SBA

The Power of Information

I confess, I’ve been reading The Guardian newspaper recently :blush:. Not really my preference in newspapers, but I felt I owed it to them to buy a few copies as they were kind enough to publish an obituary of my daughter last month and, more pertinently to this column, a Guardian / Observer writer, Carol Cadwalladr, won the Technology Journalism category at the 2017 British Journalism Awards in December so I was interested to understand more about The Guardian’s coverage of technology - had they perhaps invested in a spell-checker?

Maybe, maybe not, typos have not leapt from the pages which I have read, but neither has much reporting of technology matters; sadly The Guardian has not become the go-to source of techie news. A bit more digging, through Ms. Cadwalladr’s past stories on the Guardian website, exposed that she has written several major features about suspected (ab)uses of social media and data profiling to influence democratic processes in the UK and USA - particularly examining how these might have contributed to the victories of Brexit and Trump. Aside from the irony of a campaigning liberal anti-Brexit newspaper being rewarded for reporting about the possibility that other campaigners using technology and data might have surreptitiously promoted Brexit and Trump, it is these stories which have justifiably been recognised; they’re not technology stories any more than the recent Twitter eruption about Blue Passports, but they do address very important issues about the power of social media, data and information. I want to talk about the latter two. 

Let’s start with data. What is data? Nothing more than a collection of (hopefully) facts. My nationality, birth date, gender, marital status, home address, income, tax paid, places of education, academic qualifications, past illnesses, online shopping etc. are facts in the custody of divers data controllers. In isolation they don’t tell anyone much about me - they don’t inform. Individually they give little indication as to what my profession or interests might be, or my political sympathies, or my current health - until analysed. Data of itself is pretty harmless, the problem arises when it is processed into information. 

So, what’s information? The output of some data processing that correlates and analyses data in a specific context, so that it is meaningful to (informs) the recipient; or as I have written previously “Information is data which has been processed and presented appropriately for the context in which it is to be used”.  So if I want to target messaging to people who are likely to particularly care about the funding of the NHS, or advertise guitar strings to guitarists, or work out what proportion of workers will retire in the next decade, how long they will live and how much they will likely cost the government in pensions and healthcare, I need to profile data (discover common data traits from historical data etc.), obtain relevant current data about more people, and analyse the data to produce qualitative or quantitative information that suits my purposes.  According to an article in The Economist in May last year “The world’s most valuable resource is no longer oil, but data”.

Therein lies problem and opportunity. The whole premise of existing EU data protection law and the more robust General Data Protection Regulation which will come into force later this year is the prevention of personal data abuse. You will be aware that the penalties for abuse can be huge - necessarily so because the impact of abuse can also be huge. If you wish to influence an election or referendum, and you can afford the effort involved, then targeted messaging is the way to go. If you wanted to round up all the Jews on the island, or give notice to all Social Housing tenant households earning more than the median household income, then obtaining and analysing the relevant data would enable you. Data may be pretty harmless, but once converted into Information it’s truly powerful, potentially frightening stuff. Hence the very legitimate concerns of the Guardianista and most other fair-minded folk, whatever their political views and affiliations - your data may be used to target you.

So what about the upside? This article is published in the Business News section of the Examiner. A couple of weeks ago I exhorted business people to upskill digitally; the statistics appear to show that far too many small British businesses are weak on the most basic digital skills, but that businesses which have strong digital skills prosper. Mastering basic digital skills is the first step towards being able to gather data about suspects, prospects and customers; an essential precursor to generating useful, powerful, information that will help to grow your business. Just how powerful Information can be is clearly demonstrated by the fears of politicians, media and ordinary citizens that it may be used to subvert democracy, but the upside is that used effectively in business it can contribute to higher growth, better margins, more employment, greater customer satisfaction and loyalty - all stuff that businessfolk want.

Reduced to its simplest, using good information is the difference between targeting customers with a rifle versus shooting in their general direction with a shotgun. The shotgun cartridge will cost you four times the price of a .22 rifle bullet, and most of the shot will miss the target however good a shot you are. The rifle is hit or miss, if your aim is good then it’s a far cheaper way to hit the target. Imagine having four times the sales for the same marketing spend - most of us would be delighted with a ten percent improvement. 

There is an art to gathering personal data. Obviously you have to comply with the law in respect of obtaining direct or implied consent to data processing and how you store and protect data, but beyond that the key consideration is “What Information do I need?”, which relates directly to your products or services, your customers, and why they choose you in preference to other suppliers. In other words, you need a marketing strategy. Unless you have a marketing strategy the only personal data you actually need to gather and keep is your customer’s name, contact details and transaction history (and that may be enough). 

With a marketing strategy you can attempt to define what products you offer to different segments of your customer base, and why, and formulate a wish list of the information you would need in order to provide and promote the most suitable products to each customer. When you know what information you would like to have you can then decide what data you need in order to manufacture that data - and this is where the art comes in. There is no point in gathering data that you don’t need, it’s expensive and legally tenuous to gather and maintain data without purpose. You should ideally ensure that non-transactional data acquisition is pertinent to your needs.

Let’s take a simple example, Steve’s Taxi Co. Customers use us for all sorts of things - from and to the airport for business visitors, from the pub / restaurant to avoid drink-driving, home from the supermarket because the shopping is too heavy or bulky for the bus, to and from work because they don’t drive, etc. etc. etc. Folks use taxis for hundreds of reasons - but individuals tend to use taxis only for a limited few purposes, and they have different expectations. 

The company receptionist arranging a taxi to collect an important visitor from the airport wants to pre-book, and have a smart vehicle with a discreet driver, not the manky old Mondeo with the garrulous moaner. The old dear who needs help getting her groceries home from the supermarket wants a helpful driver and doesn’t mind so much that the car interior is getting rather tatty. The evening party crowd likely would prefer a people carrier / small minibus, and so on. You get the picture, it’s pretty obvious.

From a data perspective you want to know: who your customers are, how to contact them (with their permission), and why they use you / what their need is - you can ask them, or you can imply this from the product or service they buy (the transactional data). With this data you can do four simple things: 

• Understand who are your real customers
• More reliably provide them with what they want
• Optimise your product range / service capacity to suit customer demand
• Target promotions to suitable customers (guaranteed executive cars for airport collections, mid-week minibus discounts for the party crowd, supermarket pickup discount between 11am and mid-day - whatever.) 

How you communicate your promotions to your customers is up to you - if you serve them in person, as with a taxi passenger, you can simply have the customer service rep (taxi driver) hand over the most suitable promotional leaflet, or alternatively you might use email or even post - the communication method will vary depending on the nature of your relationship with the customer. 

If you gather and analyse appropriate data to produce information three things are pretty much certain; 

• You will get more repeat business from your existing customers
• They will be more likely to recommend you to friends / colleagues
• You will reduce your operating costs by not providing products / services that they don’t want

End of homily. A couple of weeks ago I implored readers to ensure their New Year’s Resolutions included “an action plan to close your digital skills gap”. Today, for most of us, is the first business day of 2018, and I’d like you add “and improve the way you use data to grow your business”. It’s not rocket science, it is incredibly important to all businesses, and if you don’t do it you can be sure your competitors will. Wishing you all a Prosperous New Year.