Should customers just be paid for their data?
Wise Marketer Staff
In light of rising security failures, more calls are being heard for businesses to tangibly pay customers for their data.
“California’s consumers should also be able to share in the wealth that is created from their data,” California governor Gavin Newson declared in February in proposing such a “data dividend” concept. “[Tech companies] make billions of dollars collecting, curating and monetizing our personal data [and so should] have a duty to protect it.”
But is the direct transfer of wealth from corporations to customers the panacea? Let’s play devil’s advocate and explore some of the claims supporting the “data dividend” concept:
- It will increase security: If forced to pay money, companies would be inclined to strengthen protections to preserve their financial positions from damage. Yet companies already pay fines and continue to suffer breaches despite other reasons to deter them, including losing consumers’ trust.
- It will encourage customer opt-ins: A subset of customers would likely relinquish their personal data for payment. But surveys already show customers are already enthusiastic about sending their data off onto the information highway, with one big caveat: companies have to be transparent with how they’re using it. Does simply paying off customers to use their data make more sense than building a relationship that continues to add value over time?
- It provides customers with the value they deserve: In exchange for relinquishing personal information, financial restitution offers quantifiable value. Yet while data is immensely valuable on a macroscopic level, the individual is cheap. Payments are expected to be minimal. The greater value to consumers may be in reaching the next horizon of personalization should a pay-for-data system elevate the depth of data to better deliver an individual consumers’ exact wants and needs. Brands would have a greater capacity to spark lifelong bonds with individuals.
Technology has the power to accomplish this. Data has the power to accomplish this. And it’s worth a lot more than just a few dollars now and then.
The conversation has merit, but all parties are wise to move at a deliberate pace to ensure the solutions found are sustainable over the long term.
- Who Should Own Customer Data? Examining the “Data Dividend” – Wise Marketer
- California wants Silicon Valley to pay you a data dividend – CNET
- The biggest data breach fines, penalties and settlements so far – CSO
- To Regain Consumers’ Trust, Marketers Need Transparent Data Practices – Harvard Business Review
- California Wants To Copy Alaska And Pay People A ‘Data Dividend.’ Is It Realistic? – Forbes
Discussion Questions
DISCUSSION QUESTIONS: Is paying consumers for their data a realistic goal? Would a pay-for-data process elevate access to consumer data to drive personalization and help alleviate related privacy concerns?
Poll
BrainTrust
Paula Rosenblum
Co-founder, RSR Research
Susan O'Neal
General Manager, Promo Intel & Insights, Numerator
While it’s undeniable that consumer data is valuable, it’s very difficult to assign an actual value to it. Furthermore, I think it would be very difficult to put Pandora back in the box since so many people today give their data away for free. Despite these challenges, the idea of valuing data and providing financial compensation for consumers to give it out is interesting and I won’t be surprised to see “pay for personal data” options being introduced in the future.
The short answer is, no. There’s both implied and explicit swaps in value for their information. Since there’s no charge for most social media the way they monetize is through your data. As of this year, data is more valuable a “commodity” than oil! Now if it’s just general data for people you shop with, then you should opt in or opt out, but if you opt in, don’t expect anything for it.
Opt in or opt out, the consumer gets nothing in return.
As a consumer, I would not agree with this statement. I opt-in where I am interested in the brand, want to learn something, or think I’ll get a price advantage. If I get what I want and am ready to move on, I might opt-out. If I don’t see the value from my investment in time and contribution of personal data, I’ll opt-out.
The trouble with the current system is that, as a consumer, I don’t know whether to trust what happens with my data even after I’ve opted-out. Is it really erased? Is it still held in aggregate for corporate use? I would like to know.
I don’t think the answer is to monetize, I think the answer is for brands to make good on their promise of delivering value in exchange for the data they collect.
My data is something that belongs to me. If someone wants to see it, they should indeed compensate me for it. How much? I guess the market will have to decide.
