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Are you ready for Midata?
Category: Technology | 17 January, 2013 16:11
The amount of data being held by businesses on consumers is growing at a rapid rate in the UK and all over the world. In a bid to give people more influence over the information gathered on them, the government has implemented the Midata campaign.
Various sectors have been singled out as key organisations that should release consumer data to give people the opportunity to make more informed decisions, with banks, mobile phone and payment companies being approached to begin the initiative.
Even though the majority of these firms are large multi-national companies, the likelihood is that once consumers get a taste of how the system works and the benefits it can provide, they will be looking as UK SMEs (small and medium-sized enterprises) to follow suit and disclose the information they hold.
Under the proposals, companies are being compelled to release data about consumption or transactions in an electronic machine-readable format on request. Nigel Shadbolt, chair of the programme since last April and information adviser to the government, began the initiative as he believed a shift was occurring in the way people control their data.
"The thought was this is going to be an absolute catalyst for new services, and we wanted to encourage the private sector to get more coordinated," he said.
While it may seem like a one-way deal for companies, with consumers taking all the benefits, it could offer businesses something different as well. It will actually create a two-way conversation between an organisation and its customers, which can help a firm gain further insights into the way their consumers work.
"There is a realisation for businesses that this creates opportunities, with businesses seeing less churn by having a conversation with customers, and better data as consumers help them to clean up the information they have," he added.
Are businesses ready?
The process of implementing the Midata plan is expected to be a difficult one and a new survey conducted by Deloitte has indicated that some businesses are simply not ready for the rollout of the scheme. It discovered that companies failing to get onboard the scheme risk losing out on customers.
According to the study, 31 per cent of consumers are happy to share data with brands they like, while ten per cent would share more personal information in return for access to their own shopping history. This indicates just how important getting involved with the government campaign could be for small businesses in the UK. Retaining and attracting new customers is a difficult business, so it is important once they are on board that everything is done to keep them, particularly in today's fiercely competitive market.
Just over a quarter (26 per cent) would give companies access to their shopping history in return for a financial discount, such as ten per cent off their next shop, and 13 per cent would share more data if they received less, but more relevant marketing material.
Again this shows how important the issue will become for consumers, as at the moment awareness is still in its infancy, so once it becomes more widespread the figures are likely to increase, so as a small business, getting ahead of the game could be crucial.
However, organisations in the UK still have a long way to go to gain the trust of consumers, according to Deloitte. At present, just 26 per cent of shoppers are confident that companies keep their data securely, while two-thirds are unaware what personal information companies hold about them, and 60 per cent are concerned that companies can access their internet browsing data.
Jason Gordon, retail partner at Deloitte, said: "Consumers will remain sceptical about the storage and use of personal data until businesses clearly demonstrate how they are using it for their customers' benefit. Certain uses of data, such as personalised pricing where some customers are charged more than others for the same product, risk creating a culture of mistrust. Trust is key. Gather data in an appropriate manner and use it sensibly and responsibly and consumers will be prepared to share more data.
"The government's Midata initiative will force companies to address this issue since it will make it compulsory for brands to give consumers access to the data they hold on them. But irrespective of any regulatory change, businesses that adopt a more open and transparent approach and which help their customers understand what data is held about them will improve their reputation in the eyes of consumers and gain a competitive advantage."
Data is continuing to grow
While sharing consumers' data with them seems like a very simple and easy thing to do on the face of it, the sheer amount of information companies have on their customers is astronomical. Even for a small business, the level of information and data is daunting. The Deloitte study indicated that three-quarters of people have a supermarket loyalty card, 55 per cent have a card from a non-grocery shop and 70 per cent of people have one or more online shopping accounts.
Each of these items or ways of buying goods results in the creation of consumer data that can be used by the company in question to better understand the buying habits of shoppers. Should consumers want access to this data it could end up being a dramatic undertaking.
Ben Perkins, consumer business research director at Deloitte, said: "The rise in customer data will renew the debate about privacy and the responsibilities of government and business. Sharing data with consumers to help them understand their shopping patterns and make better choices should result in consumers consenting to share more data. Consumer businesses should strive for an approach built around trust and mutual benefit
"Doing so will require a cultural shift in the way organisations think. Some businesses have fallen into bad habits because technology and data has reduced the relationship with customers to a series of electronic transactions, whereas developing these relationships with customers will require companies to find the human touch."
The opportunity to get ahead of the game is significant when it comes to Midata and with consumers more likely to trust an open and honest firm it could be the difference between success and failure for a small business in the UK.
Image Credit: iThinsktock