Advertisement

Understanding and Valuing Customer Data

  • Robert W. PalmatierEmail author
  • Kelly D. Martin
Chapter

Abstract

Firms such as Google and Amazon tout the value they generate from the skyrocketing amount of customer data they possess, which support product innovation efforts, tailored offerings, and targeted advertising. The revenues that can be earned by leveraging big data and customer data analytics also are projected to grow more than 50% over the five years from 2015 to 2019, reaching $187 billion worldwide. These sources of revenue reflect a new approach, such that “The capture of such data lies at the heart of the business models of the most successful technology firms (and increasingly, in traditional industries like retail, health care, entertainment and media, finance, and insurance) and government assumptions about citizens’ relationship to the state,” according to Leah Lievrouw, Professor of Information Studies at the University of California-Los Angeles.

References

  1. 1.
    Columbus, L. (2016, August 21). Roundup of Analytics, Big Data & BI Forecasts and Market Estimates, 2016. Forbes Magazine. www.forbes.com/sites/louiscolumbus/2016/08/20/roundup-of-analytics-big-data-bi-forecasts-and-market-estimates-2016/#27dfd8356f21.
  2. 2.
    Rainie, L., & Anderson, J. (2014, December 18). The Future of Privacy. Pew Research Center: Internet, Science & Tech, Pew Research Center. www.pewinternet.org/2014/12/18/future-of-privacy/.
  3. 3.
    Hsu, T. (2018, March 21). Users Abandon Facebook After Cambridge Analytica Findings. The New York Times. www.nytimes.com/2018/03/21/technology/users-abandon-facebook.html.
  4. 4.
    Meyersohn, N. (2018, March 22). Facebook’s Stock Drops After Zuckerberg Apologizes. CNNMoney, Cable News Network. money.cnn.com/2018/03/22/news/companies/facebook-stock/index.html.
  5. 5.
    Gartner. (2017). Gartner Forecasts Worldwide Security Spending Will Reach $96 Billion in 2018, Up 8 Percent from 2017. Available at https://www.gartner.com/newsroom/id/3836563. Accessed June 27, 2018.
  6. 6.
    Wells, G. (2018, April 10). Facebook’s Mark Zuckerberg Hints at Possibility of Paid Service. The Wall Street Journal. www.wsj.com/articles/facebooks-mark-zuckerberg-hints-at-possibility-of-paid-service-1523399467.
  7. 7.
    Madden, M. (2014, November 12). Public Perceptions of Privacy and Security in the Post-Snowden Era. Pew Research Center: Internet, Science & Tech. www.pewinternet.org/2014/11/12/public-privacy-perceptions/.
  8. 8.
    Mangalindan, J. P. (2012, July). Amazon’s Recommendation Secret. Fortune. fortune.com/2012/07/30/amazons-recommendation-secret/.
  9. 9.
    Huet, E. (2015, June 17). How Airbnb Uses Big Data and Machine Learning to Guide Hosts to the Perfect Price. Forbes Magazine. www.forbes.com/sites/ellenhuet/2015/06/05/how-airbnb-uses-big-data-and-machine-learning-to-guide-hosts-to-the-perfect-price/#56126fb16d49.
  10. 10.
    Liberto, D. (2018, March 20). Facebook, Google Digital Ad Market Share Drops as Amazon Climbs. Investopedia. www.investopedia.com/news/facebook-google-digital-ad-market-share-drops-amazon-climbs/.
  11. 11.
    Brown, B., et al. (2017, March). Capturing Value from Your Customer Data. McKinsey & Company. www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/capturing-value-from-your-customer-data.
  12. 12.
    Lewis, A., & McKone, D. (2016, October 21). To Get More Value from Your Data, Sell It. Harvard Business Review. hbr.org/2016/10/to-get-more-value-from-your-data-sell-it.
  13. 13.
    Reinsel, D., et al. (2017, March). Total WW Data to Reach 163ZB by 2025. StorageNewsletter. www.storagenewsletter.com/2017/04/05/total-ww-data-to-reach-163-zettabytes-by-2025-idc/.
  14. 14.