The other value of getting paid for your data is you can and should be able to just say no.
Google’s exploits with insurer Ascension has re-opened the privacy Pandora’s Box – infuriating ANYONE who hears what they’ve been doing. If you haven’t seen it, search for “Project Nightingale.”
At RSR we believe that the quest for privacy is a sleeping tiger that is about to wake up again. At least paying for it acknowledges who it belongs to.
It will never belong to us until we have access and control over it. It’s coming, there are several retail tech startups whiteboarding and iterating. There are large companies whiteboarding and iterating. the winner will win the trust of the consumer and bring them joy; not a couple bucks. Consumers will never get rich from their data; but their lives could be enriched by it.
The government says people should be paid for their data. Great. I look forward to my check for filling out the census next year!
Talk about spreading the wealth, this would work better than over-taxing the rich (mostly because the rich will figure that kind of thing out anyway). There are several advocates for this cause out there now, BUT is it realistic? Let’s see, Dear Mr. Zuckerberg, could you please give half your profits to your subscribers? Nice dream, but it ain’t gonna happen.
As the privacy concerns grow, I think “Pay for Privacy” as a business model will evolve and mature.
We are already seeing some form of payment for otherwise freely available/less expensive tiers. Hulu no ads and Amazon Fire no ads versions come to mind. Secondly, I expect a more restrictive security option will be the default, and paying customer for sharing more and allowing customers to get compensated to allow advertising.
There could be FB with no ads but the customer pays, FB with customers getting paid for seeing more ads, and a free tier, as it is available now.
Another business model that could evolve is someone like Google creating a platform where customers get paid for agreeing to see ads for certain product categories and brands. Or conversely, customers pay to see no ads and not have Google store any data.
If consumers knew how much data is being collected on them, they’d be appalled. For years they’ve been told that data collection helps retailers to serve them better, but in the absence of real personalization, it feels pointless and offensive. Google’s decision to pry into medical records seems like the final straw.
I agree Cathy – appalled and stunned. Another notorious example is the now defunct Cambridge Analytica which claimed to have amassed up to 5,000 data points on 220 million Americans. How many people would be willing to share this much data about themselves? I’d bet close to 0 percent.
Consumer data offers the greatest value in aggregate, not at the individual level. The value of a single person’s data is minimal, much like the payout from a class action lawsuit; the overall award might be massive, but your share won’t buy you lunch. In addition, there is the impact of unintended outcomes if we start buying data directly from consumers. The likelihood of fraud, data manipulation and even a “black market” grows exponentially. Consumers need to be rewarded for their data, but this should be in the form of greater protections, greater transparency, and greater benefit to them.
Some time ago in a focus group that Georgeanne and I conducted, we asked nearly the same question. The answer that surprised us most was one young lady who said “I want to date all of those sources,
I don’t want to marry them“. This could get creepy.
One benefit not mentioned is higher quality data. The most trustworthy person in the marketing value chain is the consumer. Why? There is absolutely no misalignment of interest between a consumer and a brand (advertiser) that was created to solve a need or serve that very same consumer. All of the frustration and exploitation that happens in our industry today is because the interests of those who sit between the consumer are not aligned toward the best interest of either the consumer or the brand. Make it simple, easy and worthwhile for the consumer to engage in the marketplaces for their attention AND their data, and you get a higher quality version of both for brands.
I get a little confounded with this topic and here’s why. Why do we want data from consumers? We want it in order to figure out exactly what, where and how they want stuff so we can provide it. Heavens, If we didn’t know anything about our customers what on earth would we be offering to them? The consumer wouldn’t get what they are looking for and the seller would go broke. Now, is there a limit as to how much data is too much? Therein lies the real question. I do believe that basic info is already being paid for in getting the consumer their goods. Do we see a pay for play beyond that? Perhaps in some way shape or form. But let’s get real folks. For my 2 cents.
OK, sign me up! Or is it don’t sign me up?
