The capacity of organizations to contextualize data and get new insights from it is increasing in tandem with the proliferation of technology that acquires and analyze data. Companies typically acquire, store, and analyze vast volumes of quantitative and qualitative data about their customer base on a daily basis through Consumer behavior and predictive analytics. Some Businesses have constructed their whole revenue streams on the backs of customer data, whether it be the sale of personally identifiable information to a third party or the creation of targeted advertisements to market their goods and services.

Here is a look at some of the methods that businesses use to collect data from customers, what they do with the information that they collect, and how you might employ the same strategies for the benefit of your own company.

Types of Consumer Data Businesses Collect

The information on customers that companies gather can be classified into the following four groups:

Personal Data

This category includes information that can be used to identify you personally, such as your Social Security number and gender, as well as information that cannot be used to identify you personally, such as your Internet Protocol (IP) address, web browser cookies, and device IDs (which both your laptop and mobile device have).

Engagement Data

This category of data provides insight into the ways in which customers engage with a company's digital properties, including its website, mobile applications, text messages, social networking sites, emails, sponsored advertisements, and customer care channels.

Behavioral data

This category covers qualitative data as well as transactional facts like purchase histories and product usage statistics like the number of times a certain activity was performed (e.g., mouse movement information).

Attitudinal Data

This type of data includes measurements regarding customer happiness as well as buying criteria, product desirability, and other related topics.

How Do Businesses Collect Your Data?

Companies collect data in a variety of methods and from a wide variety of sources. Some of the methods of collection are very technically advanced, while others are more deductive (although these processes often employ sophisticated software).

According to Liam Hanham, data science manager at Workday, the bottom line is that businesses are using a cornucopia of collection methods and sources to capture and process customer data on metrics. There is interest in sorts of data ranging from demographic data to behavioral data.

"Customer data may be obtained in three ways: by directly asking consumers, by indirectly following customers, and by appending other sources of customer data to your own," said Hanham. "directly asking customers" is the first method. "indirectly tracking customers" is the second method. "A strong commercial plan must incorporate all three."

Companies are experts at extracting various kinds of data from virtually every nook and cranny of their operations. The most apparent locations to look for this information are customer activity on the company's websites and social media pages, as well as through client phone calls and live chats; but, there are also other, more interesting approaches at work.

An example of this would be location-based advertising, which creates a personalized data profile by employing tracking technologies such as the IP address of a device that is connected to the internet (and the other devices that it interacts with, like how your laptop may interact with your mobile device, and vice versa) The devices used by users are then targeted with highly tailored and pertinent advertising using the information collected from those users.

Additionally, businesses delve deeply into the records of their customer service departments to investigate how clients have engaged with the company's sales and support departments in the past. On this scale, they are incorporating direct feedback from customers regarding what was successful and what was unsuccessful, as well as what they liked and did not like.

Companies are becoming frequent that, in addition to collecting information for commercial objectives, also engage in the practice of selling personal information and other data to outside parties. After being gathered, this information frequently changes hands in a market all its own called the data marketplace.

Turning Data into Knowledge

The difficulty of how to filter through and evaluate all of that information is a problem that arises when vast amounts of data are captured. It is unreasonable to expect a human to be able to spend an entire day reading line after line of customer data, and even if one were capable of doing so, they probably wouldn't make much of a difference even if they did. Computers, on the other hand, are able to sort through all of this information far more rapidly and effectively than humans are, and they don't need to take breaks because they can work around the clock.

Data analytics is becoming an even more powerful field as machine learning algorithms and other forms of artificial intelligence continue to proliferate and improve. This is because data analytics is responsible for breaking down massive amounts of data into manageable and actionable nuggets of insight. Some artificial intelligence technologies will alert decision-makers inside an organization to any abnormalities or provide recommendations to them based on the contextualized data. Without programs such as this, all of the data that has ever been collected in the history of the world would be completely pointless.

How Do Businesses Use Your Data?

The information on their customers that businesses collect and the conclusions they derive from that information are put to use in a variety of ways by those businesses.

1. To Improve the Customer Experience

The collection and analysis of consumer data present a number of businesses with the opportunity to improve their understanding of client requirements and increase customer participation. When businesses evaluate the actions of their customers as well as enormous stores of reviews and comments, they are able to rapidly adjust their digital presence, as well as their products and services, to be more in line with the needs of the existing market.

According to Brandon Chopp, digital manager at iHeartRaves, companies do not only use consumer data to better customer experiences on a global scale, but they also use it to make decisions on an individual level.

According to Chopp, "understanding client data and utilizing it to improve the performance of our website" is the most essential source of marketing intelligence for their company. Our team was able to provide a better experience for our customers by personalizing our promos and making special offers depending on the information we collected from them. Personalization is essential because each individual consumer is going to have their own unique preferences.

2. To Refine a Company’s Marketing Strategy

Data that has been given context can assist businesses in understanding how customers are interacting with and responding to their marketing campaigns, allowing for the necessary adjustments to be made. This highly predictive use case provides companies with a sense of what customers want based on what they have already done, which is helpful for improving customer satisfaction. According to Brett Downes, director of Haro Helpers, personalization is becoming more important in marketing in the same way that it is in other elements of consumer data research.

According to Downes, "mapping the user experiences and personalizing their trips, not just through your website but further onto platforms like YouTube, LinkedIn, Facebook or on to any other website, is now crucial." "When you successfully segment data, you are able to market to only the people you know are most likely to engage with your content." These have made previously difficult-to-market-to industries accessible to previously unexplored opportunities.

3. To Transform the Data into Cash Flow

Businesses that are able to collect data will be in a position to profit from it. Alongside the rise of big data has come the emergence of a new business known as data brokerage, which consists of data service providers or data brokers that buy and sell information about clients. The gathering of information and the subsequent sale of that information presents prospects for new revenue streams for firms that capture vast amounts of data.

