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When sold to external parties, internal data has become one of the most valuable assets for businesses across various industries. Customer data in particular holds immense potential for monetization. Back in 2015, Gartner predicted that “30 percent of businesses will have begun directly or indirectly monetizing information assets via bartering or selling them outright by 2016.” This percentage now seems conservative. Household names from eBay to Walmart are monetizing their customer data to generate net-new revenue and to improve their products, strategy and services. It’s tempting for many other companies to follow suit. But when it comes to monetizing customer data, it’s only worth doing if it’s done right.
Our guide ‘Customer Data Monetization: How To Get It Right’ equips you with information to extract the maximum value from your customer data. It provides insights into the value of customer data monetization for companies, strategies for consumers to opt into data sharing, examples of companies leveraging customer data for additional services, and a five-step approach for effectively monetizing customer data.
1. What are the Values of Monetizing Customer Data?
Monetizing customer data brings different values to the health of a business. Here are the four most significant.
1. Revenue Generation
Companies have the opportunity to generate substantial revenue streams by selling customer data to orgnaizations in need of external data. Selling customer data to third parties opens up an additional revenue channel, and also contributes to a healthy data sharing ecosystem. The companies buying the data can support their own business strategies and operations with data-driven conviction.
2. Enhanced Customer Insights
By analyzing customer data, companies are able to gain valuable insights into a variety of consumer behaviors, preferences, and trends. This understanding of customer behavior is pivotal in helping them make more informed and strategic decisions. It facilitates the development of marketing strategies that are tailored to meet the needs and preferences of their consumers.
On top of that, analyzing customer allows companies to identify emerging trends in the market. These insights can inform lucrative product development and business strategies, so the data contributes indirectly to the financial health of the company.
3. Competitive Advantage in the Market
When monetized correctly, customer data helps companies gain a competitive advantage in their respective markets. By utilizing this data, they can develop marketing messages that are more accurately tailored to meet the specific needs of their customers than any competitors. This level of personalization can result in higher conversion, ROI, and ultimately, revenue.
Therefore, the effective monetization of customer data not only provides immediate financial benefits when it’s sold to third-parties, but also helps in sustaining long-term business growth and a powerful marketing engine.
4. Improved Customer Experience
We just saw how customer data can be monetized when it’s used to create effective marketing strategies. But its value goes beyond the initial marketing touchpoint, and is in fact crucial for customer satisfaction and retention. Personalized experiences based on individual customer data, such as product recommendation based on the customer’s interests, foster overall customer loyalty.
For example, Alibaba offers targeted personal finance products to customers on its ecommerce platforms. This personal touch makes customers feel valued and enhances their connection with the brands or businesses. As a result, customers are more likely to return, make repeat purchases, and recommend the brand to others. This, in turn, facilitates a cycle of sustained business growth.
Now we’ve looked at the values of monetizing customer data, we’ll go through the five core steps in the customer data monetization process.
2. Five Steps for Monetizing Customer Data Effectively
As we said earlier, data monetization is only worthwhile if it's done right. Oversights at any stage of the data monetization journey can prove costly, even disastrous, for companies, especially when they're related to privacy and security breaches. To effectively monetize customer data in your company, follow these five steps:
1. Data Collection and Integration
Gather relevant customer data from various sources, including transaction records, online interactions, and demographic information, and integrate it into a centralized database or customer data platform (CDP).
2. Running Analysis and Extracting Insights
Use advanced analytics and machine learning algorithms to analyze customer data and extract valuable insights regarding consumer behavior, preferences, and trends.
3. Join a Data Monetization Platform
Publishing the customer data you’re selling on a data marketplace or monetization platform is the fastest way to generate demand for your datasets.
4. Privacy and Compliance
Ensure compliance with data protection regulations and privacy best practices, such as obtaining consent for data collection and sharing, implementing robust security measures, and providing transparency regarding data usage.
5. Value Creation for Customers
Focus on creating value for customers through personalized experiences, enhanced services, or incentives in exchange for their data, fostering trust and loyalty among consumers.
By following these steps and leveraging customer data responsibly, companies can unlock new revenue streams, gain competitive advantages, and deliver superior customer experiences.
This leads us to a final, crucial part of customer data monetization: how customers benefit from sharing their data.
3. How Can Customers Also Benefit from Sharing Their Data?
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Companies like Gener8 Labs have pioneered models where consumers can opt to share their data with businesses in exchange for valuable services. Here's how to set up a data monetization strategy in which consumers can participate and also benefit.
1. Create Transparent Value Proposition
Companies should clearly communicate the benefits consumers receive in exchange for sharing their data, such as access to free services, personalized recommendations, or discounts.
2. Set Data Control Options
Always provide consumers with control over which data they share and ensure transparency regarding how their data will be used and protected.
3. Get Informed Consent
Obtain explicit consent from consumers before collecting or sharing their data, ensuring compliance with data protection regulations like GDPR and CCPA.
4. Provide Fair Compensation
Offer fair compensation or incentives to consumers for sharing their data, such as loyalty points, discounts, or premium features.
Inspired to learn more about monetizing your customer data? Chat to our team to learn about how we can help with your data monetization strategy.
