The unexpected business-building benefits of stricter data regulationBy Industry Contributor 8 November 2021 | Categories: news
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By Professor Yudhvir Seetharam, FNB Business: Head of Analytics, Insights and Research
Storing data securely and using it appropriately should not be merely a compliance-driven practice; it should be a cornerstone of any business. Not only does appropriate data protection and use protect your business from risk, but it is also key to building customer trust, without which, no business can survive for any reasonable length of time.
Apart from these two vital business components of risk management and customer trust, the correct usage of customer data is also a way of building your business that many business owners have long overlooked. It’s an unfortunate and potentially costly oversight, because a failure to recognise the true value of good data storage, management and analysis practices almost invariably translates to a loss of market share, or at the very least, an inability to grow the long-term value that existing customers should hold for your business.
When you look at appropriate data practices through this business-building lens, it’s clear that regulatory intervention like the Protection of Personal Information Act (POPIA) should actually never have been required. The problem is that many businesses have always had a somewhat short-sighted view of the value of data. Most have focused so intently on the potential that data offers for short-term gains – often achieved through the sale or inappropriate use of that data – that they overlooked the far greater value that the correct protection, application and leveraging of their customers’ data can have. This value can, and should, be unlocked across all aspects of a business, from marketing and sales to relationship building and the delivery of trust-building customer experiences.
Had more, or all, business recognised this longer-term value inherent in appropriate data usage, the need to police it would probably never have been necessary. Unfortunately, such regulatory data policing is now a reality for all South African businesses. But despite the additional administrative burdens this brings, the truth is that the POPIA will likely be of significant benefit to most companies simply by forcing them to value customer data far more than they may have previously, thereby unlocking its benefit for their business, albeit inadvertently in some cases. Just three of these benefits that many businesses might now begin to see, simply because of the need to better apply data, are as follows:
More effective customer acquisition. It’s common knowledge these days that a much more connected society makes it easy for customers to share negative experiences that could potentially damage your
business prospects. But the opposite is also true, and positive customer experiences, when shared, can be a highly effective way of acquiring new customers. Of course, it’s human nature to complain quickly, but compliment slowly; so, there’s typically more negative noise on social media channels than positive. But good data practices offer a way of changing this reality, and a customer experience strategy built on sound data protection, application and usage practices is an excellent way of eliciting public advocacy for your business. And such advocates are often the most effective influencers.
More impactful marketing and sales. The simple truth is that a ‘spray and pray’ approach to marketing seldom, if ever, delivers remarkable results. It’s basic business sense that the most effective way of reaching customers is based on their identified needs or wants. Collecting the right data, analysing it effectively, and then developing sales and marketing strategies or campaigns not only reduces wasted marketing effort and spend, it’s also a proven way of achieving maximum return on sales and marketing investment. This ensures that you contact the right customer, at the right time and for the right reason.
However, it’s only possible, or truly effective, when it is underpinned by sound data collection, protection, and usage practices. And as POPIA increases the requirement of businesses to follow these practices more stringently, many will begin to enjoy the unexpected benefit of enhanced sales and increased revenue.
More loyal, potentially lifelong, customers. Many businesses have missed out on opportunities to grow their customer loyalty levels and increase their share of customer wallet, simply because they lack a full understanding of what customer trust actually is, and what it takes to build and maintain it. Trust is not created solely through the delivery of good service; it is the result of an ability to be relevant to your customers, understand their circumstances and contexts, and be there for them exactly when they need a product or service that you offer. Effective data strategies allow any business to achieve that level of relevance and accessibility, and the result is a more loyal customer base that is less likely to shop around for cheaper alternatives.
Given the widespread shift in business thinking that Covid-19 has brought about from short-term margin maximisation to long-term sustainability, it’s possible that the introduction of the POPIA came at a very opportune time for many businesses. As the regulation encourages more businesses to take their data security and use more seriously, the benefits of doing so will steadily become more obvious, even to those businesses that haven’t previously considered data management as a cornerstone of business success.
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