June 21, 2024
How Businesses Are Collecting Data (And What They’re Doing with It)featured

Businesses are increasingly able to contextualize data and get new insights from it as tools for data gathering and analysis increase. Companies routinely collect, store, and analyses massive quantities of quantitative and qualitative data on their customer base every day via consumer behaviour and predictive analytics. Whether they develop targeted advertisements to market their goods and services or sell personal information to a third party, some businesses have built their whole business models on consumer data.

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Here’s a look at some of the methods businesses use to collect customer data, what they do with it, and how you might adapt these strategies to your own company needs.

Types of consumer data businesses collect

The four types of customer information that firms gather are as follows:

Personal information.

This category contains non-personally identifiable information like your IP address, web browser cookies, and device IDs as well as personally identifying information like Social Security numbers and gender (which both your laptop and mobile device have).

Engagement data.

Customers’ interactions with a company’s website, mobile applications, text messages, social network sites, emails, sponsored advertisements, and customer care channels are described in this sort of data.

Behavioral data.

This group comprises information about past transactions, such purchase histories, information about how a product was used, like repeated actions, and qualitative information (e.g., mouse movement information).

Attitudinal data.

This sort of information includes measurements for customer happiness, buying criteria, product appeal, and more.

How do businesses collect your data?

Businesses get data from several sources in a variety of methods. While some data gathering techniques are quite technical, others are more deductive (although these processes often employ sophisticated software).

The fact remains, however, that businesses are using a wide variety of sources and ways to gather and analyze consumer data on metrics, with an interest in data types spanning from behavioural to demographic, according to Liam Hanham, data science manager at Workday.

Three methods may be used to get consumer information, according to Hanham: directly asking customers, indirectly following customers, and supplementing your own customer information with information from other sources. “All three are necessary for a solid company plan.”

Businesses are skilled at gathering data of various kinds from almost every corner and crevice. The most apparent sources include consumer behaviour on their websites and social media pages, as well as customer phone calls and live chats, but there are also other, more intriguing techniques in play. [Ensure that your firm has the greatest business phone system.]

One example is location-based advertising, which creates a tailored data profile using tracking technologies such an internet-connected device’s IP address (and the other devices it interacts with, such as your laptop and mobile device). The devices of users are then targeted with hyper personalized, relevant advertising using this information.

To learn more about how consumers have previously dealt with sales and support teams, companies can delve deeply into their customer service records. Here, they are taking into account, on a large scale, direct input on what customers liked and disliked, what worked and what didn’t.

Companies that sell personal information and other data to third-party sources have grown prevalent, in addition to gathering information for commercial objectives. Once obtained, this data often trades hands in a separate data market.

Turning data into knowledge

Businesses collect data in a variety of methods from a variety of sources. Some techniques of data collecting are more technical, while others are more deductive (although these processes often employ sophisticated software).

Overall, however, businesses are collecting and processing consumer data on metrics using a wide range of sources and methodologies, with an interest in data spanning from demographic to behavioural data, according to Liam Hanham, data science manager at Workday.

Hanham said that there are three methods to get consumer information: directly asking customers, following customers inadvertently, and adding data from outside sources to your own. “All three are essential to a strong company plan.”

Companies are skilled at obtaining various forms of data from almost every corner and crevice. The most apparent areas are through consumer activity on company websites and social media pages, or via customer phone calls and live chats, but there are other, more intriguing techniques at work as well. [Be certain that your organization has the greatest business phone system.]

One instance is location-based advertising, which creates a tailored data profile by using tracking technologies like an internet-connected device’s IP address (and the other devices it interacts with — for instance, your laptop may communicate with your mobile device and vice versa). Following that, this data is utilized to hyper personalize and relevantly advertise to consumers’ devices.

Companies also thoroughly examine their customer service records to see how consumers have previously dealt with the sales and support teams. Here, they are systematically integrating open input on what customers liked and disliked, what worked and what didn’t.

Companies that sell personal information and other data to third-party sources, in addition to gathering information for commercial objectives, are already ubiquitous. After being collected, this data often exchanges hands in a separate data market.

How do businesses use your data?

Companies utilise consumer data they gather and insights they get from that data in a variety of ways.

1. To improve the customer experience

Consumer data presents a means for many businesses to enhance client interaction and better understand customer demands. Companies may quickly adapt their digital presence, products, or services to better fit the current marketplace when they study client behaviour as well as massive troves of reviews and comments.

According to Brandon Chopp, digital manager for iHeartRaves, businesses utilise consumer data not just to personalise choices for each individual customer but also to enhance customer experiences overall.

In order to better the operation of our website, Chopp claimed that knowing client data is “our most essential source of marketing insight.” “By developing specialised promos and unique offers based on consumer data, our team has enhanced the client experience. Personalization is crucial since each consumer will have their own unique tastes.

2. To refine a company’s marketing strategy

Companies that use contextualised data may better understand how customers are interacting with and reacting to their marketing initiatives and make necessary adjustments. This highly predictive use case helps organisations estimate what customers would desire based on past behaviour. According to Brett Downes, director at Haro Helpers, marketing is increasingly about personalisation, much as other areas of consumer data research.

The mapping and personalization of users’ journeys—not only via your website but also into platforms like YouTube, LinkedIn, Facebook, and other websites—is increasingly crucial, according to Downes. You can successfully sell to just the individuals you know are most likely to interact by segmenting data. These have created new possibilities in sectors that were previously very difficult to advertise to.

