Blog

Running a data deficit can cost you

Does your partner have a data advantage over you?

In every relationship, there is a lot of information that can be collected. How much you know always effects

So ask yourself – who has the data in your strategic business relationships? Maybe your partner does. If so, they’re using it to their advantage.

Recently, we attended a meeting with a partner. In the meeting, the partner described a problem that they face:

There is a data asymmetry between them and their customers.

How does this work?

  1. In one case, their customers give them full access to their marketing campaigns and the performance of those marketing campaigns. This means that the partner knows exactly how well or poorly the customer may be performing in various aspects of their business.
  2. In another case, the customers see, very publicly, which customers the partner is working with. The customers use this to their own leverage in order to negotiate better rates and free services from the partner.

So where is the data deficit?

It’s almost never the case that two parties know exactly the same information or the same amount of information about each other going into a business discussion. But a data advantage exists where one side knows more than the other about a particular piece of relevant information going into a negotiation. For instance, if one side knows the other’s bank account balance, but not vice versa, the first party knows how far they can push on revenue commitments for the partnership.

Neither side is happy with this arrangement.

So what’s the solution? Both sides agree that the status quo can’t continue. Both sides agree that they would like a solution. But anonymizing data is too difficult to solve problem 1; and it would take a major industry shift to make the information in problem 2 confidential. So neither of those solutions is likely anytime soon. Certainly problem 2 is too difficult for now, and the partner has accepted this.

A new approach – a neutral data store owned by neither.

In talking through the whole situation, one interesting solution did emerge. That solution is to centralize this information outside. This has helped both parties feel more willing to share. Customers can control which pieces of information it allows out, and the customer can selectively choose data elements to anonymize, without having to try to anonymize everything.

Removing the data advantage in a straightforward way brings the two parties into an equitable position for open and fair partnership discussions.