There’s a battle going on out there for your data. Everyone wants them – Google, Microsoft, Yahoo, not to mention countless individual start-ups. Did you really think Google was giving you 2.5 Gb of free email storage out of the goodness of its heart? Data = context; context = relevance; relevance = understanding; and understanding…well, understanding customers is key to any future business success.
The first issue which usually springs to mind when you start talking about data is privacy, but I’m not going to enter the privacy debate in this article – perhaps we’ll look at that topic in a future MEX newsletter.
This is an article about architecture and customers.
Let’s start with a basic assumption: companies require an architecture to service the needs of customers and convince them to entrust their data. In this context, the term ‘architecture’ refers to the collection of applications, networks and other customer touchpoints operated by a company and its partners.
Data are created at all times of day and in numerous locations, as part of conscious actions by the customer or sometimes merely the nature of the user’s behaviour represents data creation in itself. Location, for instance, can become an important piece of data.
So if a company’s objective is to capture as many of your data as possible, we can assume an architecture which encloses the highest number of your data creation points will be the most valuable.
This is where mobility becomes an important part of the architecture.
Customers are creating more and more of their data in the mobile environment and – crucially – are also requiring access to existing data on the move. Contact details, images, blog entries, maps, office documents, emails, music, video – most customers have all of these data spread across numerous PCs, mobile devices and storage media. Aggregating these assets and making them available in in the simplest way through the widest range of access points is becoming central to the strategies of the world’s biggest telecoms, media and IT companies. In fact, this is occuring to such an extent as to blur the distinction between these sectors.
I’ve read several articles recently questioning the business model adopted by companies like Google, which has invested heavily in developing free services like mobile email access and mobile mapping, when there are other organisations charging for such features. Even Microsoft is flirting with this strategy, bundling free mobile email capabilities into its existing products. Sure, these are organisations with deep pockets, but how can they justify this over the long-term?
There is a term used by mountaineers known as the ‘incident pit’. It describes the process whereby a series of seemingly minor incidents combine to create an ever deepening and increasingly steep pit from which escape soon becomes impossible. Losing your torch may seem irrelevant on a day hike, but it can represent the beginning of an incident pit; if you then also lose your map and find your journey extended past daylight hours, the loss of the torch has dramatically increased the depth of the pit.
The incident pit offers a relevant analogy for companies seeking to capture as many of their customers data as possible. If you provide an address book application, you capture the user’s contact list. There is relatively little to stop the customer moving to another provider. However if you add, say, photo storage and integrate it with the ability to assign gallery access to particular groups of users from the address book, the barriers to customer exit become higher.
The same is true of access methods. If the address book is confined to a client application on the PC, it has relatively little value to the customer. Add mobile synchronisation and it becomes more compelling. Make it available in real-time, on any device and through any network and its value increases many times.
Each service you add, providing it is cleverly integrated, increases the likelihood of customers adopting future services. The more data captured, the more sense it makes to entrust future data to your existing provider. Google Mail, Google Chat, Google Desktop, Google Mobile… Yahoo Mail, Yahoo Messenger, Yahoo Desktop, Yahoo Mobile…
At the heart of all this is the principle of customer-focused architecture: the notion that services should be built around customer’s needs rather than legacy systems or a particular product. Many terms have been coined for parts of this principle: ‘always on’, ‘ubiquitous computing’ and ‘pervasive internet’ are among the more popular. Personally, I prefer ‘customer architecture’, not least because it contains the most important word pertaining to this issue: ‘customer’.
Right now network operators, portals and media companies are operating in ‘land grab’ mode. No one really knows how they’re going to make money from customer data, but they know they need it and they don’t want their competitors to get it before them. Contextual advertising seems to be the current flavour of the month for long-term revenue generation, but there are no guarantees it will scale sufficiently to fund this business model or adapt well in the mobile environment.
However, it is quite right these organisations should be trying to build architectures to capture and make customer data as widely accessible as possible, even if the business models remain immature. Those which succeed will be best placed to understand customer behaviour, determine pricing for new services and cross-sell additional features. Look at any industry – from automotive to financial services – and the same story is repeated again and again: the companies with the best understanding of customers have the highest margins.