Can Blockchain Reduce the Inflated Costs of Living Today?
Let’s take a look at how unnecessarily high customer acquisition costs lead to increased prices in all products, services and utility sectors, and how blockchain can be a possible solution.
Every day, after work, I stop at the shop by the bus stop to buy myself a treat - a tasty, one dollar chocolate bar to give me a slight sugar ‘rush’ to see me through the ride back home. Chewing on my cocoa-flavoured snack one day, I wondered what the real cost is of the bar. Where does my one dollar go? A quick Google-search gave me the shocking truth: out of every one dollar I pay, only about 30 cents go to the actual production. That’s 70% going to overhead costs - marketing, company branding, taxes, retail margins and other expenses.
70% of a dollar doesn't hurt much - at first. But it’s not just the chocolate bar industry, we’re talking about a large percentage of every single product and service you purchase. We’ve become accustomed to spending extremely inflated prices for all of our needs and products, without giving the issue a second thought.
No specific person or entity is to blame for this; no greedy fat cats sitting on piles of our dollars. Simply put, the current business model is cluttered, inefficient and ineffective. Today’s global digital interconnectedness brings with it not only promise, but also daunting challenges. Companies have to find a handful of potential customers out of hundreds of millions of users. In order to pinpoint such ‘needles’, they are increasingly reliant on vast marketing processes - complex algorithms sifting through mountainous data haystacks. Such marketing solutions are a basic necessity, yet they are costly.
Think of Google, Facebook, and Amazon - examples of giant corporate empires built around this data market. Companies are forced to pay exorbitant sums of money to fund such marketing processes - funds they then roll over to the consumer in increased final costs.
The rising price of customer acquisition
The costs per lead are simply astounding. A recent study found that the costs per lead in various marketing channels has been rising steadily. The ‘cheapest’ lead - acquired through social marketing - cost an average of ‘only’ $27 per lead. However, prices go much higher. Using Display or CRM advertising channels can cost an average of $71! Let that sink in - that’s $71 dollars per potential customer, not even a sure sale. You can imagine how much money is wasted each day to collect and try to convert all these expensive leads.
These costly leads affect all sectors (see graphic). Whether it be finance, health, utilities or even education - businesses are having to spend increasingly large sums of money in customer acquisition - fees they then pass on to the end customers. This incredible waste and inefficiency touches each and every person multiple times over, with every product, service or transaction they close.
A solution in the form of blockchain?
The world is abuzz with excited talk about blockchain technology. For the most part, such talk is shallow - discussing the extreme fluctuations of the prices of bitcoin and other altcoins, or simply making ambiguous declarations about the revolutionary potential of this latest technological innovation.
However, blockchain technology could actually provide a solution to this looming inefficiency leading to inflated consumer costs. At the heart of the customer acquisition process lies data - personal information collected about users and used to hone in on potential customers - higher quality leads.
As mentioned before, this data collection and analysis has spawned the growth of the gargantuan big data industry - continuously driving up customer acquisition costs. But, what if we could find a way to let companies and consumers make use of the consumer data directly (and in a beneficial way) without relying on all the expensive middlemen? This is where blockchain can come in.
Consumers could upload their data in an anonymized way on to the blockchain, where it remains decentralized (and, therefore, only under their control). Companies can also connect to the blockchain to interact directly with user data (either in an anonymized or opaque form - with consumer approval). This cuts out all the expensive middleman processes, letting businesses utilize consumer data in an efficient manner. This would lead to reduced overhead costs, yielding lower consumer costs - a mutually beneficial, win-win situation.
The author, Jaron Seijffers, is the CMO at MaxData.io; the first reverse bidding marketplace where service providers find consumers using blockchain technology. Using the MaxData platform, consumers anonymously provide information regarding the services they are looking for, allowing service providers to see exactly what offers consumers will be interested in. Service providers can then craft a tailor-made offer to send consumers, while saving time and money on their acquisition efforts. These savings allow service providers to drastically lower consumers’ cost of living by reducing prices for services (such as insurance, communication, utilities or financial services). MaxData’s revolutionary platform effectively saves businesses and consumers billions of dollars a year.