Leaking customer data is bleeding profits

Most companies are very aware of the two traditional elements of Customer Loyalty focusing on sales (get and grow), but underestimating the third increasingly more vital aspect of customers leaving (keep).

  1. Get - Customer Acquisition
  2. Grow - Customer up-selling or cross-selling
  3. Keep - Customer Retention

The reason is very simple. The cost of customer acquisition are in the accounts but excused by the sales value whereas the cost of customer leaving is a loss of revenue not recorded in the accounts as neither cost nor lost revenue. Sales are therefore constantly repeating the same mistake overspending on marketing and outbound selling while massively underspending on protecting customer relationships.

Are you feeding your customers to your competitors?

Google, Facebook and the other profiling engines make their money from making your customers defect.

Whenever you leak data on your prospects or customer interactions with you, you are not only helping your competitors target your best customers, you are also telling the marketing profilers how best to make your customers defect.

For instance, when marketing use Google Analytics to collect data on who visit your website and what they look at - that information go straight to competitors targeting your customers - every bit of information is automatically qualifying the targets and how to convert these - for the sake of Google Earnings.

Similar, when marketing mistake number of "Likes" on Facebook for loyalty and strength of customer relations, they are forgetting, that like are resold by Facebook to competitors and you increasingly have to pay Facebook to prmote you to you own customers as "Like" does not mean they see what you try to communicate.

The outcome is a negative spiral of growing marketing costs, market distortion and resources diverted from value creation to moving, trading and shouting to customers..

Do you have a strategy and means to prevent leaking customer data from happening?

Notice that this is pure strategy and mission critical analysis. That is even before we address other aspects of customer data leakage such as the lack of legality (e.g. EU Data Regulation), threats created towards customers (Identity theft etc.) and the accumulating consumer distrust from providing you with data.

Try making this simple check: Whenever your customer load a page from your website, do YOUR website trigger a connection to Google, Facebook or other customer profilers? I am not only talking about Google analytics, but any of the many ways the profilers try to get you to link to them and feed their profiling whether we talk "Like".

If so - you have just discovered the biggest drain on your bottom-line profit and need to act urgently on this! Pushing new customers and marketing resources to get or grow customers, when they are poring out in the other end. You need to plug the hole!

Are you feeding your future competitors through your choice of service providers?

All are suffering from the problem of leaking customers pushing price competition,

But huge industries are suffering even worse - consider media, telcos, payments, digital service etc. They all suffer from virtual infrastructure trying to take control of their customers and pushing themselves in front of the value chains.

What starts as a problem of growing marketing costs, customer churn (fast turnover) and over-communicating pressuring bottom-line in an industry turns into something much worse in terms of bleeding profits - commoditization were you loose the connection and direct relation to individualize services and possibility of differentiation - as the winner-takes-all engines are growing and getting more and more aggressive as they turn into virtual supermarkets owning the customers with you providing the product and service while they take the profits.

Consider your service providers - id, payments, communication, search, supply chain etc. - what are their business models? Are they in the business of leveraged network effects, i.e. to put themselves in the center of a spiders web were everybody else are feeding them data while they increasingly profit from controlling market making or creating lock-in effect based on the control of your customer data?

Are you doing something as simple as letting them control your security (log-in), communications channels or unsecured data? Do you depend on them for communicating with existing or potential customers?

if so - you have just discovered your biggest strategic problem and future drain on you bottom-line profit!

Your business model is unsustainable as your are being intermediated and are yourself training your future competitors on how to reduce you to a commodity-player with a rapidly growing pressure on profit margins.

Do you have a strategy and means to maintain control of your connections with customers?

Any other problem is secondary to dealing with the two above problems.

If you do not understand and have a clear strategy on dealing with these two aspects, your business is under attack due to your own neglect.

You can design new products, you can poor marketing costs into the operations, you can create great technology - but if you are not able to protect your customers, your business model are leaking.and your future profit under serious attack.

If you

  1. do not understand the problems, get help - because you are most likely suffering from these.
  2. do not know whether you suffer from these problems, buy the analysis - as you are working in the blind.
  3. know, you suffer but don´t know what to do, get help for the workshops and training - as your strategy is omitting the key components.
  4. know what to do, but lack the skills to do it, get the expertise - as the devil is in the detail.
  5. are suffering from unfair competition, get the help to document and inform government authorities - as the lobby of the winner-takes-all players are extremely powerful and politicians and bureaucrats have no idea of the kind of problems, you are facing.

Protect your customer data from leaking, control your connection with customers and do not let unfair competition from winner-takes-all virtual infrastructure erode your market.