Comment by Chris Pouney, independent consultant
An interesting story occurred in late 2016 when a British car insurance firm proposed an innovative way to reduce the cost of notoriously expensive car insurance for younger drivers. If users were prepared to grant access to their Facebook profile, then the insurer may be prepared to offer reduced premiums. In short, armed with more information on the customer, the insurer would be capable of more accurate risk assessments and prices could be personalised to those living a lifestyle more conducive to safer driving. One can only assume that the shortfall in revenue would be made up from those not willing to share, or those whose lifestyle indicated a higher risk profile.
Customers were canvassed and overwhelmingly supported the approach, and why wouldn't they? Everyone considers themselves a safe driver so why should they carry the cost for others who are not?
Facebook however, had other ideas and shut it down.
There was plenty of analysis around Facebook's rationale. Many pointed to the fact that the social media giant makes a lot of revenue through people sharing their habits and feelings, likes and dislikes. Creating an ecosystem where Facebook users could benefit from creating alter egos, of a healthier more sensible self, would be bad for business. Would a few 'Yum yum I love the fruit smoothie I just had for breakfast' impress a health insurance provider enough to lower premiums? Possibly, but it wouldn't help the health company's bottom line and would certainly damage the value of Facebook advertising.
In short what we have here is a reminder of the power of personalisaton, and the battle over who owns the relationship between supplier and consumer. A discussion not too dissimilar to the one being played out in the debate over IATA's New Distribution Capability (NDC).
Airlines and consumers are highly supportive of purer content, and enhanced merchandising enabling more personalised offers. Some corporate travel managers, (Facebook in the example) realising the impact of these offers on their power and influence being eroded, are not.
But who do the airlines consider the end user? Most buyers will tell you that airlines consider the traveller the consumer, and not the company footing the bill.
And personalised for whose benefit? There are plenty of examples in the consumer world of personalised pricing where internet browser (which may indicate the hardware used) or purchase history is considered so that people who can pay more are offered higher pricing.
The UK's Office of Fair Trading considers personalised pricing a form of price discrimination: when a firm charges a different price to different people for the same good or service, for reasons not associated with costs. Is it so far-fetched to imagine that, equipped with the merchandising possibilities of NDC, an airline may offer a last minute upgrade to an investment banker for £500, but the same seat to someone in manufacturing for £200? Only time will tell if behavioural pricing, a travel buyer's worst nightmare, ensues.
Like Facebook with car insurance, there is a fear among some buyers that they are being shut out of this 'supplier and consumer love-in', but unlike Facebook, travel managers lack the power to shut it down.