    Wood, A. (2016, March 15). Big Data: The Secret Weapon Behind Loyalty Programs. Chief Marketer. www.chiefmarketer.com/big-data-secret-weapon-behind-loyalty-programs/.
  15. 15.
    Benston, L. (2011, January). MGM Loyalty Program Will Reward Customers with Perks Not Imagined Previously. LasVegasSun.com. lasvegassun.com/news/2011/jan/06/you-could-pick-music/.
  16. 16.
    Meyer, J. (2017, November). Solving the Right Problems: How Retailers Can Leverage Data for Maximum Impact. COLLOQUY, 1–66.Google Scholar
  17. 17.
    Tirunillai, S., & Tellis, G. J. (2014). Mining Marketing Meaning from Online Chatter: Strategic Brand Analysis of Big Data Using Latent Dirichlet Allocation. Journal of Marketing Research, 51(4), 463–479.CrossRefGoogle Scholar
  18. 18.
    Pressman, A. (2016, September 30). Here’s Why AT&T Internet Customers Won’t Pay Extra for Privacy Anymore. Fortune. fortune.com/2016/09/30/att-internet-fees-privacy/.
  19. 19.
    Smith, C. (2017). AT&T Could Start Charging You to Keep Your Private Data Private. Nypost.com. Available at https://nypost.com/2017/06/27/att-could-start-charging-you-to-keep-your-private-data-private/. Accessed June 27, 2018.
  20. 20.
    Martin, K. D., Borah, A., & Palmatier, R. W. (2017). Data Privacy: Effects on Customer and Firm Performance. Journal of Marketing, 81(1), 36–58.CrossRefGoogle Scholar
  21. 21.
    Hann, I.-H., et al. (2007). Overcoming Online Information Privacy Concerns: An Information-Processing Theory Approach. Journal of Management Information Systems, 24(2), 13–42.CrossRefGoogle Scholar
  22. 22.
    Samaha, S., Palmatier, R. W., & Dant, R. P. (2011, May). Poisoning Relationships: Perceive Unfairness in Channels of Distribution. Journal of Marketing, 75, 99–117.CrossRefGoogle Scholar
  23. 23.
    Palmatier, R. W., Jarvis, C., Bechkoff, J., & Kardes, F. R. (2009, September). The Role of Customer Gratitude in Relationship Marketing. Journal of Marketing, 73, 1–18.CrossRefGoogle Scholar
  24. 24.
    Steinhoff, L., & Palmatier, R. W. (2016). Understanding Loyalty Program Effectiveness: Managing Target and Bystander Effects. Journal of the Academy of Marketing Science, 44(1), 88–107.CrossRefGoogle Scholar
  25. 25.
    Rosenbaum, M. S., Ostrom, A. L., & Kuntze, R. (2005). Loyalty Programs and a Sense of Community. Journal of Services Marketing, 19(4), 222–233.CrossRefGoogle Scholar
  26. 26.
    McAlexander, J. H., Schouten, J. W., & Koenig, H. F. (2002). Building Brand Community. Journal of Marketing, 66(1), 38–54.CrossRefGoogle Scholar
  27. 27.
    Hann, Il-Horn, et al. (2007). Overcoming Online Information Privacy Concerns: An Information-Processing Theory Approach. Journal of Management Information Systems, 24(2): 13–42.CrossRefGoogle Scholar
  28. 28.
    Culnan, M. J., & Armstrong, P. K. (1999). Information Privacy Concerns, Procedural Fairness, and Impersonal Trust: An Empirical Investigation. Organization Science, 10(1), 104–115.CrossRefGoogle Scholar
  29. 29.
    Morey, T., Forbath, T., & Schoop, A. (2015). Customer Data: Designing for Transparency and Trust. Harvard Business Review, 93(5), 96–105.Google Scholar
  30. 30.
    Kahneman, D., & Tversky, A. (2013). Prospect Theory: An Analysis of Decision Under Risk. In Handbook of the Fundamentals of Financial Decision Making: Part I (pp. 99–127).Google Scholar
  31. 31.
    Palmatier, R. W., & Sridhar, S. (2017). Marketing Strategy: Based on First Principles and Data Analytics. London: Palgrave.CrossRefGoogle Scholar
  32. 32.
    Gorbis, M. (2014, December 18). Pew Future of Privacy Report, 57 www.pewinternet.org/2014/12/18/future-of-privacy/.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Foster School of BusinessUniversity of WashingtonSeattleUSA
  2. 2.Colorado State UniversityFort CollinsUSA

Personalised recommendations