How Companies Monetize Their Data

Every company these days absolutely has a website, most have social media, and a lot of technology companies are in the IoT (Internet of Things) realm.  With all of these different outlets there is a huge data dump on companies i.e. demographics of the traffic to their websites, browsing behaviors etc.  The creation of this data has made data the new currency.  However, not all companies have figured out how to use that currency.  Collecting data can provide huge insights for businesses, however monetizing that data can provide long term company growth and value.  As Bruce Daley, author of Where Data Is Wealth: Profiting From Data Storage in a Digital Society, said “The companies that are most progressive in thinking about data differently are the companies that are changing the economy, like Google and Uber. Most business lag way behind in terms of the idea that data could be their primary reason for being.” While a lot of companies are better at monetizing data than they once were, there is still a lot they can do.  The following are some ways to monetize their data.

The first way, and most immediate way, for a company to monetize their data is through improving their internal processes.  This can mean anything from collecting data to change operational processes with customers to using people analytics in HR to figure out a way to improve employee productivity.  MIT Sloan Management review gives a great example of how Microsoft used internal data to improve revenue.  The CEO of Microsoft encouraged employees to come up with ways to improve internal process proven with data.  Their sales team look at many different data sets and data points of performance and were able to conclude that there were too many different systems being used within their processes and they created a new one. The new one used predictive analytics and machine learning to improve their pipeline etc.

The second way a company can monetize their data is through wrapping information around their products.  This means that companies will have to figure out what their problems and challenges their customers are facing and how they can solve them using data.  Companies from FedEx tracking to credit cards to health monitors have figured out ways to use their data and include it as part of their product offering to please their customers.  Tracking your packages online is very early example of this type of usage of data to attempt to monetize.  It is monetizing their data because it is resulting in more satisfied and therefor returning customers.

The third and potentially most obvious, but arguably most difficult, way for a company to monetize data is through selling that data.  This can be the most directly lucrative way for a company to monetize its data, however not all companies are set up in a structure that they are able to sell that data.  You will see companies across almost every industry ready to sell their data (and buy other companies’ too).  Companies from cell phones to hospitality to retail and to financial services have figured a way to set up their company in such a way that they are an information business and understand the value in their data.  You can read more about specific industries monetizing their data here.

While these ways of monetizing data can show very real, positive effects on a company’s bottom line, there still needs to be some caution in regards to data privacy.  I think that companies should really be a lot more forth coming in what they intend to do with the data their customers are leaving behind on their websites.  While most sites do have a terms and conditions disclosure to read and agree to, how many of us actually read those? And if you did could you understand them?