Do you pay for online services with your customer’s data?
Your data is your business. We have been telling us self since the 1930´s that there is no such thing as a free lunch. Remember to act on it too.
Do you pay for online services with your customer’s data?
The recent focus on how user data has been exploited on Facebook should raise many relevant questions, such as: Could the same happen for my business data? Where are the biggest pitfalls? What can I do to avoid them?
Data is an asset
The first step is for you to realize that all your data is an asset, and sharing data with any third-party can be considered equal to a payment.
Most companies don’t realise that Google and Facebook are probably their biggest competitors when it comes to acquiring various different types of customers. You should start treating them as the competitors they genuinely are. The reason being that you compete for the same user’s attention, and the more customer data you share with companies who let others act on your data, the worse you are off.
The travel agency example
Let’s take a look at an example. Let’s say you run a travel agency. You have built a customer base of customer, that frequently travels with you. Your most successful communication tool to reach your customer base is your newsletter and your Facebook page. Subsequently, one of your customers starts showing an interest in traveling again, they react to your e-mails or Facebook content. They will then either call you or visits your website. This is the first step of a sales in order to convert them into a paying customer.
However, Google and Facebook are fully aware that the same person is getting interested in traveling again. Your customers will start getting adds from your competitors because your customer has searched for travel-related topics and because your customer has visited travel related blogs and sites. Including yours.
The new Google Adwords feature
A recent example is Google who has just released a new Adwords feature that lets your competitors specifically target users who have recently visited your website. Your hottest leads are actively sold to your competitors. Facebook has similar targeting features, however not yet on this level.
We are all fighting with Google and Facebook for the same customer’s attention. The more data you share with them both, the better they stand in the fight against you in the battle of your customer attention.
From a strategic business perspective, the only rational approach is to assume that the data you share with Google, Facebook or Amazon rarely works in your favor but works against you in the longer run.
This might not necessarily be a problem for you. A lot of businesses are profitable using Amazon as a sales channel, without knowing who their end-customers are. If you are ok with not being in control of your data, then Amazon can be a great tradeoff as you get access to a giant customer base.
How can you avoid the exploitation of your data?
You must consider how much data you think you feel like sharing with the tech giants. You must start putting a strategic value to your data and decide who you wish to share certain kinds of data with. This brings you in control of the situation.
You should probably start asking the question such as:
- What can others do to harm my business if they get access to this kind of data?
- How likely is that to happen?
- What would be the consequences of this?
For most businesses, their customer data is what has the highest strategic value, so it makes sense to focus on the ”free” applications that process customer data. This means the focus on online applications should have your primary focus. The most critical applications in that sphere are:
The issue with Google Analytics is that it collects information on how your users have interacted with your website. This information is applied to Google’s customer profiles. Google Analytics is only free because you create a channel, that provides them with information on your customer’s behavior on your website.
This customer information is collected from your website via Google Analytics is one of the ways Google gets the information that let your competitors target your hot leads from your website. There are many alternatives to Google Analytics. Manu good ones all cost money, but you should always compare it against the value of being in control of your data.
Google has services based on reading the content of your personal G-mails.
As a private person, this is a privacy issue. However, as a business, it can have real monetary consequences to your business. It is easy to switch to other e-mail applications, and most of them are free or at a low cost.
Facebook is a very appealing medium for communicating with your customer base and building a long-term relationship with them. However, Facebook users are facing the same fundamental problem as with Google Analytics. You do not own or control your customer data. Once you have shared your data with Facebook it is completely up to them how they choose to let others benefit from your customer’s data.
The problem is that as long as you have committed yourself to the platform, then there is not much you can do about it. Your best shot is probably to be so good in building the relationship with your customers on Facebook so they won’t react on any of your competitors advertising.
The best way for a hacker to hack a bank is not hacking the bank. It is by hacking a legitimate third-party system that integrates with the bank’s IT infrastructure. Such systems are more likely to have a weaker security set-up than a bank itself. You should view the apps you use the same way especially the ones, that integrates with customer data. Do you need them, and what would be the consequence if your competitors had access to this information?
The most significant difference between Android and iPhones is that Android phones are designed to support Google’s business model of collecting data on your behavior.
Google has an internal motto: Do not be evil. The reason they have it is because they have many ways of using data for the wrong purposes. However, you are in no way in control of what they choose to do with your data, and how they define evil when it comes to practical applications of your data.
No such thing as a free lunch
The bottom line is that your data should be your business only. Whenever you use a business model which is fueled by your data, you need to ask yourself a simple question:
Which problems would it cause if someone with opposite business objectives got hold of the data to which I am now exposed?
We have been telling us self since the 1930´s that there is no such thing as a free lunch. Remember to act on it too.
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