It is quite clear that within a few years, every consumer in the European Union will have the opportunity to gain control of personal information and realise more of its value than ever before. In the UK, the midata initiative will release transactional data from financial services, telcos and utilities (with or without the force of leglislation), while the new Data Protection Regulation will impose data portability across the board.
According to a new report by Boston Consulting Group, “The Value of Personal Data”, it will be worthwhile for consumers to take advantage of this new access. The analysts calculate that across the 27 countries in the EU, the total value of digital identities to their subjects will be €670 billion by 2020. Assuming a population of roughly 250 million citizens, that means a personal data asset worth €2,680 per person.
Actually realising that value will not be quite so straightforward, however. In its calculations, BCG has combined the surplus value of Internet services, lower prices resulting from companies cutting prices due to more efficient distribution and pricing, and time-savings.
It is clearly in the interest of business to help consumers realise some of that surplus value, although it is far from certain they will actually share fully all of it. To put your company at the head of the value-releasing chain - and thereby win more loyalty and market share - here are some actions to consider:
1. Make your service a real time-saver
One of the core drivers of the new data economy is removing the need for multiple data capture, both by business and consumer. The UK Government’s “Tell Me Once” initiative aims at a single registration across all public sector services, for example. That will save a lot of time on both sides.
In the commercial world, delivering this efficiency could be a little harder. At the first stage, you need a visitor to a website to accept cookies in order to prime the system to recognise them. Then you need to find ways to shorten the log-in process which are still secure and fit-for-purpose. Many sites already do that.
But the real value-release will come if that digital identity then populates - or even defines - the service without the consumer having to do anything else. Think about how online grocery chains can fill your basket based on previous shopping trips, for example. Could your site structure its navigation for each visitor based on what you know about their previous usage or perceived needs? Its a bigger step than just personalising some of the offers, but it would transform the experience.
2. Price for the person, not the product
Segmented or even personalised pricing remains uncommon and even controversial. While there is little argument that insurance premiums should reflect specific risk factors, for example, there are still plenty of providers willing to buy-in the business by using looser filters.
So the proposition has to come with a real benefit for the individual which is not just about saving money. Car insurance that provides telematics to the driver as well as the insurer is a good example, since it allows the consumer to take more control of this area of cost through analysing their own information - drive less or better and the premium comes down.
Other services need to start looking at whether they can do similar things. Instead of the bundling of multiple services to bind a customer to a provider, as currently used by utilities with dual-fuel tariffs, for example, the use of a smart meter could be accompanied by time-band pricing, rather than annual consumption so the household runs the washing machine at night, rather than during the day.
3. It really is time for customisation
Much has been said about personalisation of products and services - some companies even offer it. Less has been done to take the next step towards mass customisation, where these same products and services are defined for segments. Production techniques still require an economy of scale to keep goods affordable.
Yet the real release of digital identity value will come when a company only has to manufacture when it knows there is a demand - and can deliver a totally customised product as a result. No more dead stock sitting in warehouses or being scrapped when it is unsold.
Historically, customisation has always meant a premium price for the buyer. Going forward, it will need to mean cheaper products, as well as better ones. This is one area where the availability of data is well ahead of the systems that can use it. But recent inventions, such as 3D printers, are starting to hint at new possibilities where you only make what you can sell.
4. Tell the consumer what value you put on a “free” service
It is easy to take things for granted when they are offered free of charge. While business is busy trying to calculate what a Facebook Like or Twitter Follower is worth to them, consumers pay little heed to the fact that they are getting to use social networks for nothing.
At some point, consumers will need to recognise that these benefits are paid for by the advertising that appears on them (just as with commercial broadcast media). If they knew that such a service would cost, say, €20 per year if they had to pay directly for it, it might alter their openness to commercial content.
While it is obvious to everybody that data has a value for the consumer, realising and releasing it is more difficult. It does require providers to share the benefits they get if the individual does the data entry, for example, or to return internal efficiencies through lower prices.
If that happens, we all benefit - to the tune of an 8 per cent kick to EU GDP, according to BCG.