The Debate Around Dynamic Capabilities

The state legislature in New York just passed a bill that bans what has been called surveillance pricing or personalized pricing. In essence, the bill, called the One Fair Price Act, makes it illegal for companies in the state to provide discounts to customers based on data they have gathered about them. The bill now heads to Governor Kathy Hochul’s desk for signature.

Surveillance pricing refers to the practice of using consumer’s personal data, such as past behavior, browsing history, device type, income, location, or ZIP code, to dynamically charge different individuals different prices for the same product or service. The act prohibits businesses from collecting or using such data to individually tailor or inflate prices, while expressly preserving legitimate discounts, coupons, loyalty programs, and senior pricing.

The bill drew support from a broad coalition of legislators, advocates, and community leaders, who framed it as a victory for consumer privacy. Sponsors emphasized a single governing principle: that the price a consumer pays should reflect the product being sold, not the data a company has collected about the buyer.

The One Fair Price Act signals growing regulatory scrutiny of data-driven and algorithmic pricing models, and New York is one of the first states to act. If the One Fair Price Act becomes law, New York would be the third U.S. state to address personalized pricing, following Maryland (which enacted a law to prohibit dynamic pricing for food retailers and third-party delivery service providers) and Connecticut (which enacted a similar prohibition as Maryland and also requires disclosure of personalized pricing practices). Additional states, including California and New Jersey, are considering similar proposals.

I’m not quite sure where I come in on this issue of dynamic pricing. On the one hand, I certainly wouldn’t be opposed to my Uber driver giving me a better fare because I’ve tipped well in the past, my food delivery service cutting me a price break because of how frequently I order, or the local big-box home improvement store giving me a better rate on new drywall because I live in an area that floods often and will likely be making lots of purchases in the coming months. I can also see how these dynamic pricing practices might be considered unfair by those who don’t get similar discounts or who get charged more due to their individual circumstances.

I also have mixed feelings about any government body telling companies how much they should charge for their goods or services and how they can and cannot use the mountains of data that they collect about their customers.

What’s a lot less ambiguous in my mind is how companies can use their CRM data to dynamically alter other aspects of the total customer experience. In this issue, we highlight two of those use cases.

In our cover story, “Friction Mapping Moves to CRM to Spot Customer Pain Points,” we highlight how CRM data, customer journey mapping, artificial intelligence, analytics, and other technologies are coming together to identify where customers are having difficulty during their interactions with companies. Though most of this has traditionally happened after the fact, new technologies are enabling it to occur in real time, empowering companies to dynamically alter experiences as customers move along their paths to purchase and beyond.

In our second feature, “Dynamic Content Delivery Fuels the Ultimate Hyper-Personalization,” we highlight how companies can use their CRM data to tailor the marketing messages they deliver to prospects and existing customers. In essence, dynamic content delivery tools automatically decide what customers see, when they see it, and from where it gets served, in real time. For companies, the returns from dynamic content delivery can be quick and substantial, the article concludes,

With dynamic pricing, the benefits are a bit murky. With these two other use cases, the benefits are far easier to quantify: better customer experiences leading to greater customer loyalty, increased revenue, less waste, and competitive advantage. Not even the politicians should be able to find fault with that.

Leonard Klie is the editor of CRM magazine. He can be reached at lklie@infotoday.com.

Related Articles

The Pope, a Contact Center Fail, and AI

It's highly likely that the next time the pope needs to call his bank, he will be speaking to an AI agent.

I’m Looking Forward to More QR Codes

It's not conjecture or hyperbole; QR codes truly are back, and this time around they might have actually have staying power.

Companies, Your Lack of Attention Is Disturbing

You would think firms would always take action against fraudsters for trying to impersonate them. Think again.