Walmart, GM and consumers' data: smart or short-sighted business models?
Just like TV manufacturers, automakers have mostly tried to make side money on their customers' data for years by selling it to ad companies. This is certainly a testimony of how poor the strategic thinking and long-term perspective on these markets have been for years. In both cases, razor-thin margins coming from commoditized products obviously don't help.
Walmart and Vizio
There's at least some level of proper strategic thinking for TV manufacturers who managed to digest the set-top boxes of yore with 'smart' TVs. By recapturing the streaming flux with their device and barebones but somehow effective operating systems, they repositioned themselves as a hardware bottleneck, now weakly challenged by Apple TV and a few other surviving boxes that have since then offered their own app to LG or Samsung OS. And in this market, switching a one-time transactional revenue (selling a TV) into a recurring three-to-five year's ad-based revenue has been brilliant. Still rather crappy for the consumers, mostly unaware of what would be going on as soon as they would buy a smart TV, but effective for the manufacturers.
This explains why a few weeks ago, Walmart decided to move in and offer to the TV maker Vizio for $2.3 billion. Such a move could be called 'pulling an Amazon,' where you understand how digital platforms work and decide that for selling dog food and washing powder, owning the physical rails on which your consumer's attention is running several hours daily is a must. Even better for Walmart, rather than packing stuff and sending it to you, selling ads is just more profitable... even if they don't promote their products!
Nathaniel Meyersohn
GM and LexisNexis
For automakers, it's a bit more mind-boggling.
The NYT recently reported that GM was selling its customers' driving data to insurance companies through several third parties, such as LexisNexis. After a Florida man decided to sue GM over his insurance premium skyrocketing because his insurer decided he was breaking too aggressively, the story caught media attention and revealed this shady practice.
Upon reviewing his report from LexisNexis, Chicco discovered it chronicled 258 of his journeys in the last six months, including specific details like trip durations, distances, and instances of speeding or abrupt driving maneuvers. This discovery led him to file a lawsuit in the US District Court for the Southern District of Florida against General Motors and LexisNexis Risk Solutions, alleging breaches of privacy and consumer laws. – Insurance Business, 2024
GM then proceeded to try to PR its way out of this mess by explaining how its customers were fully informed of this option (they weren't) and how it was oh-so-easy to opt out of this tracking (it wasn't).
Don't blame GM more than any other car manufacturer, as most of them are also selling their customers' data to data brokers worldwide. And in the case of GM, like most of them, there are reasons for fumbling around any extra revenue they can get...
David Welch
My perspective
If given the chance, selling out customers' data is always on the table, and your company is not Facebook or Google, you certainly have a problem. It possibly means a few of these things or all of them at once:
- You don't create enough value to be differentiated enough so that you don't need to squeeze any extra possible revenue out of your customers (Apple is not shunning ads and protecting their customers' data by sheer goodwill; they just don't need the money).
- Your organization and culture have become so dysfunctional that competing baronies make conflicting decisions, and service business units end up being at odds with hardware manufacturing.
- Or, simply, you just think it's a good idea because you don't understand how digital markets have evolved, how customers can suddenly distrust you, and how fast your brand value can go sideways.
- You don't know (or haven't thought through) how to leverage these data yourself into insights to develop new digital services.
Ironically, the last option is the cruelest.
Anyone stepping back a little should assume that having a large amount of real-time customer data should allow you to ramp up (or at the very least try) dozens of innovative services. And as much as we can discuss what would be the options for TV manufacturers who won't be able to compete with Disney in content production, or why there's still no Apple TV, for that matter, for automakers, it's certainly unforgivable.
After all, Toyota did invent auto insurance and financing services back in the thirties ...
