Why You Don’t Really Need A 360-Degree View Of Your Customers

Lizzy Foo Kune, vice president and analyst, Gartner

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Lizzy Foo Kune, vice president and analyst at Gartner.

“On the Internet, nobody knows you’re a dog.” This may have been true in 1993, when this caption to a Peter Steiner cartoon appeared in The New Yorker. But decades later, it’s no longer the case.

These days, everyone knows I’m a Bernese Mountain Dog living in greater New York City that likes Nylabones and Jolly Balls. I eat a particular kind of high-end dog food because it’s good for my coat (and helps me manage my weight). They also know I enjoy barking at the gig worker delivering the dinner my human ordered through a mobile app.

Still, all this data begs the question: What do companies achieve from the relentless pursuit of a 360-degree view of the dog?

The answer? Nothing.

Conventional wisdom suggests that pursuing a 360-degree view of the customer is a mandate for most organizations. But it will destroy your business. 

This unconventional view isn’t an indictment of customer data. Rather, it’s an indictment of the idealistic, unrealistic and impractical pursuit of an omniscient customer view. 

The cost is disproportionate to the value

Organizations have spent the better part of the last 20 years on a quest for this mythical 360. They have invested a lot of money on technology to support it. On CRM applications alone, we estimate that more than $80 billion will be spent in 2021 and $100 billion by 2023. 

But it’s not just CRM that organizations use in the pursuit of a 360-degree view. In some cases, organizations use four or five CRM systems, a customer data platform (or two), master data management, customer identity and access management, and more.

These technologies rely on data collection and data management, underpinned by soon-to-be-obsolete tracking methodologies (e.g., IDFA, third-party cookies, shorter first-party cookie shelf lives). But your business can’t outmaneuver these changes.

The value of collecting and unifying customer data remains unclear. In fact, our research shows that half of marketing leaders agree that pursuing a 360-degree view of the customer (also known as a “unified view” or “single view” of the customer) isn’t worth the investment.

It violates privacy regulations

As global data privacy regulations continue to mature, marketers are finding it increasingly difficult to obtain and secure the data needed to build a 360-degree view of the customer. The cost to comply is high. One independent study of California’s CCPA statute estimated initial compliance costs to tally $55 billion.

And the fines for non-compliance can be severe. Violating the EU’s GDPR can cost businesses as much as €20 million or 4% of global revenue (whichever is higher).

But compliance just ensures companies do the minimum, versus doing what’s right. In the next five to 10 years, ethical concerns over customer data use will force businesses to reevaluate the goals and metrics used to train machine learning models and measure success. Instead, leaders will distinguish their brands through customer data ethics, aligning business practices with moral and ethical policies that reflect stated values.

The risk of overinvestment in customer data will only grow as data privacy regulations and efforts evolve and customers become more protective over their own personal data. 

It obliterates trust

Customers don’t want you to know everything about them.

Think about it. And not as an advertiser, reliant on third-party signals of “intent,” but as a consumer yourself. How comfortable are you with the idea of an organization having access to everything you do online? Most likely not very comfortable.

We asked our Consumer Community this question, and 72% of them agreed that it makes them “very nervous” to share personal information online, an increase of 13% from 2014. And if you think this is just a problem for marketers, you’re wrong. We asked executives across the organization which social fractures would have the biggest impact on their business. The top concern? Trust. 

There’s no appealing way for organizations to position the value of an all-knowing, 360-degree view of you, scaled to the power of every brand you’ve ever done business with. When you strive to know more about your customers than they’re willing to share, you will face consequences.

Focus on providing value

Instead of pushing the boundaries of available data, marketers should focus on how their organization creates value by collecting only the data necessary to support marketing operations, product innovation or customer experience.

In their 1993 Harvard Business Review article, “Customer Intimacy and Other Value Disciplines,” consultants Michael Treacy and Fred Wiersema outline three ways businesses can deliver value:

  1. Operational excellence: Giving customers what they need as efficiently and inexpensively as possible. For example, a grocery store using real-time location data to prioritize order fulfillment and pinpoint customers in its parking lots for curbside service.
  2. Product leadership: Providing innovative and best-in-class products that outperform the competition.
  3. Customer intimacy: Using data to tailor offerings to specific customer groups or segments.

Today, their recommendations still stand. You don’t need 360 degrees of a customer. You need to align the scope of your customer data collection efforts to the value you’re aiming to provide.

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1 Comment

  1. The old adage “just because you can, doesn’t mean you should” comes to mind with regards to the 360 view. Brands and other data buyers still need *some* consumer insights while earning consumer trust. 1st party data is digital gold but tends to be limited (sans a handful of tech titans). It only gets more challenging amid consumer data legislation and cookie degradation.

    Enter zero-party data via data unions. Permission-based, GDPR and CCPA complaint. Consumer data agency is a core tenet of web 3. Brands that understand this development will have an advantage in the days ahead.