Data Monetization: Data Assets into Profit

ART04x - editYou may have heard the term “data monetization” but you might not fully understand what it means. Obviously you know it has something to do with making a profit, but from what exactly are you making a profit? Let’s clear up any confusion right now with a simple definition before we start on the road to data monetization.

Data monetization is a way to generate revenue from available data sources or real-time streamed data by discovering, capturing, storing, analyzing, distributing, and using the data. More plainly put, it’s a process by which data consumers, data producers, and data aggregators, sell or trade data. This type of monetization is important for any organization, regardless of its size.

Data monetization can be about selling data, but typically it tends to be more about making a process run with greater efficiency, incentivizing specific kinds of behavior or revealing the actual value of an asset.

Monetizing Your Data: Taking the First Steps

Not every company takes the same data monetization approach. However, without knowing where to start, the process can seem daunting and confusing. To help you figure out the approach you’d like to take, here are some steps towards monetizing your data that you may want to consider.

Step 1Ask questions and explore analysis methods. Prior to generating revenue for collected data, you need to know what you’re looking for. To help you understand whether the data you have will positively impact performance, figure out if the data you have is sufficient, or if more is needed. In many cases, the inspiration for data monetization comes from questions: data you’ve already discovered, and analytical strategies. Essentially, you need to explore different ways to analyze the data and extract indicators to discover if you possess the analytical capacity to answer the questions most likely to impact performance.

Step 2 – Better your marketing ROI.  For years, marketers have utilized data as a tool to target their customers with better accuracy and to improve their campaigns’ return on investment (ROI). What companies have learned about today’s environment is that understanding the behavior of customers across all channels requires the reliance on more data from within the business and third parties. Combining the right information can expose plenty about a customer including their interests, their buying patterns, and how much they spend.

In terms of making the most of marketing, you might find that a company that assists with monetization may be very useful in helping you to better understand and improve your money-making strategy.

Step 3 – Improve your understanding of customer satisfaction. Pay attention to your customer satisfaction levels. Use social media sentiment analysis and customer satisfaction surveys to attain a good understanding of what your customer thinks and to find out how satisfied they are.  For instance, many airlines have discovered how satisfied a customer is likely to be based on their flight seat simply by combining data from various sources.

Step 4 – Remain relevant. Always evaluate your company and be ready to change and restructure when something doesn’t work. You need to re-imagine the value that your company provides to your customers and your company’s value as part of a value chain as the value of your data assets continue to grow. Redefine your company’s definition of value when needed to make the most of data monetization.

The Importance of Company-Customer Trust Building

There is more than one way to monetize customer data. Basically, you can make a profit via two methods: directly or indirectly. If you choose the direct approach, this involves selling or trading customer data. The indirect approach, on the other hand, involves producing new information services or products that will leverage the data without selling it.  Balancing between customer privacy and profits can be a slippery slope if you’re not careful.

Not all customers like it when a company sells their data to third parties on the side. Some see this as a breach of trust and this could hurt your data monetization efforts more than help them. For this reason, it is important to establish trust with customers by making your policies clear in regard to information gathering and by giving customers an opt-in and opt-out option.

If your intention is to sell customer data to third parties, make sure your customers are aware of this and tell them exactly how their information will be shared. Provide them with the choice to opt-in and let them know that they can opt-out at any time. Be clear about your intentions. Don’t create convoluted and long-winded policies customers will have a hard time understanding. Be upfront and show respect and customers are likely to feel that they have direct and greater control over their privacy and over how their information is shared.

Furthermore, make sure that you tell customers how opting-in to have their data shared with third parties will benefit them. People love perks, rewards, savings and freebies. Make something worth their while with no hidden strings attached and they’re far more likely to be assets that help grow your data monetization efforts.

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