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Data as a Product: How Selling User Data Can Boost Your Business's Bottom Line
I'll take the raglan T-shirt in large and the July '23 SKU-level receipt data, please!
At risk of sounding like one of the cutting-edge self-help books or trendy reads on entrepreneurship, much of life is buying and selling. People are consistently presenting “offers” to others, which are accepted, declined, considered, tabled, or left “on read.” In the realm of commerce, identifying viable products that people want to buy comes with lots of trial, error, and experimentation. Fortunately for you fellow readers, this blog is not about figuring out which product to sell, to whom, and for how much. If you’ve got a successful store, you’ve probably already figured out a good deal of that on your own. Instead, this is about adding more revenue to your bottom line in a novel, intuitive way that aligns with current trends and consumer sentiment. And it all centers around user data.
Before I dive into this, I need to make a confession. I’ve lied. Or at least, I’ve misdirected you a teeny bit. This blog is sort of about figuring out which product to sell, to whom, and for how much. But that’s only because you have figured all of this out on your own, and someone else is very interested in figuring out bits and pieces of how you did it. All that receipt and demographic data that proved you sold a certain something to a certain someone is an incredibly valuable asset. Have you considered stocking user data in your inventory? Maybe not. It’s a bit of a new idea, at least from the perspective of an online store. As fate would have it, we’ve been working around the clock building something to make user data an item you can sell, just like all of those wonderful products you’ve been selling.
See, the thing is, there’s a lot of hoopla stirring about when it comes to data. And that’s because, for a long time, a bunch of businesses were screwing around with everyone’s data. It didn’t matter if the behavior was questionable or outright illegal; the benefits usually greatly outweighed the negatives, and because, well like, everyone else was doin’ it, ya know? It took years of breaches and scandals before critical mass was met, and enough people realized there was a major problem. In 2023, people are pretty pissed off about the state of their data. Privacy is becoming not just a desired feature, but an absolute necessity.
Consumers have become increasingly savvy about the significance of their personal data and are demanding greater transparency and control over its utilization. The days when businesses could casually manipulate data for their advantage are long gone. Sorry data Grinches. WE WILL FORCE YOUR HEART TO GROW THREE SIZES! (This is not a threat). There's a palpable shift in the air, and privacy is no longer just a feature—to many, it's a fundamental right. Consequently, the concept of data ownership has taken center stage, with consumers now viewing their data as a valuable commodity they produce that contributes to the digital ecosystem. The landscape is evolving, and consumers now expect something in return when their data is traded or utilized. Rightfully so.
For data-driven businesses, the situation may appear messy at first glance. Okay, fine, it is messy. However, beneath the surface, there lies a glimmer of hope. Okay, fine it’s not a glimmer. It’s more like the glare of 10,000 suns, if you’re paying attention. Plato’s Cave closed at midnight, y’all. ANYWAY, Consumers are not averse to sharing their data; instead, they seek transparency and fair compensation in return. Privacy preferences vary across individuals, creating a spectrum of data-sharing willingness. Yet, amidst this complexity, businesses have a remarkable opportunity to build trust and provide clarity to users. By being upfront about data usage and offering fair incentives, businesses can foster stronger relationships with their customers. This not only enables them to gather more valuable data for their own purposes but also creates a new asset—the data itself—that can be ethically leveraged and sold with user consent.
Offering consumers discounts and coupons in exchange for their data emerges as a no-brainer move for businesses. This approach not only acknowledges the ownership of data from the user's perspective but also facilitates the transfer of licensing rights when businesses collect and re-sell the data. By providing tangible benefits like exclusive deals and discounts, businesses create a program that benefits both sides: users receive added value for their data contribution, and companies gain access to valuable insights for improving their offerings.
In economic inflation, where consumers are actively seeking ways to save money, the lure of discounts can be irresistible. Users are more likely to embrace such data exchanges, establishing a sense of trust with the business and promoting long-term loyalty. Moreover, this strategy becomes a powerful deterrent against customers jumping ship to competitors, as they recognize the value they receive in return for their data. As a result, the practice of incentivizing data sharing can not only bolster businesses' bottom line but also strengthen their customer relationships in the competitive marketplace.
Win over your customers by showing you genuinely care about them (including letting them know what their data will be used for, whether or not it is deidentified) and give them something of value that they want in return. The return could already be the exact types of coupons and discounts you’re already giving out. Build up a data lake that allows you to analyze customer behavior, cater to their interests with personalization and recommendations, segment users, sell more products, predict churn, and much more.
All of that stuff are things we’ve known are possible with data for a long time, which is why data is a hot commodity. What is novel is the act of selling user data with direct user consent. So, along with that ever-expanding data lake, customer data becomes an actual product in your inventory. From training AI models, to research and development, to running customer analysis of their own, there’s no shortage of interest when it comes to purchasing consumer data. Demographic data is the ol’ tried and true data of desire, but receipt data is where the real money is at, especially when it gets down to the SKU level.
Here's the part of the blog where I pivot to the self-promotey stuff. TIKI has been at work for the last three years building the technology to make data-centered transactions between businesses and their customers possible, as well as piquing the interest of businesses who want to buy that data. A noble pursuit, if I do say so myself. Our Shopify plug-in is set to launch in August, which will allow any business on the platform to enticing coupon and discount data offers in minutes.