Companies are collecting data. How are they using it? (2023)

• Businesses may collect consumer data and use it to improve customer experiences and marketing strategies. You can also sell this data to earn income.
• The European Union's General Data Protection Requirements (GDPR) is a general law that governs any business with buyers based in the EU. California, Colorado, and Virginia have enacted similar laws, although there is no federal equivalent.
• Use VPN, implement ad blockers, avoid app linking, choose reputable apps, and sign up for non-essential services with fake credentials to protect your privacy.
• This article is for consumers who want to know how companies use their personal information and how they can protect that information.

As technologies for collecting and analyzing data proliferate, so does the ability for organizations to contextualize data and gain new insights from it. Throughconsumer behaviorYpredictive analytics, companies collect, store, and analyze vast amounts of quantitative and qualitative data about their customer base every day. Some companies have built an entire business model on consumer data, whether it's selling personal information to third parties or creating targeted ads to promote their products and services.

Here's how companies collect consumer data, what they do with that information, and how you can use the same techniques for your own business purposes.

Types of Consumer Data Businesses Collect

The consumer data that companies collect falls into four categories:

1. Personal information.This category includes personally identifiable information, such as social security numbers and gender, as well as non-personally identifiable information, including your IP address, web browser cookies, and device IDs (which both your laptop and mobile device have).
2. Commitment data.This type of data describes how consumers interact with a company's website,mobile apps,text messages, social media pages, emails, paid ads, and customer service routes.
3. behavior data.This category includes transaction details such as purchase histories, product usage information (eg, repeated actions), and qualitative data (eg, mouse movement information).
4. configuration data.This type of data includes consumer satisfaction metrics, purchase criteria, product desire, and more.

How do companies collect your data?

Companies collect data in a variety of ways from many sources. Some survey methods are highly technical, while others are more deductive (although these processes often use sophisticated software).

But the bottom line is that companies are using a myriad of collection methods and sources to collect and process customer data into metrics, with an interest in types of data ranging from demographic data to behavioral data, said Liam Hanham, manager of data science on Workday.

“Customer data can be collected in three ways: by directly interviewing customers, indirectly tracking customers, and attaching otherCustomer data sourceson their own," Hanham said. "A strong business strategy needs all three."

Companies are experts at reading all kinds of data from almost every corner. The most obvious places come from consumer activity on your websites and social media pages, or through customer calls and live chats, but more interesting methods work as well.[Make sure your company has themThe best business phone system.]

an example isLocation-Based Advertising, which uses tracking technologies such as the IP address of an Internet-connected device (and the other devices you interact with; your laptop may interact with your mobile device and vice versa) to create a personalized data profile. This information is then used to target users' devices with relevant hyper-personalized advertising.

Companies also dig into their customer service records to see how customers are doing.interact with salesand support departments in the past. Here they incorporate direct feedback at scale about what worked and what didn't work, what a client liked and didn't like.

In addition to collecting information for business purposes, companies selling personal information and other data to third-party sources have become common. Once recorded, this information regularly changes hands in your own data mart.

Key taking:Customer data can be collected in three ways: by interviewing customers directly, by tracking customers indirectly, and by aggregating other customer data sources to yours.

Turn data into knowledge

The collection of large amounts of data leads to the problem of how to order and analyze all this information. No human being could reasonably sit and read customer data line by line all day, and even if they could, they probably wouldn't make much of a dent. However, computers analyze this data faster and more efficiently than humans, and can work 24/7/365 without interruption.

AndMachine learning algorithmsAs other forms of AI proliferate and improve, data analytics becomes an even more powerful field for breaking down the sea of ​​data into manageable chunks of actionable insights. Some AI programs flag anomalies or offer recommendations to decision makers within an organization based on contextualized data. Without such programs, all the data collected around the world would be completely useless.

Above:Hebest crm softwareIt can be used to store customer data in an easily accessible way, making it useful for your sales and marketing teams.

How do companies use your data?

There are different ways that companies use the consumer data they collect and the insights they gain from that data.

1. To improve the customer experience

For many businesses, consumer data offers a way to better understand and understand customer needs.increase customer loyalty. By analyzing customer behavior and a large number of reviews and comments, businesses can flexibly tailor their digital presence, goods or services to the current market.

Companies are not only using consumer data to improve the overall consumer experience, but are also using it to make decisions at the individual level, said Brandon Chopp, digital manager at iHeartRaves.

"Our primary source of marketing intelligence is to understand customer data and use it to improve the functionality of our website," Chopp said. “Our team improved the customer experience by creating personalized promotions and special offers based on customer data. Since each client will have their own individual preferences, personalization is key.”

2. To refine a company's marketing strategy

Contextualized data can help companies understand how consumers interact and respond to their marketing campaigns and adapt accordingly. This highly predictive use case gives companies insight into what consumers want based on what they have already done. As with other aspects of consumer data analysis, marketing is increasingly about personalization, said Brett Downes, director of Haro Helpers.

