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GDPR – Death Knell or a New Life for Customer Analytics?

July 26, 2018 • STRATEGY & MANAGEMENT, TECHNOLOGY, SPECIAL FEATURES, Digital Transformation, Strategic Spotlight

By Amit Joshi

Even before the enforcement of the General Data Protection Regulation (GDPR) across the European Union’s 28 member states, European firms apparently had a tough time becoming GDPR compliant. Today, they are faced with the implications of the constraints on the ability to collect, store, process, and use customer data. Where this leads customer analytics is a significant question to ask.

 

As countries in the European Union prepared to roll out the General Data Protection Regulation (GDPR), the initial sense across European firms was that they are underprepared for the disruptive effect that such a law brings forth on all aspects of data management. Even among companies who were well aware and better prepared for the commencement of the GDPR regime, there was a sense of despair arising from what were seen as severe constraints on the ability to collect, store, process, and use customer data. But were these fears legitimate, or were they misplaced? Were firms overreacting to the implications of this law? And what about consumers – are they going to see long lasting benefits from the increased individual data privacy?

 

Immediate effects

It is important to separate the immediate effects that this regulation have on both companies and consumers, from its possible longer-term implications. Moreover, all parties, including regulators, should consider the unintended consequences resulting from such a sweeping change in data privacy regulations.

In the short term, companies that are dependent on consumer data (especially data collected online) were hamstrung in their customer outreach efforts as they lost their access to several avenues of data collection that were previously used, including both internal and external sources of data. Since May 25, re-targeting data, clickstream data and even data that could previously be purchased from vendors were lost. Furthermore, even for data that were legally collected and stored, the scope of usage was drastically reduced, since GDPR rules that data can only be collected and used for very narrow, specific purposes, as disclosed to consumers during collection. Companies were apparently caught unawares by the law, or unknowingly committed infractions. Luckily, the consequence of the first sanction is only a warning and not a fine! In the short term, the fears of several managers may therefore be realised, especially if they are unprepared for the challenges.

The most agile companies can recover their edge by prioritising speed to market new analytics systems over the accuracy. The best firms are using analytics innovation to meet this challenge.

Ironically, the short term impact of this law can be felt most by the firms that are truly committed to managing by analytics, while those that are analytics laggards cannot be as impacted. However, the most agile of these companies can recover their edge by prioritising speed to market new analytics systems over the accuracy. The best firms are using analytics innovation to meet this challenge.



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About the Author

Amit Joshi is Professor of Digital Marketing and Strategy at IMD business school.  He brings IMD extensive expertise in marketing management and strategy, advertising, digital media, data analytics and marketing accountability. He is also the Program Director of the open program Digital Analytics.

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