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Are Your Customers Hostages, Victims, or Participants?

In this guest post, identity services provider UnBoundID makes the challenging analogy that many telcos treat their customers and their personal identity data like ‘hostages’, and need to move to treating them as ‘participants’. UnBoundID will be speaking at the New Digital Economics EMEA Brainstorm in London on 12-13 June.

Everyone recognizes customers as the lifeblood of their business - every interaction with a customer can lead to sales, which can fund new products and services - this is the premise on which companies are founded. But the relationship between company and customer can be complex. Are your customers treated as participants, victims, or hostages?

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A customer who is a hostage is one who must submit personal data in order to gain basic services. Above and beyond the initial data like phone number and billing address, these customers are compelled to provide additional information in order to secure the relationship with the company. They are generally given one chance to opt-out (at best) and never truly asked if they want to opt-in again. These customers are unlikely to feel much loyalty to the business, and they have no control over how the business uses their data - it can be bought or sold without their approval or knowledge. This model is typically used by the telecommunications and financial services industries. They both have services we need to do well in modern society and thus can ask us for lots of personal data to provide those services.

A victim customer is one who gives up their personal data in order to get “free” applications. These users want to participate in social networking, or they make use of search engines, never really aware of the amount of data and information they’re giving away to the hosts of these sites. The hosts go on to use this data, providing it to advertisers for more targeted ads, or using it as demographic data for sponsors. These customers may not necessarily feel exploited, but their information is being bought and sold whether they are aware of it or not, with little benefit to them. This is the model used by both Facebook and Google, and judging from their market capitalizations it is obviously lucrative. In this model the user is the product; the customer of the host is the advertiser. As users we can leave these services but does our identity data truly leave with us?

In contrast to this, a participant customer is one who is aware of the value of their identity data, and who has the power to provide their data to the vendors and businesses they prefer. These customers recognize that their data is the currency of an Identity Economy, and they can trade that currency for products and services that truly meet their needs. A participant who trusts a business will share identity details willingly, because the business has proven that the resulting exchange will benefit the user. This model values trust, transparency, openness, and the ability for the consumer to choose and participate.

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As customers become more aware of how business uses their data, many will demand more control over how their information is used, and greater transparency into what data companies gather about them. Some customers may never rise up against the businesses that are treating them like hostages or victims, but they are unlikely to enter into a deeper, more trusting relationship with that business. Companies that take an extra step and begin to treat customers like participants will engender greater trust, and ultimately greater loyalty from those customers. This customer-centric model will be the engine of the Identity Economy that allows all parties to receive value in a virtuous circle.

This post was written by Steve Shoaff, CEO and Founder, UnboundID, who describes it as “a leading platform provider for identity services, enabling companies to dynamically manage, protect, and share customer data in real-time across cloud, mobile and social applications. UnboundID solutions help companies increase average revenue per customer while significantly lowering their costs for service and application delivery. It is a privately held company based in Austin, Texas, and is funded by Silverton Partners and OpenView Venture Partners.”

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