Blockchain in digital marketing will have a huge role to play in the future of relationship marketing. On the one hand, access to customer data is considered paramount to improving customer experiences. On the other, growing concerns from consumers on how their data is managed, especially following GDPR, highlights the challenges marketers will face in the coming years around gaining consumer trust.
This is where blockchain technology can prove highly valuable. Through blockchain, ownership of customer data can be directly held by the customer allowing them to manage access rights for the various brands they choose to interact with. For brands, this can improve the ability to better target digital ads, avoiding ad overload. It can also ensure increased personalisation and intimacy by directly listening to customer preferences and the transactional data they choose to share. With customers securely owning their transactional data, the possibilities of data access and insights around a customer’s transactional history across brands and channels will be endless.
The dilemma we currently face
Our increasingly digital presence means we leave a series of ‘digital footprints’, or data points, behind. As a result, unique digital identities are created entirely based on this data, painting a good picture of who we are - from what we do and who we interact with to what we like and what we dismiss. No longer restricted to online interactions, additional data points are being collected in line with the advancement of connected devices.
However, this is met with increased vulnerability as we run the risk of losing control of our data. We have already seen examples of this with Facebook, JP Morgan and various other hacking scandals leading to increasing concern surrounding the security and use of personal data. Despite a first step with GDPR, inadvertent access to and usage of personal data remains. However, it is this access to data and digital identities that helps businesses make informed decisions impacting their bottom line. Moreover, the customer’s increased demand for relevant and personalised interactions requires more data points to improve their experiences with brands.
So how can blockchain help?
Blockchain can be powerful by providing a more secure way to exchange data. As a distributed ledger technology, blockchain can reduce the vulnerability associated with centralised data servers. This reduces security risks through increased transparency, immutability and traceability.
Moreover, it enables the removal of intermediary actors, reducing costs of transactions (whether monetary or not) while enabling secure third-party verification. Think of Google and Facebook acting as middlemen in the exchange of data for ads. Instead, blockchain can enable consumers to directly own their personal data and control the resulting exchanges of information. This empowers consumers to decide what information they are ready to share with others and whether to do so publicly or privately.
Furthermore, in an industry such as advertising, where $8.2 billion is lost annually due to digital fraud such as inaccurate recording of ad traffic or false online reviews, blockchain technology can help build the transparency needed to maintain consumer trust.
What does this mean for customer engagement?
With consumers owning their digital identities, they can directly control access rights to their data. This means providing full access to browsing, purchasing and social media data points for frequently visited retailers while restricting access to those that are visited less often. Doing so helps build intimacy and a stronger relationship with a consumer’s preferred set of brands and reduces intrusive marketing behaviours. Moreover, it not only can lead to greater brand loyalty, but also a better use of marketing spend through improved customer targeting. This can increase conversion rates as customer trust is built through a better, data-rich knowledge base. A resulting win-win situation occurs. Most appealing is the 360 degree view of a consumer’s transactional history across brands and channels that can be obtained with data owned directly by the user. This is where the value of data can be truly unlocked, enabling organisations to understand an individual’s story and enhance their view of the customer.
For example, imagine yourself consuming more sustainable products, following greener brands on social media and liking a few more posts around sustainability. With a 360 degree view of your recent behaviours, the organisation can understand that sustainability is increasingly on your radar and your ‘greener’ transactions predominantly across three brands. Given your conscious attempt to consume sustainably, you have the option to share this data with not only the brands you frequently engage with but with others too, both within and across industries. This enables brands to have visibility on your consumption preferences and behavioural patterns to provide you with personalised recommendations on relevant products and services (e.g. recycled clothing lines by other brands, seasonal food products, sustainable Airbnb options).
Think how powerful this can be; while your data remains secure, anonymous and entirely owned by you, your experience with brands improves through more relevant and personalised interactions.
What implications will this have on digital marketing?
Although desirable, flipping the control of data from brands to consumers comes with a fair set of challenges. It requires redefining consumer expectations, developing innovative customer engagement strategies and creating entirely new business models. Businesses will need to focus their efforts on building and maintaining consumer trust to earn access rights to their customer’s data. Customer engagement strategies will therefore be around incentivising customers to share their data and rewarding those that do through innovative methods such as creating new forms of loyalty, smart contracts or even paying users to view ads. Creating such a value exchange to drive consumer trust and data capture requires a new marketing ecosystem – one that is open to collaborating across brands and allowing consumers to control and potentially monetise their data.
For marketers, this could lead to a lower amount of leads, but the quality of those leads will be stronger and better targeted. This can greatly improve costs and operational efficiencies. With the 360 degree view of transactions and behaviours through blockchain, a more robust and richer profile for each customer is possible improving the ability to achieve authentic one-to-one interactions. As a result of the shared access to customer information, a brands competitive advantage will be around strong analytics capabilities enabling differentiated customer experiences. Truly innovative brands will be those that can intelligently use data insights to drive new consumer behaviours and reinvent consumer expectations.
The greatest challenge, however, will be having the necessary data rights in place ensuring the increased transparency of data is not exploited, and consumers and brands are well informed of their data rights and responsibilities in order to adhere to a new code of conduct. So, although not a new technology, we are yet to see the potential blockchain will have on enhancing relationship marketing, consumer trust and engagement.
Written by Natalia Skaloud - Management Consultant - Customer Engagement at Capgemini Invent.
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