Today’s headlines declare that data is the new oil, the essential fuel that powers the digital economy. In the more advanced consumer goods and services economies, the personal data of billions of people is the most precious of all digital fuels. An entire industry is emerging around the concept that data is the most precious asset in any enterprise, in any industry. Economists are working to determine how to value personal data. Its immense value is reflected in the soaring stock values and astronomical cash flows and profits of companies that monopolize and leverage data. Personal data is a uniquely magical economic asset. It will be the greatest corporate resource, except for human beings, in the 21st century and beyond. Today, there is a dire lack of expertise within businesses as to how to efficiently and effectively source, manage, value, and leverage data to generate true long-term enterprise value.
The Luxury Institute has committed to developing deep expertise in data and AI to best serve its clients. CEO Milton Pedraza was the senior business leader for the first global CRM project for global giant Citibank and Cendant, a consumer brands global giant. Today, Pedraza is an avid entrepreneur and private investor in the emerging personal data economy. Driven by Pedraza’s CRM track record and his passion to master new data/AI innovations, the Luxury Institute has become the recognized innovator in new, emerging customer personalization techniques. The 10 rules are designed to help ethical business leaders and their teams to develop a 21st-century mindset and understand the true nature of personal data. This is critical in an emerging world where consumers are gaining greater and greater control of their data through regulation and market forces. Consumer brands urgently need to master how to gain direct, legal, and ethical access to customer data and optimize its use, combined with emotional intelligence, in order to create deep, lasting customer relationships. Below are the 10 new rules for the 21st-century data-driven enterprise:
Rule 1: Consumers are highly selective about sharing personal data
The most magical attribute of personal data is that one customer’s data, such as their gender, income, address, purchasing and browsing history, location, etc., can be used by hundreds, even thousands, of brands in dozens of categories, all at the same time, for different purposes. This is called the non-rival nature of data. Think of the hundreds, even thousands, of goods and services brands in health and wellness, financial and wealth, lifestyle and travel, and all other human endeavors, that simultaneously seek to fulfill the needs and desires of any one human being. The non-rival nature of data, however, does not mean that data will be made available by consumers to all brands that require it. Consumers will soon be represented by fiduciaries who will help them determine with which trusted brands, and under what terms, they should share their data. The most trusted, transparent, legal, ethical, creative, and innovative brands will get the loyalty of customers, including their precious data. Many will fail to earn trust and be left out.
Rule 2: Data accessed directly from the individual is the most accurate and trustworthy
This is obvious. However, judging from the behavior of brands, one would never know it. When personal data, such as behavioral data, is accessed directly from the original source, brands have a guarantee that it is timely and accurate. This is why developing a direct, trusted relationship with customers for legal data/insight sharing is so critical going forward. Third-party vendors can never guarantee the accuracy of the data. Coerced digital platform data is inaccurate and expired. For example, an individual may change addresses, get married or change jobs. Third-party brokers have no idea until months later. Search engines, at best, draw inferences and make assumptions from individual inputs. They are often wrong. That is why ad-tech is such a failure for brands. This makes data directly sourced from, and authenticated by, customers the critical resource for every enterprise.
Rule 3: Real-time personal data is most often the most valuable
People evolve daily, hourly, minute by minute. Over time, personal data quickly expires and becomes less relevant, or useless. Brands need to be able to access the most recent, relevant data/insights, often in real time. In many cases, the brand’s ability to access the most up-to-date data and process it with AI in real time will be the difference between commercial success and failure. Whether it is preventing an accident, diagnosing an ailment or making a special offer to a valued customer when they enter a store, brands must develop the agility and technological capability to access and prioritize real-time data, deploying real-time AI, and executing real-time solutions, recommendations and offers to their customers.
Rule 4: Access to multiple personal data streams from one customer creates even more value for the brand
When different data streams from one person are combined, the value of the data to each brand increases dramatically. Think about how combining one customer’s genetic data, medical history, nutritional and exercise data can help hundreds of health care and wellness companies create new products and services they can monetize. The same is true when combining one customer’s historic apparel and accessories purchases, related browsing data, and location data. In order to deliver advanced personalization, brands need access to an optimized combination of a customer’s multiple relevant data streams, generating even more value for customers and, consequently, the enterprise.
Rule 5: In the age of AI, more personal data generates more accurate predictions
In the early days of computing, enterprises did not know what to do with access to more customer data. They did not have the computational power to take advantage of more data. In the age of machine-learning algorithms, massive computing power (even inside personal devices), and real-time processing, access to larger quantities of data from each individual creates even better prediction power for brands that improves their marketing and selling results across all customers, products, and channels. The more access to more data a brand has, the greater its predictive power, and its ability to convert and retain customers.
