The big interview: Clive Humby (part two)

In the second of this two-part interview, data science innovator Clive Humby talks to Starcount about the future of loyalty, investing in new technology and his biggest professional inspiration.

 

What are the biggest challenges that brands face over the next five years?

There are two types of business. There are the current contract holders, like banks and mobile phone providers. They own your account for a period of time and, broadly speaking, will increasingly focus on maximising the profitability of the accounts which they will retain or lose at renewal time. Then there are the share of wallet businesses – those competing with a number of other businesses for a particular customer’s spend. These will increasingly need to understand consumer repertoires and their motivations for buying.

There’s been a recent flood of apps integrating with fintech banks which allow customers to gain loyalty points directly through their debit and credit cards. How do you see this impacting the way brands understand customer loyalty?

There’s no obvious winner in the ‘purchases mean points’ world. There must be at least half a dozen big ones and fifty more small ones in the UK alone. Those businesses actually make money from the dysfunctional structure of the internet- from finder fee referrals where they are routing the customer and taking a small commission on the sale made. That’s not a sustainable business model. I think it will disappear within the next five years, as consumers become smarter and brands start to recognise that it’s far more efficient to service and understand their customers directly, rather than through these third party aggregators.

What do you think is the ideal balance between innovation and business as usual?

I think the consumer wants three things from a brand. They want the customer experience to be as frictionless as possible, they want to trust that they’re not being ripped off compared to someone else and they want to know what the brand stands for. That final point has become increasingly important to consumers. I think in the future, people will be much more concerned about quality and the ethics around the production of the product, as opposed to the end product itself.

I think in the future, people will be much more concerned about quality and the ethics around the production of the product, as opposed to the end product itself.

Technology’s job is to distribute content that allows me to understand the product or service being offered and to make it as easy as possible for me to buy it.

How do brands know when to invest in the latest technology and when to steer clear?

I think, again, it comes back to what the brand stands for. If you stand for innovation, then you should be investing in new technology, new channels. If you stand for being ‘cheap as chips’, then you should follow behind and when someone has proven the opportunity, you jump on the bandwagon. Both of those are valid business models and there’s all sorts of grey in between. 

How do you strike the balance between using technology to make the customer experience easier and not relying too heavily upon it?

Brands haven’t fully recognised that content is a way of making a brand more relevant without having to make or create it. You can share or source great content about issues that consumers care about, you can show why you’re ethical and relevant – and cool!

Could you give an example of one of your biggest professional headaches?

Procurement. I’m an innovator and I believe [Starcount] innovates very well. Innovation carries a big upside but it also carries risk, and companies don’t like that. It’s very hard to sell innovative solutions when the process is dominated by procurement because procurement stifles innovation. I think, interestingly, very few big companies find innovation easy or easily integrated.

Do you think there’s a particular point in a company’s journey when that balance shifts?

I think it depends. When we [at Starcount] describe what we’re capable of doing, most people get excited, but they also want reassurance that it will work. I have confidence and evidence that it does but adoption means change and some disruption to the norm or the accepted way. If you’re an innovator, people tend to think it’s like magic – that because you’ve looked at the data and you’ve found a pattern, things will change.

If, for example, our analysis shows you should stock more of product A in certain category stores and more of product B in others, they suddenly realise that nothing will happen until they make it happen – we can’t do it for them. Getting that idea owned by the business and embedded in their operational systems is vital to it being successful. They have to stock the product that the data and evidence shows is ‘the best’.  You can only ‘prove it’ once they’ve taken that action. Then the line between knowing it and doing it is blurred – but so too is ownership of that change – which is the best form of transformation.

On the opposite side, what’s your biggest source of inspiration professionally?

I love it when I see that the work we’ve done has made a real difference to someone’s bottom line. I remain ever-optimistic that if people use data well they can make their businesses better, but there’s a difference between using data well and finding data patterns, and it comes back to the implementation issue. A brave business has to find the pattern that can be exploited and action it. That’s my biggest inspiration – finding something that makes a fundamental difference, and someone bold and brave enough to effect that change! After all, the reward really comes when customers are happier because they can find the stuff they want and they come back again and again, for more. It’s a win-win; both the business and the customer succeed.

Would you say the willingness to take risks is the hallmark of a successful business?

 I think you have to be prepared to take risks, especially in a world that’s changing as quickly as it is. My favourite phrase is ‘things happen in dog years’; there’s more change in one year now than there used to be in seven years.

Can you name something or someone that’s made the biggest difference to your business in the last year or so?

I think Starcount’s appointment by Marks & Spencer. They’re a very complex organisation operationally, but it’s an organisation that people really love. Their customers love them and you can only feel that using the data to get it right is going to change that business fundamentally. I’m excited about this moment in time – adapting to the many new ways consumers behave, want they want from the brand and how they want to shop ‘My M&S’.

 It has maintained a unique place in the collective public imagination.

I think people genuinely love the brand – it’s an iconic British brand that the vast majority of people see for some of the special moments in their life, treats, birthdays and coming of age. There aren’t many businesses that could claim that.

Read the first part of our interview with Clive here.

To learn more about how Starcount’s innovative approach can transform your business strategy, get in touch.

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