Finding business balance

How is regulation impacting customer experience?

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A guide to transforming customer experience

Read how regulation affects customer experience

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The changing face of modern legislation

Customer experience has been regularly described as the major business battleground with organisations in all industries clamouring to differentiate through the art of bespoke customer communications. But another major force is impacting their ability to deliver against the modern buyer’s expectations. Namely, legislation.

Despite widespread demand from buyers for bespoke business engagement, people today are more aware of their digital footprint than ever before. According to GlobalWebIndex, 1 in 4 are now worried about the internet eroding their personal privacy, a figure which has risen from 13% in 2013.[1] It’s no surprise that people are feeling uneasy either, with high profile data breaches dominating the news for the last year including Facebook’s Cambridge Analytica scandal which saw the social media behemoth fined €560,000. As a result, tougher legislation such as the EU’s General Data Protection Regulation (GDPR) is being introduced, forcing organisations to be more transparent about the data they hold, and more diligent about how it is protected. In the case of Facebook, had the GDPR already been in force the company could have lost up to €1.6 billion.

Despite the pressure of such crippling punishment for firms that do not adhere to the new legislation, nearly a third of organisations still do not feel GDPR-compliant – even with May’s compliance deadline now a distant memory. What’s more, well over half of businesses don’t feel that they would be financially prepared for GDPR fines[3] which begs the question of how far they are willing to go to personalise their communications. Of course, personalisation and legislative compliance are not mutually exclusive. But with the microscope on responsible data usage and open requests for information available to everyone, the new rules have left many businesses struggling to meet both customer demands for both privacy and a personalised customer experience.

More specifically aimed at the marketing function, the proposed ePrivacy Regulation (ePR) is further evidence of the governing authorities taking greater control of the data / personalisation divide. By directly tackling specific communication channels such as email and SMS, the legislation builds on the GDPR and cracks down on cookies and unsolicited contact.

Can legislation actually enhance accuracy?

In the immediate aftermath of these legislative changes, many businesses have found their databases decimated as they seek implicit permission from customers with whom they may only have spoken with once.

But it’s important that marketers don’t view tighter legislation as necessarily damaging; in fact it should be helping to cut down wasted efforts. Buyers are now required to actively opt-in or ‘consent’ to marketing communications. By ensuring that every customer who receives communications agreed to it essentially eliminates individuals who have no genuine interest in the brand. Customers who then choose to exchange their personal information in favour of tailored promotions, rewards and communications, are demonstrating that they are more engaged and more likely to make a sale. Similarly, customers who did not explicitly agree to receiving communications no longer receive unwanted contact which alienates them from the business.

The result is more effective ongoing business communication with customers combined with a reduction in wasted efforts and associated costs.

Weighing goods

Increasing trust and transparency

Although personalisation is increasingly accepted as a crucial part of good customer experience, trust is an ongoing issue, with many consumers increasingly suspicious of how businesses are using their private information. Regulation such as the GDPR aims to counter this by forcing organisations to be more transparent about personal data collection.

The Information Commissioner’s Office (ICO), the UK’s data protection agency, has already been overwhelmed in the wake of GDPR’s introduction, receiving over 500 calls per week reporting alleged data breaches.[1] France, similarly, has seen a 53% increase in the number of complaints against companies, which has lead Giovanni Buttarelli, the European Data Protection Supervisor, to predict the first round of GDPR fines by the end of 2018.[2] The process may be lengthy, but the appropriate bodies are determined to uphold the legislation. The ICO has in fact already identified its first target, issuing Canadian data firm AggregateIQ (AIQ) with a formal notice under GDPR due to concerns over “continued retention and processing” of data.[3]

However, transparency should be part of organisational culture regardless of the threat of fines, with businesses being open and honest about the data they want to access and how it will be used to improve customers experience. By demonstrating responsible and secure data handling, businesses encourage trust from their current and potential customers base. This in turn boosts the company reputation and the likelihood that new customers will be willing to share their data.

Smarter data collection

While consumers must consent to their data being used, it falls to businesses to ensure that the data offers usable insights. Despite this, 55% of marketers today don’t feel they have sufficient data to drive effective personalisation.[1] Changing legislation will force marketing teams to become smarter with the information they collect. This means harvesting ‘smart data’ that is accurate, agile and actionable[2], helping marketers to build a single view of a customer and identify insights that can be applied across the business.

But striking the right balance is essential because good customer experience translates into loyalty, and in turn, sales. Research finds that 86% of customers who received a great experience were likely to repurchase from the same company. This is compared to just 13% of those who received a poor CX[3]. For today’s customer, good CX means a personalised experience from an organisation they trust with their data. That being the case, stricter data protection laws should be seen as an opportunity to embrace a transparent culture which in turn boosts company reputation and transforms CX.

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