Every time we use a search engine, surf a website, buy a product or download an app, we part with personal data that’s being collected by the companies providing their products and services.
This data is collected through a sophisticated and sometimes covert combination of online tracking tools such as cookies, beacons and e-tags. However, even when the data collection is overt, most of us are all too eager to part with our personal information in order to speed up the online experience. The result is that a mind-boggling amount of personal data is being compiled by companies - a transfer that’s rapidly growing due to the ease of mobile and cloud communication. And this trend is set to continue as we embrace new breakthroughs such as wearable technology and the Internet of Things, which, according to Cisco, will see 25 billion devices being connected to the Internet and creating their own data trails by this year - and increasing to 50 billion by 2020.
This explosion in personal data presents great opportunities for companies, but also brings with it great responsibilities. Some consumers are already very savvy about the digital footprint they leave, and some frequently ‘give away’ their personal data (e.g. their preferences, attributes, consumption data or behavioural data) in return for discounts or targeted deals. And, while not yet the norm, it’s not implausible to imagine a time when consumers will think of their personal data as a form of currency that they can use in pursuit of goals they care about and that money alone can’t buy. But today, most online consumers have yet to grasp the amount of data they’re sharing or the purposes that the shared data will actually be used for.
Two-thirds of the CEOs we talked to for this ‘pulse’ say they’re capturing ‘significantly’ or ‘somewhat’ more data from their customers this year compared to last. Perhaps not surprisingly the main reason they cite is the sophistication and availability of technologies - notably the preponderance of mobile devices and cloud computing - that can track transactional, behavioural and consumption patterns. Neither is it surprising that a whole new industry of big data sellers has grown up to collate and package consumer information in a way companies can monetise.
Data comes in all sorts of shapes and sizes. Firstly, there’s structured data, typically transaction-based data captured by systems (i.e. point of sale). Secondly, there’s unstructured data gleaned from either sensors (in other words, machine data) or from people themselves as they consume products and services, do things they like in their spare time (e.g. fitbit wrist-bands for joggers) or interact with companies and social media.
So, is it any wonder that companies may be collecting more consumer data than ever before? The majority of CEOs say their companies collect personal data at the point of transaction (75%) or via third parties (62%), yet just 55% of CEOs collect data via ‘social listening’. Of those who do, just 13% have the systems in place to continually conduct social media monitoring despite the rapidly increasing number of consumers sharing opinions and spending habits on social media.
Could the fact that many companies continue to underutilise social media analytics be partly due to senior management’s unfamiliarity with the medium? Despite the social listening industry being a decade old, many senior executives still see personal data through the quantitative and structured prism of numbers rather than the qualitative and unstructured measurement of real people’s behaviours.
As we see it, there are five fundamental challenges of big data that organisations need to be aware of:
Knowing how to effectively integrate personal data insights throughout the business is another major challenge for CEOs. At present, personal data is mostly being used to improve customer-facing parts of the business such as customer service (85% of CEOs always or often use customer data to improve this function), sales (84%) and marketing (81%). That can help deliver some short-term wins in cost savings and sales growth, but also suggests that a larger strategic opportunity is there to be realised.
Whether it’s because most companies still operate in siloes, or whether it’s because the C-Suite is yet to fully appreciate the value of applying consumer insights throughout the business (or both), it’s clear that customer data isn’t reaching keys parts of the enterprise. CEOs tell us that personal data is least likely to be used to help HR and it’s not being used to fuel innovation or improve procurement and sourcing. Improving the C-Suite’s understanding of data – by creating the role of Chief Data Officer for example – and connecting all parts of the business to key customer analysis, such as social listening, are just two options for companies.
Rising above the internal debate of how best to apply personal data analysis is the larger issue of how consumers feel about the mining of their thoughts, opinions and browsing habits - never mind their bank details. CEOs tells us that consumers are quite comfortable with the arrangement with 50% saying customers are ‘significantly’ or ‘somewhat’ more willing to share data than they were 12 months ago.
But is that actually true? In a recent PwC poll of consumers, just 21% of those surveyed said they were willing to share more personal data with companies than they have over the past 12 months. And 24% said their trust in companies’ ability to protect their data online had declined ‘somewhat’ or ‘significantly’ during the same period.
Not a week goes by, it seems, without a major company falling victim to personal data theft or cyber attacks. As companies harvest more personal data, they’ll need to prove to consumers that they can be responsible stewards of the information they collect. And, as that data is deemed more valuable by companies, so consumers may well question why, exactly, they’re giving away large pieces of their digital identity for free.
Consider today’s ‘big data of the seller’ environment whereby organisations offer discounts or targeted deals to consumers who, in return, are willing to part with their personal data such as preferences (in other words, they trade their data as a product). More often than not, this data can be used by the seller for purposes that the consumer has little, if any, control over. As a result, consumers might now want an ‘erase button’ for their personal data.
So, picture a world in which ‘big data of the seller’ in fact becomes ‘big data of the customer’ – where consumers can use their personal data to achieve goals they care about. Undoubtedly this would prompt a profound shift in the economics of personal data with new disruptive business models emerging. Trusted ‘data banks’ that manage and seek a return on the value of data in much the same way independent financial consultants do now with real money would soon become conceivable. Consumers would have multiple banks to cover their various needs and goals such as health, money, home, etc. and, at any given time, could decide to withdraw (or rather delete) their personal data from any of those banks. That’s quite a different scenario from today’s situation in which people’s personal data is scattered in many places. In other words, in this digital age consumers might well wake up to two fundamental rights: the ‘right to be forgotten’ (i.e. the ability to hit the erase button) and the ‘right to be aggregated’ (i.e. having a trusted bank of my personal data that’s only used for purposes for which I gave permission and that I have awareness and visibility of).
Ultimately, the way in which companies manage and protect personal data will become a major test of transparency and authenticity, and a source of much needed trust. The smart ones will use personal data in a meaningful way that also has reciprocal value for consumers – whether it be in obvious areas like improving customer service or in shaping mutually-beneficial new services such as health and lifestyle advice through wearable tech. The companies that continue to take consumers for granted may well find themselves starved of the very personal data they need to succeed in an increasingly ‘socially-connected’ online world. Trust will become even more important as the ‘gold dust’ of business in a world in which personal data is just exploding.
PwC’s CEO pulse provides a temperature gauge of global CEO sentiment on a variety of topical business issues throughout the year. For this pulse on personal data, we spoke to 189 CEOs across Europe, Latin America, Asia Pacific, Africa, North America and the Middle East during the summer of 2014. At the same time, we polled 1,200 consumers from the United States, United Kingdom, Germany, Spain, India, Brazil, Russia, Mexico, Canada, Australia, China and Sweden for their perspectives on the same topic.