Rule 6: Personal data access generates breakthrough innovations for brands
When brands access rich customer data, they can immediately convert the insights into short-term revenue. As importantly, with continuous access to customer data and insights, brands can innovate for valuable new breakthrough products and services for new markets. This can generate billions for brands long term. The fact that personal data helps generate not just immediate returns for brands but also identifies new future revenue streams makes customer data valuable for the present and, often, even more critical for the future health of the brand. Brands that seek long-term competitive advantage through innovation must build the iron-clad trust that fuels the continuous data access that enables and empowers breakthroughs in new products and services.
Rule 7: Diverse data access generates legal, ethical, effective solutions
As artificial intelligence drives brand predictions, recommendations, and decisions that affect the daily lives of individuals, there is a strong recognition that algorithms can be biased, racist, and worse. Some algorithms illegally and unethically exclude and damage the interests of certain groups of people, such as women, children, the elderly, the sick, and minority groups. The law requires that the data and assumptions that feed algorithms be fair, equitable, and inclusive. This means that no one who is eligible can be excluded, by law, when companies make offers to consumers such as housing, loans, credit cards, education, etc. Any brand that accesses data must guarantee that the data is representative of the society and delivers fair treatment and opportunity for all individuals. Brands must master the data access and AI skills that not only follow the law but also live by a higher set of morals than required. They must serve the disadvantaged in society and help to right wrongs. These are the new moral standards of personal data in the 21st century and brands that fail to do so will unravel in a data-less black hole as ethical consumers abandon them and take their data with them.
Rule 8: Direct access to consumer attention is the future of advertising
Brands are wasting massive sums of money targeting digital ads to the wrong people at the wrong time inside digital platforms. Most digital ads are annoying and avoided. Often, it is bots that see the ads. Ads are often placed at websites with which no ethical brand would ever want to associate. The technology exists for brands today to directly contact and compensate prospects and customers to voluntarily view ads and offers and provide feedback to brands, even if they don’t buy. At a minimum, brands will have confidence that their communication was viewed and judged by the right person and can learn immediately through the insights that are generated. The attention economy is transforming into the right attention economy. Innovative brands will lead this trend, instead of follow.
Rule 9: Consumer intention is the ultimate data resource
A customer’s clearly stated intent to shop and/or intent to buy are data points and insights that brands in many goods and services categories want to access in real time. This prevents them from wasting resources, and from wasting the time of people who are not real, timely buyers. This is probably one of the most straightforward and lucrative ways that brands will generate data-driven revenue in the 21st century. Brands need to earn and verify trust and guarantee privacy and security first, but consumers will soon directly help transform the inefficient and ineffective attention economy into the mutually profitable intention economy.
Rule 10: Personal data security, privacy, and advanced personalization are completely compatible
Technology is evolving so rapidly that, today, the capability exists to help a customer create a personal data cloudlet, structure their data for easy access and use by both the brand and the customer, allow the data to reside safely and privately in the customer’s device, and send the brand’s predictive algorithm into the device, with consent, to train, learn, predict, and recommend, all in real time. This is the future of personalization. With major brand server hackings and ransomware rising astronomically, there is no longer a need for any brand to incur the high costs and high reputational risks of coercing, extracting, dangerously storing, and mining data in the cloud. Gartner predicts that, as early as 2022, 75% of enterprise data will be created and processed outside the traditional cloud vs. 10% today. Frost & Sullivan predicts that 90% of industrial enterprises will be using edge computing by 2022. The consumer device, not the cloud, will be the center of advanced personalization. Leading brands need to join this movement now or be left behind.
“Personal data is truly magical,” said Milton Pedraza, Luxury Institute CEO. “There will never be any other asset that has the favorable revenue and profit-generating advantages of personal data. Today, ethical brands have no choice but to embark on this trust-based, humanistic, 21st-century data-driven journey hand in hand with customers. By mastering and executing these 10 new rules of personal data, brands can perfectly align their best interests with the best interests of customers.”
For brands that need conflict-free, leading-edge expert guidance on how to put these rules into effective practice, please contact the objective and independent Luxury Institute.
About Luxury Institute and the Global Luxury Expert Network (GLEN)
Luxury Institute is the world's most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry.
Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy, and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system Luxcelerate that dramatically improves brand culture and financial performance.
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Original Source: Luxury Institute: The 10 New Rules for the 21st-Century Data-Driven Enterprise