Putting a Price on Big Data: How Society Values Information
As demonstrated by another of our blogs, our digital society is continually producing enormous amounts of real-time data. Through our smart home devices, smart phones, social media accounts, web behaviours, travel patterns, and card transactions to list but a few, we are constantly creating a rich and messy, complicated web of data as we charge through our busy lives.
I think we would all agree that this data has value; however, that perception of this value varies depending on which position you occupy within society, and how much knowledge you have of the uses of this data. At its most basic, the user of data will have a very different view and range of priorities, when contrasted with the creator of this data.
For a business, the value of data is largely conceptualised in financial terms – thank you Big Data! By collecting numerous data points and combining vast datasets, the messy web of data can be transformed into something a bit more intelligible. With the right knowledge and the right analytical tools, the vast amount of data takes on meaning and becomes insightful information – information that describes consumer preferences, priorities, and needs, perhaps even in greater detail than the consumer could have known about themselves.
It is fair to say, the evidence-based decision making associated with big data has revolutionised how a business thinks and operates. Its application allows business to identify crucial opportunities and cut costs across a whole range of operations. Customer acquisition and retention, NPD and automation are just a couple of the many fields that are applying big data to predict behaviour, tailor and personalise offerings to yield competitive advantage.
Research consistently shows that companies using a big data strategy outperform those that don’t – estimates vary depending on the source, but this in some cases can be by as much as up to 30%. Indeed, the European Commission forecasted in 2017 “that even limited use of big data analytics solutions by the top 100 EU manufacturers could boost EU economic growth by an additional 1.9% by 2020”.
A Shared Perception?
So for business, big data is a key commodity; but do consumers share this view of data as representing a key financial opportunity?
In short – no. While data clearly has financial value, at this moment in time, the opportunity for the everyday person to capitalise and achieve a financial return through the sharing of their data doesn’t really exist yet; or if it does, it isn’t widely known.
There is an abiding belief in some parts of the corporate world that consumers are willing to actively trade their data in exchange for the ‘benefits’ brought about from big data analysis. I would, however, question the extent to which consumers actually appreciate the contributory role their data plays in driving improvement and innovation within a business or industry. While the much cited ‘benefits’ of big data, i.e. convenience and personalisation, are certainly demanded and valued by consumers – the mechanisms behind these experiences are intangible and unrecognised.
How Consumers Perceive Data
Consumers have a much more emotional relationship with their data and its value can best be understood through the notions of ‘cost, ‘loss’ and ‘compromise’. People in general have a strong loss aversion preference; that is, the prospect of losing something weighs heavier and is emotionally more potent than any potential gain. When it comes to data, this instinct is extremely high.
The consumer experience of data is one that is inherently personal and full of context and meaning, therefore the prospect of sharing or disclosing it represents a threat. Consumers fear that their data may, in some way, negatively impact them or be used against them to their disadvantage.The most obvious example here would be the impact of a data breach, but it goes deeper than that.
There is a concern that data might give something away about them that they wouldn’t want others to know, or create an image about them that is inaccurate or undesirable to them. As an example, think about attitudes to advertising. Many people will adamantly deny being influenced by advertising in any way – yet we know advertising has a power to influence consumers into a purchase.
It is as though there is a kind of vulnerability associated with a consumer’s data, acknowledging its impact is like admitting weakness. The same can be said of the consumer relationship with data – people want to guard and protect it out of concern that it represents a version of them that they do not agree, recognise, or wish to be associated with.
Putting the Price on Data – Next Steps
So, given the significance of big data for business, what strategies can be applied to make the exchange of data more palatable to the consumer, to counter the natural instinct of loss and to focus on the gain? Transparency and integrity are obviously vital when it comes to consumer data and are critical for building consumer trust.
The next step is to demonstrate the value of data of the collected or sought from consumers. It is not enough to simply describe how data is going to be used – businesses need to work harder to create opportunities for meaningful dialogue with customers about the positive impact their data has had on the company and crucially their own experience of the company.
Under GDPR, people are increasingly more conscious of their data rights and the methods by which they can control their data – if businesses are to ensure that the benefits of big data continue to be realised, they need to look for ways to empower the consumer and recognise the value they associate with data.
Louisa is a self-described Info Sec Warrior, who has been key to FlexMR obtaining the ISO 27001 and Cyber Essentials Plus certifications. She is responsible for our information and data security processes, using her extensive knowledge of market research and attention to detail to ensure that we provide the highest level of security possible. You can follow Louisa on Twitter.