Data-informed pricing bill would harm small businesses

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OPINION – For small businesses like mine, success often depends on reaching the right customers at the right time with the right deals. That makes data-informed promotions – like coupons for products left in customers’ online shopping carts, or special deals for customers we’d like to reengage – a critical part of our marketing strategy.

So, it’s worrying that California lawmakers are considering a bill, AB 2564, that would prohibit those kinds of promotions. Intended to protect consumers from unfair data-based pricing practices – a worthy goal – the bill goes so far that it could hurt millions of California small businesses.

In 2020, I launched a business selling products that help new moms manage babies’ care schedules. I’d been laid off from my tech job during the pandemic, soon after my son was born. After his birth, I struggled to manage job interviews while trying to coordinate his feeding and sleep schedules with my mom and husband, who were both helping out.

To keep everyone on the same page, I created a whiteboard that stuck to the fridge, with sections to log feedings, naps and diaper changes. Since nothing like that existed, I began selling it online through Amazon. Over time, I added tracking products for toddlers and pregnant moms, expanded to Walmart and Etsy, and launched my own website.

Today, my business still has just one employee: me. But it’s succeeding thanks to smart, data-informed promotions that help me attract customers and build enduring customer relationships.

That doesn’t mean I can see anyone’s personal or sensitive information. Instead, it means I have the basic data I need to offer customers special deals and discounts that are likely to appeal to them. That’s Digital Marketing 101.

But AB 2564 would prohibit many such tried-and-true marketing practices.

Here’s an example of the kind of data-based marketing we might use. Suppose a new mom purchased my infant-care tracking system. Six months later, I might email her to offer a discount on my solid-foods tracker. That helps her save money on something she’s likely interested in, and helps me make a sale while building customer loyalty and goodwill.

Similarly, if someone adds an infant-care tracker to their online shopping cart and then leaves my website, I might offer them a discount to encourage them to come back and complete their purchase. If AB 2564 passes, however, these commonplace – and highly effective – marketing practices would be prohibited.

For a small business like mine with a tiny marketing budget, basic data-informed promotions are essential – and losing them would make it much harder to connect with customers and keep my business growing. I can’t afford to run TV commercials or newspaper ads, and even if I could, they’d be a less effective way of reaching the specific audience that’s interested in my specialty baby products.

Using basic customer data to offer relevant discounts helps me attract and retain customers while delivering the personalized experience customers appreciate and expect from small businesses.

AB 2564 jeopardizes small businesses’ success in other ways, too. If passed, it would expose us to serious legal risks, including hefty fines – meaning a simple data-use mistake could result in costly penalties.

The bill also contains a limited private right of action that could force us to pay for litigants’ attorneys fees, which could lead to even greater losses on our end.

I share lawmakers’ desire to prevent data-informed discriminatory pricing – a practice I strongly oppose and would never engage in. But AB 2564’s overbroad regulations would make it much harder for California small businesses like mine to connect with customers, compete with bigger companies, and succeed – while eliminating discounts that help Californians save money.

I urge lawmakers to reject AB 2564 and instead strive for legislation that helps California small businesses grow, thrive, and serve their customers and communities.

Michelle Mak is the Founder of San Francisco-based Mewl Baby.