Locking in customers may become even more popular in the aftermath of Cambridge Analytica

Posted on April 11, 2018  /  0 Comments

Firms have always had an interest maintaining the loyalty of their customers. This has also involved knowing more about the customers. In a discussion of subscription models, the Economist, refers to what may happen because of restriction on data that may emerge because of the Cambridge Analytica imbroglio.

Subscription models are becoming more popular, in part because technology has made it easier to rent rather than own assets. Instead of buying software, for example, users can get access to it as a cloud-based service. Data mining means that the insights gained from a sustained relationship are more valuable than before, for customers and firms—Netflix purports to know what viewers want to binge-watch. And after a scandal involving Cambridge Analytica’s dubious acquisition of data from 87m Facebook users, there could be a shift from digital businesses built around advertising to subscription models that protect privacy.

Of course, when data about prospects dries up because of privacy rules, it will be very difficult for start ups to compete with well-established firms who would still be using the enormous troves of transaction-generated data and insights they will continue to collect, but would no longer allow anyone else to access. That would then bring the competition authorities into the game.

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