Can the GDPR Save CXM (From Itself)?
- February 14, 2018
- Posted by: Tim Walters, Ph.D.
- Category: Customer Experience
The GDPR? Forget about it.
Yes, the EU’s restrictive General Data Protection Regulation takes effect in less than four months. But seriously – just close the cover (or the PDF) and set aside the document. While you’re at it, set aside as well your panic about bloodthirsty EU regulators and the specter of massive fines.
The GDPR is not your problem. Instead, we need to talk about customer experience management (CXM) – all of the efforts and investments you’ve made to attract and satisfy increasingly fickle and demanding consumers.
It’s likely that your investments in CXM are paying off in some areas. The personalization platform has increased conversions and share of wallet. The data dashboard for the call center agents has reduced churn. But if we look beyond these internal metrics and ask consumers how they feel about the experiences they are offered, the answer is painful but inescapable: They suck.
Year after year, large-scale consumer surveys by the likes of Accenture, Capgemini, and Forrester Research show that despite the massive investments of time, money, and energy, CXM is making virtually no real progress. Consider some of the evidence:
- In 2015, Forrester reported on their CX Index (CXi) for North America (45,000 consumers, 299 brands) twice (January and September). In the approximately six months between the two surveys, 2.3% of the brands improved their rating . . . and 28.5% got worse. Overall, 1% of all N.A. brands analyzed received a rating of “excellent.”
- In Forrester’s 2017 European CXi, a total of ZERO brands achieved an “excellent” rating. In Germany, 83% were found to be “OK” (which for Forrester means mediocre), “poor,” or “very poor.” In the UK, twice as many brands declined compared to 2016 as increased. In France, every brand studied was rated mediocre or worse – and over half were “poor” or “very poor.”
- In the retail industry – perhaps the most obvious realm where a customer’s experience can make an immediate difference in a purchase decision – IBM’s 2017 Customer Experience Index (CEI) Study concluded bluntly: “Retailers on the defensive.” On the CEI’s 100-point scale, the average score for all brands was a cringe-inducing 33 points. Retail CXM is literally failing.
What is killing customer experience?
The usual suspects behind the CXM train wreck are resource constraints: Companies don’t have enough budget, or the rights skills, or the necessary technologies, or the proper structures. The shortages might also be “mental”: Insufficient agility, or lukewarm executive support, or simple lack of will to change.
Some combination of these factors no doubt does handicap the CXM efforts of many firms. From this perspective, success with CXM requires playing the long game. When the budgets are increased, and the new systems are in place, and our center of excellence matures, and the stuck-in-the-mud CXO’s retire – then we’ll be able to put the pedal to the metal and consistently deliver the holistic omnichannel experiences consumers crave. It’s slow going, but we’ll get there.
However, the results of Accenture’s latest Global Consumer Pulse Survey tell a different and far less optimistic story. In effect, they suggest that even if the budget is plump and the will is strong CXM success is far from guaranteed. In fact, the findings could mean that more resources and fewer constraints could make the outcome worse. Why?
Because it is a structural problem.
It’s not just that most companies have proven incapable of or unwilling to provide enough fuel for the machine– money, time, skills, focus. It’s that the machine’s design is faulty. In short, we’ve built a CXM machine that, with rare exceptions – edge cases, outliers, freak occurrences – can only and always produce undesirable results.
The double bind of data-driven CX
Accenture calls it a “vicious circle.” On the one hand, consumers very much want personalized, relevant, context-appropriate “experiences” – i.e., communications, offers, interactions. For example, in the US:
- 47% expect special treatment for being a good customer.
- 43% are more likely to shop with companies that consistently provide personalized experiences.
- 41% switched providers in the past year; Accenture estimates the total revenue lost to this “switching economy” is $756 billion in the US alone.
But, on the other hand, and at the very same time, consumers have become enlightened about the risks posed by the unfettered collection and use of personal data and are concerned about trusting companies with their data. For example:
- 92% of US consumers believe it is important for companies to safeguard their data privacy.
- 79% find not being able to trust a company with personal information is a top source of frustration.
In other words, we – the vendors, service providers, analysts, and practitioners in the CXM “industry” – have conspired (unconsciously, for the most part) to create the conditions for the failure of CXM.
From its inception, the entire CXM ecosystem has embraced a “maximum data” approach — grab as much data from as many sources as possible in order to improve targeting and (allegedly) “enhance the customer experience.” But this approach has proven unacceptable to ever-more savvy and suspicious consumers. Consumers no longer trust companies to “do the right thing” with their data. They are irritated and concerned that they do not know when or what data is collected, what it is used for, with whom it is shared, or whether it is secure.
This is the double bind of CXM in 2018. Consumers demand highly personalized experiences – and will abandon those companies that can’t provide them. But at the same time, they are increasingly reluctant to share the personal data that are necessary to create, deliver, and power those experiences.
What is to be done?
Consumers understand that their data is necessary for personalized experiences. But they want and need to be assured that they are in control of how their data is collected, used, and shared. Firms that can instill and maintain this sense of control will engender trust among consumers and will be far more likely to gain access to the personal data that informs superior experiences and creates a competitive advantage.
So in order to finally make progress with CXM and to compete effectively in the experience economy, companies of all types need a blueprint or roadmap for putting consumers in control of how their data is used.
Behold, the GDPR
Now you should crack open the cover (or the PDF), for the GDPR presents precisely such a blueprint. The central principle of the regulation is to ensure that consumers “have control of their own personal data” (Recital 7).
Thus, while the GDPR is an unavoidable regulation for any company doing business with EU residents, it effectively is also the necessary solution for any company that wants to compete in the experience economy — namely, by granting consumers control over their data and thus creating and sustaining a trust-based relationship with the company.
The (literal) bottom line
If you do business in the EU, compliance with the GDPR is not optional. But you should comply not in order to satisfy data regulators and avoid potentially massive fines. You should comply in order to satisfy consumers and avoid potentially massive lost revenue when your customers switch providers.
And if you don’t do business in the EU, you should still study it very carefully. The control over personal data processing that the GDPR aims to grant to consumers is mandatory for your success in the experience economy.