Big data aids customer-centric success
It is Sanoma’s cutting-edge approach to consumer data and the analysis and application of it that brought Ulla Kruhse-Lehtonen, vice president of customer insight and analytics, and Riikka Turunen, director of data protection and privacy, to the RSM Leadership Summit in October as keynote speakers. Russell Gilbert, managing editor of RSM Outlook, talks to both about the benefits and challenges presented by big data.
Story by Russell Gilbert
With key markets in Finland, the Netherlands, Belgium and Central and Eastern Europe, media and learning giant Sanoma employs some 10,000 people and in 2013 achieved net sales of over €2.2bn. It is one of Europe’s largest media companies. Sanoma actively seeks to develop new and innovative ways of offering its many millions of customers and users tailor-made experiences through the provision of rich and, more importantly, relevant content across its digital platforms.
It is through meaningful relationships with customers and a deep appreciation of their needs – developed through the collection and analysis of data about customers’ interaction behaviours and preferences – that the company creates value propositions for countless advertisers both large and small. For Sanoma, big data is an innovation wellspring.
Going back to basics, Ulla thinks that the big data concept – the collection of what can be petabytes of data – is very hyped at present and points out that it has its origins in the 4V model (volume, velocity, veracity and variability), itself an adaptation of the 3V model developed by Gartner analyst Doug Laney in 2001, but with the later addition of “veracity”.
That said, Ulla makes clear that: ‘It doesn’t matter what label is attached to it because for us at Sanoma it’s consumer data. Millions of people come to our websites and other digital platforms and that generates a considerable volume of data. This is in addition to what is traditionally known as “small data”, which comes from our subscription databases and transactional data.’
Analysing the big data that it gathers brings considerable advantages to Sanoma, she says: ‘Combining our customer information with financial data really helps us to build a 360-degree view of how they behave in our networks. Using the data for customer relationship management (CRM) purposes allows us to personalise offerings – magazine subscriptions, for example – and make them more relevant to the customer. In fact, the data is useful through the entire consumer funnel. It helps us understand how we can acquire and engage with customers, encourage them to purchase our offerings, and how to retain them.’
As well as the many CRM benefits, Sanoma applies the behavioural and other insights it gains from big data analysis to get maximum value from its B2B relationships with advertisers: ‘Sanoma obtains its revenues in a roughly equal split from two sources: consumers and advertisers. Of course, advertisers want to maximise their spend with us by reaching the parts of the audience that’s of greatest value to them. Through customer analytics we can help them reach specific target groups by profiling customers, providing attribution modelling and, by understanding the optimum frequency of advertisements on channels, we improve conversion rates of media campaigns,’ she says.
According to Ulla, larger advertisers in particular can be very advanced in their use of this type of data and have data analysis functions in-house. ‘They know what to demand and what questions to ask about the data Sanoma gathers. Small and medium-sized companies generally don’t have that level of sophistication, so we help them get the best out of the information we provide.’
The company is currently piloting an initiative across a number of online channels that allows it to offer customers more personalised content and recommendations based on their own reading behaviour and the behaviour of readers who are like them. ‘The whole idea is that the customer will benefit through better-targeted content – including advertising. Look at Amazon – 35 per cent of their sales come from recommendations. That makes it clear that recommendations can offer great value for the business,’ she explains.
But it doesn’t stop there. ‘Another initiative in Finland, the Sanoma Account – a common user login – will help us identify users across different online properties. At the same time, users will receive special loyalty offers, get access to unique and personalised content, and have the ability to personalise home pages. Again, it’s very much about two-way benefits.’
The benefits of customer insights also extend to the company’s printed products. ‘With traditional print media, reader preferences and the impact of on-page advertising has always been very difficult to gauge and is typically measured through consumer research,’ Ulla points out.
‘In Finland, we’re now measuring impact through the digital replicas of our publications that customers read and browse on their tablets and other devices. Our hypothesis is that there is a close correlation in behaviour between readers of digital versions and traditional paper products. Some statistical weighting has to be made for variances between the population using tablets and those who prefer the printed versions. Unsurprisingly, it’s something that advertisers are very interested to learn more about.’
Ensuring that the benefits of big data are of strategic value is a key issue, says Ulla. ‘Sanoma’s approach to data-related projects is to ensure that there are always people involved from business, IT, data and privacy functions. This highlights that everything we do is interdependent. For example, without useful data our media sales teams find their job much more of a challenge. Without business value, data is meaningless. Common incentives help ensure that everyone, no matter which department they’re in, focuses on the same goals.’
A matter of privacy
Unsurprisingly, with so much personal information being gathered and analysed, there are many privacy concerns. Indeed, in the USA earlier this year, the White House Big Data and Privacy Working Group stated that key concerns surrounding the use of big data included 1) that it can reveal intimate personal details, and 2) that it could lead to discriminatory outcomes.
Acknowledging these and other concerns, Riikka Turunen, Sanoma’s director of data protection and privacy, believes that data collection is an opportunity for both parties, as long as some basic privacy principles are respected: ‘There have to be data collection limitations and purpose use limitations,’ she explains. ‘First, organisations must always be clear about for what specific purpose they’re collecting data. Second, they must be transparent about the data processing and provide users with fair choices about the data is used.’
For Riikka, it’s important to consider how privacy is evaluated and to build solutions around the architecture and related data management processes. ‘It’s always possible to find a solution through which you can respect the basic principles of privacy. It does mean you have to invest more time in privacy; it has to become a part of analytics and part of the data management process.’
Riikka is firm in her belief that privacy professionals must work together with data scientists to evaluate the different profiling mechanisms or algorithms that are to be used. ‘We have to identify threats and define solutions that give consumers transparency about how they are profiled, and whether they are profiled or not. Some people – and it’s a fundamental human right to be left alone – don’t want to be profiled.’
Additionally, she believes that one of the biggest risk concerns relates to the complexity of the technology. ‘Most consumers don’t understand big data,’ she says. ‘About a year ago, we did a customer survey in Finland about big data. Of the 2,000 or so people who responded, 60 per cent didn’t understand what big data means or what it’s about. They may have heard the term and realise the benefits, but they don’t really understand.’
Privacy is an issue that has to be tackled not only at a business and a national level, but also at an EU and international level. ‘For any sort of accord to be reached there will have to be common rules,’ she says. ‘The plain fact is that there is great value in data for business and for society.’
At the same time, throughout history some people have wanted to remain anonymous. It’s a constant. ‘What’s changed is that the mechanisms for being anonymous today are different,’ Riikka observes. ‘I believe that at some point in the future people will start to see their personal data as something that they own. It will become an element of your digital identity and be protected by rights.’
If that is to happen, for Riikka the question is: ‘How do we make all of this understandable, eliminate the complexity and give people choices to ensure they are not discriminated against and have the ability to influence how they’re treated?’
At the heart of the matter is trust. ‘Research shows that trust is always an important element when people make purchases online. If a company offers sufficient choices as to how customers are treated in respect to privacy, trust can be increased. There’s also a value exchange: people want to know what they get in return for the information they provide.’
Privacy is very much about the service design in the digital environment, she believes: ‘The use of a recommendation engine that’s based on the purchases you’ve made or viewed is, for example, a key value proposition offered by Netflix. Consumers are happy to provide their data in return for the good recommendations Netflix provides.’
As Ulla concludes: ‘Big data is about the consumer and about companies being consumer centric. The consumer-centric company understands its customers and that understanding comes from data.’
This article first appeared in the Winter 2014 issue of RSM Outlook.