The glass consumer in the age of smart products
Digital products are becoming more and more of a reality in our lives: Nearly every consumer owns at least one “smart” product, be it the smart vacuum cleaner, a smartphone or a car with autonomous features. With the usage of these products, a massive amount of data is generated – how and when has the device been used, is it in need of maintenance or are there any technical issues? But to which extent should companies receive those data? And what do they say about me as the consumer? Which conclusions are possible with these kinds of information? What can the consumer do to keep his privacy, at least to a certain extent? The ICI-HSG is conducting research regarding these and similar questions with a combination of qualitative und quantitative methods.
The glass consumer
Nowadays, a person without a smartphone has increasingly become an exemption in our digitalized world. Since some years, we are using more and more digital products, such as autonomous kitchen machines, automated lawn mowers or fitness trackers. However, this means at the same time that a massive amount of data is produced through the use of those smart products. These data give private insights into the life of consumers: What is her/his daily routine? When does s/he do sports? Which (bad) habits does the consumer have? These and many more questions can all be answered through the use of data produced by connected devices. This is good news for the device manufacturer and other companies who can get private insights into the lives of consumers – but at the same time it is uncomfortable for the consumer who wants to keep her/his life private. But how can the use of data be regulated and administrated in a way such that both parties benefit? How can a trustful relationship between the consumer and the company be created?
Consumer trust as the key to success
This is no simple question, as consumers are insecure due to former data privacy breaches and incidents. They want to maintain control over their data – in case they are even aware how much the data produced by their smart product usage says about them. Companies, on the other hand, want to collect as many customer data as possible in order to optimize their products as well as marketing and advertising activities.
Data truly have become the new currency in the business world. The importance of data has been recognized since a long time in research and multiple ways to gain and keep consumer trust have been researched. The literature in this area of research stems from multiple literature streams from internet shopping, online banking, and cloud computing to topics such as smart products and the internet of things.
Studies show that consumer trust depends on multiple factors, amongst other the purpose for which the data is used and the kind of data the companies want to collect and work with (Morey, Forbath und Schoop 2015). Moreover, the industry the company works in also has a significant influence on the consumer decision whether to share private information or not (Morey, Forbath und Schoop 2015).
Yes, the question of who should have access to consumer data is not the only problem in the area of smart products and the internet of things. Other topics such as cybersecurity and data storage in case of product damage also play an important role – in academia as well as in practice (Maple 2017).
An independent third-party player as a solution?
To solve the frequently occurring problem of asymmetric information between consumers and companies and to avoid a “market for lemons” in the sense of Akerlof (1970), we at ICI-HSG conduct research to understand how digital trust is built and how it can be strengthened.
We are especially interested in the signalling effect and the usage of independent third parties, who act as an intermediary party between the consumer and the company. The third party does not only guarantee data security and privacy, but also that the data is handled in a proper way and only used for its intended and allowed purpose.
Our calls for action
1) Inform the consumer about data security and data privacy
Our research shows that a lot of consumers are not aware of the challenges and problems that the topic of data security and privacy carries. Hence, consumer education should be placed first by companies. However, at the same time, more and more consumers want to know what happens with their data, how they are used and saved. Moreover, they want to obtain control over their data. Some companies, such as Apple or Snapchat, have been giving consumers increasingly more control over their data in the last years and have communicated about data security and privacy openly. In line with those firms, companies should openly inform consumers about data storage and usage as well as give them as much control about their data as possible.
2) Trustworthy third parties
First results of our research show that the existence of a third, independent, trustworthy party, can have an important influence on consumer trust, if it gives guarantees for data quality and security. In this case, a trust transfer from the third party to the company takes place. However, it is important that the third party is seen as competent in the IT sector and has a good reputation. In sum, it might be beneficial for companies to cooperate with this kind of “gatekeeper” in order to build and strengthen consumer trust.
More regarding our research
Contact us: email@example.com
- Akerlof, G. A. (1970). The market for lemons: Quality and the market mechanism. Quarterly. Journal Economics, 84, 488-500.
- Maple, C. (2017). Security and privacy in the internet of things. Journal of Cyber Policy, 2(2), 155-184.
- Morey, T., Forbath, T., and Schoop, A. (2015). Customer data: Designing for transparency and trust. Harvard Business Review, 93(5), 96-105.