Companies are ignoring the value in their customer data and missing out on the potential monetary value of it, according to Gartner.
The analyst firm says customer data needs to be managed with the same discipline as any other corporate asset.
Douglas Laney, Gartner vice president and distinguished analyst, says digital business is having a significant on customer data.
“The growing wealth of information – from social media, location and context-sensitive data collected from mobile devices and the internet of things – is increasing the volume, velocity and variety of that information, radically expanding the scope of the 360-degree customer profile,” Laney says.
Gartner says while some organisations have begun to invest in big data technologies in relation to their customers, with a view to monetisation either directly or indirectly, many lack business models required to do so.
“Organisations should use valuations of their customer data as the basis for prioritising investments in technologies that help them acquire, maintain, enrich, archive and apply information,” Laney says. “They should also calculate thorough business cases when designing monetisation products.”
He says that will create the necessary transparency for stakeholders regarding the profitability of monetisation initiatives and enable them to present proof of valuation during mergers or acquisitions, or an IPO.
He says companies can look to other industry examples of monetisation of customer data, and cites the example of banks and credit card companies providing payment information value added services to retailers and merchant partners.
“Banks use payment information value-added services to understand customers better and help them build stronger relationships with retailer and merchant communities,” Gartner says.
Large retailers put their point of sale and other store promotion data online for business partners to subscribe to, some offering it free to suppliers, others monetising it by charging an access fee.
However, Gartner also cautions that there are obstacles to the monetisation of customer data, notably data privacy legislation and the public’s concerns.
“Organisations must evaluate the associated risks in relation to data ownership and data privacy when developing a business model to monetise customer data,” Gartner says. “Products should then be designed on the basis of the organisation’s level of risk tolerance.”