Suppliers of prospecting equipment used by the early California Gold Rush pioneers in the mid-19th Century enjoyed a surprising side hustle. Having unloaded their cargo of prospectors, shovels, pans and dynamite on the West Coast of America, they realized they could load up for the return journey back East with another natural resource that was (at the time) both plentiful and surprisingly lucrative.
This product? Guano (commonly known as bird droppings). Stopping off at various Pacific islands which for thousands of years had been the exclusive domain of millions of seabirds, they could scoop up guano which lay hundreds of feet deep, fill their empty holds, ship it back home, and sell it at a premium as a nitrate-rich fertilizer.
This sparked a ‘poo-rush’ in which hundreds of unoccupied Pacific islands were claimed and mined for this valuable avian by-product. But the activity scared off the seabirds, causing populations to decline and supplies to dry up. By the mid-20th Century, the party was over.
Here in the early 21st century, we are in the middle of a similar rush for a resource that is also created as a by-product. Personal data is the ‘digital exhaust’ we leave behind us as we speed through our busy modern lives. This resource will only ever get bigger, and it can be incredibly valuable to those with the ability to collect it, store it, analyze it and monetize it.
The guano farmers of the 19th Century didn’t share the proceeds of their fertilizer business with the seabirds who provided their raw material, and unfortunately, it is not recorded how their feathered friends felt about this. But where we see the data landscape unfolding in the coming years is for data businesses like ours to recognize that the data we use ultimately originates with each and every individual customer and that we should more equitably share the monetization revenues this data generates with the person who produced it.
Data as a resource
Loyalty programs are in a perfect position to collect the data that proliferates as a by-product of commerce. Nectar, for example, captures data from its members (better known as ‘collectors’) when they shop with coalition partners, swiping or scanning their Nectar barcode to earn points from offline transactions and linking their accounts to earn points from online transactions.
This is the value exchange we have agreed with our collectors. They choose to shop at our partners because we reward them for their spend. That they agree to identify themselves through their Nectar card as part of this transaction is the implicit agreement that we can track who they are and what they buy.
Data that we collect directly from our collectors when shopping at our partners is, of course, first-party data. When someone signs up for a loyalty program they grant it permission to capture and store their transaction data, analyze it to create models, profiles and segments, then use these insights to inform better business decisions and target relevant marketing messages and incentives back to the individual.
If the collector responds to a nudge to shop somewhere or buy a certain product, the loyalty program can observe if and when it happens, then calculate whether the cost of the incentive was worth the value of the transaction.