“Brands traditionally focus on how to increase customer lifetime value — the total revenue they extract from a single customer over time,” Bain & Company explains in a new report on digital product passport business models. “With DPPs, product lifetime value — the total value a product generates throughout its entire life cycle — will become an equally important metric.”

“With DPPs, one product can generate value multiple times, benefiting brands, consumers, and marketplaces well beyond the first transaction,” the consultants say.

“Digital Product Passports (DPPs) will force brands, consumers, and resale platforms to change how they view and measure value,” they add, with the new “product lifetime value” metric becoming the key metric for brands, consumers, and marketplaces.

“DPPs could double the lifetime value of products, with consumers set to benefit the most, receiving up to 65% of this new value,” Bain adds.

“A strong secondhand market will have a halo effect on the primary goods market, particularly for brands that retain value. Brands should look beyond compliance and deploy DPPs as a strategic opportunity with consumers in mind.”

“For most brands, value is realized at the point of sale, in a straightforward transaction in which goods are exchanged for revenue,” they explain.

“When a product is resold, consumers and secondary goods marketplaces — not the brand — capture the majority of any remaining value.

Value of DPPs

“DPPs could change this dynamic by tracking a product’s entire journey — from first sale through disposal — so brands can see who owns it, how it’s used, when it’s resold, and what services it requires along the way.

“Brands can leverage rich data streams made possible by DPP initiatives to track all the value derived from a product. When post-sale and resale opportunities are accounted for, the lifetime value of a product could double — and a single transaction could turn into ongoing revenue opportunities.

“Equally important, DPPs will give brands valuable insight into individual products and consumers. They’ll see which products retain the most value and which customers buy and resell pre-loved items — picking up important signals for future product development.”

“Rather than viewing DPPs as a compliance burden, brands should see them as a strategic tool for long-term value creation,” they conclude. “By moving beyond compliance, they can unlock a new measure of value — product lifetime value — and reap benefits from the first to final transaction.”

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