Presentation to Big Data World - Europe in London Sep 20 2012. "How to generate an ROI through a positive approach to data privacy".

1. How to generate an ROI through
a positive approach to data privacy

2. In general, a business case . . .
• Translates issues into economic terms
• Justifies and prioritizes effort forward
• Evaluates impacts in hindsight
For data privacy, the business case sounds . . .
“What will it take?” “It depends.”
“Worst case?” “You’re going to jail.”

3. 1. Itemize risks For data privacy, this approach
yields subjective, extreme and
2. For each risk, identify the impacts sometimes threatening results.
3. For each impact, estimate:
Economic impact (Ie) • Not credible
Probability of Risk (Rp)
• What about next year
ROI = ∑ Risks ∑ Impacts (Rp x Ie)
Cost to Prevent
4. Add, to taste . . .
PV of Risks PV of Costs
Cost of Capital Tax Impact
Current – Future Insurance

4. Cost & Risk driven Opportunity & value driven
No differentiation Competitive ground
Justified a priori Measured impacts
“Do” or “Do Not” decision “to what extent”
Zero-Lose game Zero-Win game
CRM
For privacy, recognize Brand
value contributions Loyalty
Control

5. Privacy practices ARE interactions
Customer integrated
communicating policy
Relationship interactions Cost
Value recording preferences
Management preferences
observing practices
objectives
So:
• Apply CRM valuation to Privacy
Customer Satisfaction
• Involve/Obligate Marketing
Basis for ROI Revenue / Customer • Communicate impacts
Retention
Lifetime Value (LCV)
A/B testing
Measure by Cross-process impact
Anecdotal tracking

6. Brands have measurable value also called Brand Equity, reflected in premium
• P/E, or market capitalization in excess of earnings valuation
• Price, or Value/Sales compared to generics or competitors
• Intangible Asset (Goodwill) applied in finance and negotiating power
“Trust” efforts can be valued like those of marketing campaigns
Reach – population who experience privacy messaging
Expect terms Frequency – how often privacy is expressed (with other messages)
Impact – ad concept of message importance
 Talk to your advertising “Agency of Record”
 Get subjective, authoritative impact value
 Check out brand valuation methods from:
Institute of Practitioners in Advertising (IPA)
International Financial Reporting Standards (IFRS)

7. A loyalty program translates
Loyalty & customer registration programs
“Do you want privacy?” into
• Acquire more customers “How do you want info?”
• Retain them longer
• In sell, cross sell, up sell
• Change privacy to “preferences”
All of these are measured!
• Use loyalty to lift privacy “frequency”
Direct Marketing
Redemptions and other activity • Coordinate measurement method
Customer service
To Loyalty, privacy means “opt-out”
But “My Account” also
• Incentivize engagement
• Offers multiple preferences
• Returns data to customer

8. Usually refers to public → board → organization because it’s their money.
In big data, we customer → information because it’s their data.
Governance is measured by asking & inspecting.
Customer care, service and sale events can embed privacy messages
• Including it in greetings, confirming identity and script flow
• Reiterating policy, soliciting confirmation
• Monitoring satisfaction by process (expect varying impact)
 Satisfaction is measureable
 Transparent companies disclose CSI
Analyst community premium
Evidence of Consumer Protection
 Like all measures, it trends, translates to financials

9. “Positive” cases depend on other business functions
• Reach outside legal, compliance, IT
• Learn partnership, collaborative sponsoring
• Address: what’s in it for them?
“Positive“ includes measuring outcomes
• Even/especially when they miss expectations
• Tracking needs to be baked in to process & tech solutions
• Continually improving measurement methods
Michael Bryan
michael.b.bryan@gmail.com
(703) 638-3224