As a result of the fact that advertisers place a high value on this information and are willing to pay for it, there is an ever-increasing need for further data. Therefore, data brokers can make more money by selling this information to one another and to advertisers if they can pull data from a wider variety of data sources and package it in a more comprehensive manner. The more data sources they have access to, the more thorough data profiles they can create.

4. To Secure More Data

Some companies even use the data they collect from customers as a safeguard for other, more sensitive information. For instance, financial institutions will occasionally make use of voice recognition data in order to authenticate users in order to grant them access to their personal financial information or in order to safeguard them from fraudulent efforts to steal their information.

These systems are able to identify and flag potentially fraudulent attempts to access a customer's account by combining data from a customer's interaction with a call center, machine learning algorithms, and tracking technologies. This data comes from the customer's interactions with the call center. This eliminates some of the room for error that was previously caused by human guesswork.

Companies will discover new and more effective ways to collect and contextualize data about everything, including customers, as data capture and analytics technology get more sophisticated. If a company wants to continue to be competitive well into the future, doing so is absolutely necessary; failing to do so is analogous to competing in a race while having your legs tied together. In the modern world of business, gaining insight is essential, and the best way to do so is by analyzing data in its proper context.

Data Privacy Regulations

Because of the vast amounts of consumer data that have been collected and analyzed, countries are currently working to enact stringent data and consumer Privacy legislation. These regulations are intended to provide individuals some degree of control over the ways in which their data is utilized. The following are some of the most notable consumer privacy regulations:

European Union General Data Protection Requirements

The General Data Protection Requirements (GDPR) of the European Union establish the guidelines for how businesses should collect, store, use, and share customers' personal information. Regulation and compliance with GDPR are not just important for European nations; it is a law that applies to every business that targets or gathers the personal data of individuals in EU countries.

California Consumer Privacy Act

By way of the California Consumer Privacy Act, data privacy has finally arrived in the United States (CCPA). While General Data Protection Regulation (GDPR) is focused on service providers, California's Consumer Privacy Act (CCPA) places the onus on customers to exercise choice about whether or not their data is collected. Also, the state, not a company's internal decision-makers, is tasked with crafting data laws under this provision.

Virginia Consumer Data Protection Act

The Virginia Consumer Data Protection Act (VCDPA) will become law in the state on January 1, 2023. VCDPA, like CCPA, will require individuals to exercise choice regarding the use and disclosure of their personal information. Under the VCDPA, businesses will be obligated to keep just the information necessary to accomplish their missions and to permanently destroy that information after those missions are complete. Companies subject to the VCDPA have a responsibility to educate their customers on their legal rights and the steps they can take to enforce them.

Colorado Privacy Act

The Colorado Privacy Act (CPA) will become law on July 1, 2023. The CPA, like the CCPA and the VCDPA, mandates an opt-out mechanism for consumers. The CPA extends to data-based profiling and targeted advertising. Within 45 days, businesses that collect personal information must respond to consumers' requests and post privacy policies on their websites.

What Do Consumers Think of Business Data Collection?

According to a survey conducted by Ipsos in 2022, seventy percent of respondents believe that controlling who can view private information has gotten more difficult. Only 34% of American adults believe that businesses provide sufficient protection for customer information.

In addition to asking about their overall approach to data security, Ipsos polled 1,005 people specifically regarding this topic. Ipsos found that only 16% of respondents really used all 6 data security procedures they were instructed to use. A further 49% of participants used only 3, and none of, these tools. A respondent's pessimism about effectively managing access to their data was related to the number of security measures they had implemented.

Seventy-eight percent of those polled also stated they wanted businesses to get their permission before accessing and using their data. Seventy-one percent felt the same way about maintaining their online anonymity, and 70 percent wanted the option to erase their digital footprint. The results as a whole reveal that the typical consumer is concerned about the security of their personal information while shopping online but is unaware of what steps to take to ensure its safety.

How Can You Protect Your Data?

For maximum data secrecy, experts advise the following precautions.

Block Ads and Trackers

Online advertisements may track your movements and collect personal information. Additionally, many websites use tracking tools that might collect information about you, which can then be sold to other parties. A privacy wall can be built around this data by using a browser extension to restrict advertisements and trackers.

Use a VPN

By connecting your device to a remote server, you can safely and securely surf the web via a virtual private network (VPN). As you browse the web, your tunneling activity remains hidden, blocking access to your data by advertisers. All of your data will be encrypted by the VPN as well.

Reconsider Free Apps and Platforms

To generate revenue, social media sites provide their services for free. It's possible that this is true of any app that's available for no cost. This is why it's best to pay for apps instead of downloading them for free. Because of this, you can conclude that the free Slack mobile app is adequate. However, your personal information could be sold by an otherwise harmless free gaming software that offers no in-app purchases.

Sign Up for Unimportant Memberships with Fake Information

If you were to apply for health insurance, for example, no one would advise you to use a false name, phone number, or address. But that is an essential and reliable service that generates income without access to your private information. Whereas, your personal information may be sold by less crucial businesses like streaming subscriptions. In this situation, using false information can help keep your data secure.

Avoid Linking Your Apps

The convenience of interconnecting your personal apps comes at the cost of data sharing between them. Try not to make any new connections between your data and businesses by using connected apps.

The Future of Business Data Use

Data privacy requirements are influencing how companies collect, maintain, distribute, and study customer information. Increasing consumer demands for privacy rights mean that even industries not yet regulated for data privacy have a legal obligation to safeguard customer information. However, private sector data collecting is here to stay and will certainly take on new forms as companies comply with emerging legislation.