Commercialisation of data is the future for brands. Brands should channel their innovative approach to providing a luxury service to consumers into their use of data, but all the time being mindful of the data privacy requirements.
Is good data slipping out of your fingers?
For years, data has been an asset that a number of luxury brands have not been able to monetise in the same way as other sectors, for example, online publishing. This is primarily due to luxury brands operating mainly through brick-and-mortar operations and relying on antiquated supply chain networks.
However, in this ever-changing new world of e-commerce, technology and automation, luxury brands are now starting to accumulate vast data sets through collecting data from online sales (or sales of their retailers) as well as through their more sophisticated supply chains. Further, luxury brands have the benefit of third-party data providers to help them further enhance their data sets.
Luxury brands can really start playing the data game in a meaningful way.
Now that luxury brands have the luxury of this data (excuse the pun), it is critical that they use it in ways that are commercially savvy and maximise sales. An obvious way for luxury brands to exploit their data sets is to deploy one of the many data analytics solutions, or even better, “in house” a team of data scientists to really enhance the brand’s understanding of its customer base. This in turn will allow luxury brands to create personalised and seamless online and in store experiences which will no doubt leave customers feeling valued, loved and wanting more. It will also enable these luxury brands to ensure that their marketing is tailored and, importantly, delivered at a time that is likely to maximise sales.
Another way luxury brands could look to commercially exploit their data is to use it to help create innovative AI solutions, including virtual assistants and virtual changing rooms, to enable a seamless, yet indulgent and personalised, experience in store and more importantly online. However, using data in commercially savvy ways is not just about ensuring consumers are sent the right type of marketing at the right time or making their experience personalised and indulgent, it is also about using data to drive efficiencies within the workforce and supply chain. As a result, luxury brands should not just be focusing on monetising their consumer data, but also on using internal data sets to drive efficiencies and maximise profit.
How to navigate the muddy privacy waters of commercialising data
Leveraging data in these ways poses obvious privacy challenges, as in order to do it, brands are likely to be handling, receiving and sharing large amounts of personal data. However, despite these privacy challenges, anything is possible with the right protections and measures in place. A few key things, for example, that luxury brands should be thinking about when deploying commercial data-driven solutions that involve processing personal data include:
Transparency & control
You may hear this time and time again, but a central cornerstone of data privacy compliance is transparency and ensuring that if you are using an individual’s personal data, that individual is clear, amongst other things, on what personal data is being processed, with whom it is shared, and the reason for the processing. Individuals should also be given control over how their data is used and have a clear understanding of their rights.
Lawful basis
Brands must ensure there is a lawful basis to carry out the data processing activity, and in particular will need to consider if the individual’s consent is required. If it is, they need to ensure such consent is GDPR compliant.
Security
The more personal data a brand holds or processes, the higher their risk profile is and the more important it is to have security measures in place. Brands must ensure they have in place robust internal data security measures such as access controls, encryption and pseudonymisation measures to reduce the risk of a personal data breach.
Data Privacy Impact Assessment (DPIA)
Where the processing of personal data is considered high risk (e.g. profiling of consumers on a large scale to understand their interests and provide a personalised experience), it is likely that a brand will need to carry out a DPIA to identify any risks associated with the processing and ensure measures are in place to mitigate against those risks.
Use of third-party data brokers
This has been a hot topic for data protection regulators recently and the UK’s data protection regulator (ICO) has carried out an investigation into three major data brokers. Although use of data brokers is not in itself unlawful, brands should act with caution if using them to ensure their own data sets are compliant. In particular, if a brand is using a data broker to enrich data sets, they must ensure they are carrying out an appropriate level of due diligence on these data brokers before they are onboarded to ensure the personal data received from them: a) has been lawfully obtained; and b) can be lawfully used by the brand going forward. The ICO has made clear that simply accepting a data broker’s assurances that the data they are supplying is compliant is not enough.
A final word
Now that luxury brands have the data, they need to ensure they can maximise it in a way that drives profit but remains on the right side of compliance. Although this is a tricky tightrope to navigate, it is ultimately worth the investment to get it right to ensure they remain competitive.
Luxury brands should not be scared of their data and hide behind GDPR compliance as a reason not to unlock its value, but instead should be looking to fully engage their C-suites to maximise their potential.
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