3. To transform the data into cash flow

Businesses that collect data may benefit from it. Alongside the growth of big data, a new business called “data brokers,” or “data service providers,” has emerged. These companies acquire and sell client information. Information gathering and selling provide prospects for new income streams for companies that collect a lot of data.

The desire for additional data is rising since marketers value this information highly and will pay for it. In other words, data brokers may earn more money by selling this information to each other and to advertising if they can assemble more comprehensive data profiles from a wider range of different data sources.

4. To secure more data

Even some companies utilize customer data to secure more delicate information. To permit a user to access their financial information or to shield them from unauthorized efforts to steal their information, for instance, banking institutions sometimes utilize speech recognition data.

The combination of data from a customer’s contact centre interaction, machine learning algorithms, and monitoring technology allows these systems to detect and flag possibly fraudulent attempts to access a customer’s account. Catching a scam involves less guessing and human mistake now.

Companies will discover new and more efficient methods to gather and contextualize data about everything, including customers, as data collection and analytics technology advance. In order for firms to be competitive far into the future, doing this is crucial; failing to do so is like to running a race with your legs tied together. In the contemporary corporate world, insight is king, and insight is derived from contextualized data.

Data privacy regulations

Governments are developing stringent data and consumer privacy legislation in an effort to provide people some degree of control over how their data is used since so much consumer data has been collected and analysed. The four most important consumer privacy laws are listed below.

European Union General Data Protection Requirements

The General Data Protection Regulation (GDPR) of the European Union specifies the guidelines for collecting, storing, using, and exchanging data by businesses. GDPR legislation and compliance are important for all businesses who target or collect personal data from EU people, not just those in European nations.

California Consumer Privacy Act

The California Consumer Privacy Act is the U.S.’s first legislation addressing data privacy (CCPA). The CCPA is similar to GDPR law but differs in that it places the responsibility on customers to choose not to have their data collected rather than on service providers. Additionally, it specifies that, rather than a company’s internal decision-makers, the state would be the one to create any relevant data laws.

Virginia Consumer Data Protection Act

The Virginia Consumer Data Protection Act (VCDPA) will go effective on January 1, 2023. The VCDPA will place the onus on consumers to choose not to have their data processed or sold by corporations, similar to the CCPA. In accordance with the VCDPA, businesses must only keep the data necessary to fulfil their objectives and destroy it thereafter. Companies covered by the VCDPA are required to let customers know about their legal rights and how to exercise them.

Colorado Privacy Act

The Colorado Privacy Act (CPA) will go effective on July 1st, 2023. The CPA necessitates consumer opt-out, much as the CCPA and VCDPA do. The CPA also covers certain kinds of data-based profiling and targeted advertising. Entities that retain data must respond to customer inquiries within 45 days and provide privacy notifications on their websites.

What do consumers think of business data collection?

A 2022 Ipsos survey found that 70% of Americans believe that restricting who gets access to their data has become harder over time. Only 34% of Americans, according to this research, believe that businesses appropriately protect customer data.

Ipsos also inquired of the 1,005 respondents in the survey about their data security practices. Only 16% of respondents used all one of the six data security procedures that Ipsos requested. Another 49% of survey participants completed three or fewer of these activities. The amount of security precautions taken by a responder and their skepticism about effectively regulating access to their data were correlated.

Additionally, 78% of those polled stated they wanted corporations to get their permission before accessing and utilizing their data. Similar to this, 70% desired the option to delete their online data, and 71% wanted to remain anonymous online. Overall, the findings imply that the typical customer is both concerned about and uncertain of how to secure their internet data.

How can you protect your data?

The following actions are advised by experts if you want to keep your data as secret as possible.

Block ads and trackers.

You may have your information collected by the advertisements you see online. There are trackers on many websites that may collect your data, and corporations can access this data. Browser add-ons that stop trackers and adverts may create a privacy wall around this data.

Use a VPN.

When using a VPN to access the internet, data is tunnelled from your device to a server. By obscuring your surfing habits, this tunnelling creates a barrier between companies and your data. Your whole data will also be encrypted by the VPN.

Reconsider free apps and platforms.

Social networking sites are free because they generate money by selling your data. Any free programme can be subject to the same rule. For this reason, you should stay away from free programmes or restrict your use of free apps to those from trusted developers. For instance, while Slack is a paid service, the free Slack mobile app is probably OK. However, a random free game may sell your data if there is no paid version.

Sign up for unimportant memberships with fake information.

No one would advise you to adopt a false identity while applying for, say, health insurance. However, it is a reliable and important service with a separate income source from your personal information. Non-essential services, like a streaming subscription, on the other hand, could sell information about your name, phone number, and address. In this situation, using false information may help secure your data.

Avoid linking your apps.

While connecting your personal applications might make them easier to use, this also means that your data will be shared throughout the connected apps. To avoid creating additional connections between your data and companies, try to avoid linking applications.

The future of business data use

Regulations governing data privacy are altering how companies collect, keep, distribute, and analyse customer data. As more customers demand privacy rights, businesses that are now exempt from data privacy legislation might anticipate a larger legal need to safeguard consumer data. Though it is doubtful that private corporations would stop collecting data, they will likely just vary how they do it as they adjust to new rules and legislation.

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