Data as a Currency: Deciphering Best Practices for Consumer Data

Data as a Currency: Deciphering Best Practices for Consumer Data

October 30, 2018 by Lynn Bates

 

 

Consumer Data If you'd told someone 30 years ago that your customer's data was valuable - and that people were willing to hand it over to you - that idea would have sounded like science fiction.

But the business world - and customers' attitudes - have changed. Many customers are willing to sign over at least some of their personal data to companies. Companies have learned they can use data to pinpoint marketing materials. Many companies have profited off customer data, but in recent years a backlash has forced many companies to reconsider their business model.

Sounding the Alarm

Many consumer advocates are concerned about privacy in the new data market. Customers may not understand what information they're giving to companies, and often don't read legal disclaimers before they agree to disclose data.

But even if users are genuinely OK with the company having the data, the data may not stay with the company. Some agreements authorize companies to sell users' data to third parties. And if a malicious hacker breaches a database, that can have severe negative consequences for users' privacy.

Many governments have heeded these concerns, and passed regulations to change how companies gather, store, and use consumer data. Perhaps the most visible of these was the European Union's GDPR, a wide-ranging series of regulations that forces companies to clearly disclose their data policies to consumers (and gain their affirmative consent).

The GDPR, California Consumer Privacy Act and laws like it are particularly strict about third-party data. Once, up-and-coming companies could buy consumers' data en masse. Now, customers have to explicitly consent to that kind of sharing - and it's likely they won't. Companies have to work with existing relationships with customers, rather than advertising to people whose data they've collected via a third party.

A New View of Consumer Data

Many companies are making significant adjustments in response to these changes. They're not just changing their policies around their customers' data: they're changing their philosophy on how they look at customers' data more generally.

One of the most significant understandings to emerge in recent months is that consumer data is a currency. No, there's no exchange rate between dollars and metadata. But data has a value that goes beyond what a third party will pay for it.

When a consumer willingly gives up some of their personal data to a company, they are displaying trust. Companies should take the same trust and care with a customer's data that they might take with, say, money entrusted to them.

Topics: Personalized Content, Consumer Data, GDPR

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