What Is The Value Of Your Customer Data?
If data is money, shouldn’t everyone be rich?
Every time you click on a Google search result, like a Facebook status, or order an item on Amazon, you’re lining the pockets of corporations with increasingly valuable data. In fact, postmodern consumers are so good at generating data that many don’t even know they’re doing it. All of those metrics are then added to the arsenals of big companies and turned into profit. It’s not hard to understand why that doesn’t sit well with many economists and data experts. Creating data is a skill, and skills should be paid for. Consumers are the labourers that oil the digital machine – is it time that they were paid for their efforts?
Another day, another database
Consumers may grumble about the amount of data they give away, but the crux of the issue is that many don’t actually know what it’s actually worth. However, according to Tom Athron, group development director at John Lewis Partnership (JLP), this is clearly beginning to change.
“Everyone is becoming much more savvy about the way their data is used, the kind of data they want to give away, and indeed they are starting to ask questions about how that data is stored, because the thing they’re most concerned about is data security,” he says. “The first wave of GDPR is coming into force across Europe in May, which I think is very much designed to put control over data back into the hands of customers. When it comes to asking customers to reconsent to handing over data, it will be really interesting to see how many will take the opportunity to say, you know what, I’m actually not happy that you’re holding my data.”
It comes as no surprise that a Capgemini survey of 1,000 c-suite and senior executives found that 61 per cent of respondents saw data as a driver of revenue. As businesses continue to adopt automation and Artificial Intelligence, data will be worth even more. The real question, though, is whether the rising value of data means that consumers should be paid for producing it. The answer, according to a recent paper published by Stanford University researchers, is to view consumers as ‘data labourers’. The paper also suggests the implementation of a ‘pay for data’ model. Just like a skill or asset, companies should pay to access data. Athron disagrees, stating that consumers should be able to vote with their feet.
“In many ways, I think the onus is on business to work out what customers feel is a responsible way of managing data. Ultimately the businesses will pay, but they’ll pay for it in lost trade if they don’t treat that data carefully,” he explains. “If they don’t use it for things that deliver value to customers, customers will not be prepared to give them data. That’s what GDPR does by giving control back to the consumer. I’d much rather see it that way than businesses paying for use of customer data.”
In some respects, consumers are already reimbursed for the data they create with higher quality products and services. For many, the issue is that the value of the information is not always fairly distributed. If free data was replaced with a pay for data model, consumers could come to be viewed as producers, potentially creating a more level playing field. While the Stanford paper claims this would give consumers more power, Athron is decidedly unconvinced.
“To be honest, I think businesses should view customers as human beings, not as producers, and not as systems or sources of data. That way, you understand who your customers are, what they want from you, and then you form a relationship that goes beyond utility and has an emotional engagement. Thinking about your customer base as producers of data feels very mechanistic to me. My own view is that successful businesses are those that can harness the power of the digital footprint alongside real human relationships.”
While GDPR aims to put control back into the hands of consumers, friction could easily arise. Do governing bodies have a role to play in mitigating data discussions between companies and consumers?
“Absolutely. I think the UK government effectively already does this through the Information Commissioner’s Office, which is the root through which the UK’s response to GDPR is devised and enforced. But it’s difficult, and the reason it’s difficult is because it’s a principles based set of legislation,” explains Athron. “There’s quite a lot left open to interpretation in terms of what compliance means. In order for GDPR to be effective, there has to be a lot of dialogue between governments, businesses, and the relevant agencies – in this instance the ICO – to make sure that it does what it should. But it’s not straight forward. There’s an element of judgement that comes into this which means that businesses have to think slightly harder about the reasons why they hold data.”
DIY data protection
Businesses undoubtedly need to give more consideration to data policy, but so do their customers. How can consumers protect themselves against the dangers of data? An interesting idea discussed in Stanford University’s paper is the creation of a Data Labour Union. However, the only way to make this happen would be to have a united movement. If one thing is certain, it’s that attitudes towards data are incredibly diverse. Some people don’t mind how companies use and store their data, while others find it distinctly unsettling. A third apathetic camp sits firmly on the fence. Despite growing consumer awareness, there is still a lack of understanding about the consequences of digital footprints.
“More information should be provided to consumers on a more regular basis to help educate them in the risks and opportunities that sharing data provides,” says Athron. “It starts with talking to school children about their social media profiles and what that might mean when it comes to getting a job. It’s those interactions that happen early on in people’s data lifespans that will encourage people to behave differently. It’s not just customers sharing data with businesses, it’s your entire online profile which can be pieced together from so many different sources. You can piece together an incredibly rich profile of a person.”
It doesn’t look like a Data Labour Union will be knocking at the gates of Silicon Valley any time soon. Nonetheless, that doesn’t mean that technology companies shouldn’t consider the changing attitudes towards data production and sharing. Perhaps the short term answer is to hold off pay for data initiatives by offering something more in return. Initially, that might include special access or perks. The alternative, argues Athron, is to give consumers greater say over the kind and amount of data that is available. If businesses fail to respect customer data, then they will pay in lost revenue. Either way, it’s an eternal truth that you get what you pay for.
Could the concept of ‘digital labour’ address future concerns over unemployment? What can businesses initially offer consumers in place of a ‘wage’? Share your thoughts.