This all sounds very nice, but how exactly would it work? The problem, of course, is EVERYONE collects data or has the ability to do so, so how would all these payments be made and who would enforce them?(And would we ironically have to give up even more personal data to receive our due?)
So far the only detail I’ve seen is a comment from an unnamed “guest contributor” that “Technology has the power to accomplish this.” (And Gov. Newsom, I suspect, will have his hands full [just] trying to keep the lights on).
The concept of paying consumers directly for data first gained popularity in the late ’90s with the dawn of the internet and the concept of the “infomediary.” While paying customers directly has some clear benefits, it is fraught with risks and challenges both ethically and legally. In fact, there is an equal likelihood that paying for data negatively impacts personalization and relevance if consumers would “accept” irrelevance in exchange for money.
The reality is today is that customers increasingly vote with their time and with their engagement – and will favor the brands who deliver relevant value. Increasingly, as they share data, their expectations for relevance and for value increase and move from advantage to table-stakes and those that best deliver relevance will win “share of customer” over time. Personalization and relevance are, in fact, the “value” that customers want most and the path for how leading organizations can best position themselves to win over time.
What happens when we are paid for our data and people start selling each other’s data as their own to receive more of this “data dividend?” Would just be a legal method versus the illegal credit card data fraud that already happens.Wherever there is big money there is always somebody coming up with some new scheme right behind it. Just something to think about.
Owning our data should be a 2020 right, not an option. Companies need to look beyond the value of data as it relates to advertising channels and focus on providing consumers a real value in return for permission to use their data.
“Does simply paying off customers to use their data make more sense than building a relationship that continues to add value over time?” Really well said “Wise Marketer Staff.” The way companies are treating customers and abusing personal data is atrocious and paying them off is not the answer. Data needs to be leveraged to improve service, shopping experience, and product development. This is how we can improve retail performance, simply by doing a better job at work.
Companies have an immense amount of data that has no way to get into the hands of the people that need it to do their job better. It’s nearly impossible to execute against these data pools in real-time; except for ad strategies. I can’t even call it marketing anymore. I’ve spent a couple years running scenarios for PII and preference management to align value structures to be mutually beneficial. It’s an enormous opportunity and a problem that is going to take more than an app to solve. The solution lies in hyper-personalization that emphasizes value beyond a discount or payment. Personally, I don’t want money for my data, I want value, trust, and joy.
The future of retail would not be referred to as an apocalypse if companies had deep relationships with their shoppers; not just an email address or cookie used to pester them. Not one brand will ever truly know me if they don’t know all of me. I firmly believe that consumer data should be aggregated, dropped into the hands of shoppers and connect it to all the b2b software through an API. Data on-demand. The experience economy offers an environment that can balance the tides and scale compounded experiences that drive LTV. Unfortunately or maybe fortunately not every brand will be part of the experience economy. The companies that embrace it will become self-sustainable and rely less on acquisition (CAC) because they can focus on customers (CRC).
I applaud the author.
This is a string that we could regenerate every 6 months and revisit current thinking.
There are at least two partitions to this discussion:
The first is the unscrupulous access to data that is the subject of the Cambridge Analytical episode. We all know this is horrendous and its this type of activity over the years that have captured the attention of regulators.
The other side of this is the choice that we all have to opt-in to anything as consumers. I view the current system as “buyer beware.” Here’s just one example: while I might have had some fun with my FitBit, now that it has been acquired by Google, I’m more conscious of where my data may end up and how it might be used. As a result, I might ditch that device or opt-out of data sharing, but keep using the device locally.
The trouble with the current system is that, as a consumer, I don’t know whether to trust what happens with my data even after I’ve opted-out. Is it really erased? Is it still held in aggregate for corporate use? I would like to know.
I don’t think the answer is to monetize, at least until someone comes up with a practical way to manage that process. In the meantime, the answer is for brands to make good on their promise of delivering value in exchange for the data they collect. That should be the promise that consumers hold them to, or risk losing their business.