"It is now imperative to map user journeys and personalize their journey, not only through your website, but also on platforms like YouTube, LinkedIn, Facebook or any other website," Downes said. “Effective data segmentation allows you to market to only the people you know are most likely to engage. These have opened up new opportunities in industries that were previously difficult to market.”

3. To convert data to cash flow

Companies that collect data benefit from it.data broker, or data service providers who buy and sell information about customers, has emerged as a new industry along withbig data. For companies that collect vast amounts of data, collecting information and then selling it presents opportunities for new revenue streams.

This information is immensely valuable to advertisers and they will pay for it, increasing the demand for more and more data. This means that the more diverse data sources data brokers can use to build richer data profiles, the more money they can make selling that information to each other and to advertisers.

4. To back up more data

Some companies even use consumer data to protect more sensitive information. For example, banking institutions sometimes use voice recognition data to authorize a user to access their financial information or to protect them from fraudulent attempts to steal their information.

These systems work by combining data from a customer's interaction with a call center, machine learning algorithms, and tracking technologies that can identify and flag potentially fraudulent attempts to access a customer's account. This saves quite a bit of guesswork and human error when trying to catch a scam.

As data collection and analysis technologies become more sophisticated, companies will find new and more effective ways to collect and contextualize data about everything, including consumers. This is essential for companies if they want to remain competitive in the future; If you don't, it's like running with your legs tied. Insight is king, and insights into the modern business environment come from contextualized data.

Privacy Policy

So much consumer data has been collected and analyzed that governments are imposing strict consumer privacy laws to give people some level of control over how their data is used. Below are four important consumer privacy statements.

General data protection requirements of the European Union

Those of the European UnionGeneral data protection requirements (GDPR)establishes the rules of collection, storage, use and disclosure of data for companies. GDPR regulation and compliance is not only relevant to European countries: it is a law that applies to any company that targets or collects personal data from EU citizens.

Did you know?:Companies that breach the GDPR and their legal obligation to protect consumer data can face fines of up to €20 million or up to 4% of annual revenue, whichever is higher.

California Consumer Privacy Act

Data protection came to the US in the form ofdem California Consumer Privacy Act(CCPA). The CCPA is similar to the GDPR regulation, but differs in that it asks consumers to opt out of data collection rather than holding service providers accountable. It also names the state as the authority that develops applicable data law, rather than a company's internal decision makers.

Virginia Consumer Privacy Act

On January 1, 2023, the Virginia Consumer Data Protection Act (VCDPA) goes into effect. As with the CCPA, the VCDPA will require consumers to opt out of allowing companies to process or sell their data. The VCDPA will also require organizations to only store data relevant to their goals and then delete that data once the goal is reached. All businesses to which the VCDPA applies must inform consumers of their legal rights and how to exercise them.

Colorado Privacy Law

On July 1, 2023, the Colorado Privacy Act (CPA) goes into effect. As with the CCPA and VCDPA, the CPA requires consumers to opt out. CPA also covers targeted advertising and certain types of data-driven profiling. Data custodians must process consumer inquiries within 45 days and display privacy notices on their websites.

What do consumers think about business data collection?

sea ​​aIpsos Survey 2022, 70% of Americans believe that over time it has become more difficult to limit who can and cannot access their data. This survey also found that only 34% of Americans believe that companies adequately protect consumer data.

Ipsos also asked the 1,005 respondents how they protect their data. Only 16% of respondents have implemented all six data security measures Ipsos asked about. Another 49% of respondents have taken three or fewer of these actions. There was a correlation between the number of security measures a respondent took and their cynicism about properly controlling access to their data.

Additionally, 78% of respondents said they wanted to require companies to obtain their consent before accessing and using their data. Similarly, 71% wanted to remain anonymous online and 70% wanted the ability to remove their information from the internet. Overall, the results suggest that the average consumer is concerned about their data online and unsure how to protect it.

How can you protect your data?

Experts recommend the following steps to keep your data as private as possible.

• Block ads and trackers.Ads you encounter while browsing the web may collect your data. Many websites also contain trackers that can retrieve your data, and companies can access this data. Browser extensions that block ads and trackers can create a privacy barrier around this information.
• One first VPN.When you browse the web with a VPN, it funnels information from your device to a server. This tunnel hides your browsing activity and builds a wall between the business and your data. The VPN also encrypts all your data.
• Rethink free apps and platforms.Social media platforms are free because they sell your data for profit. The same goes for any free app. That is a reason to avoid free apps or to limit the use of free apps to only those from reputable companies. For example the freeCupboardThe mobile app is probably fine since you can pay for Slack. But a random free gaming app with no payment option could sell your data.
• Sign up for non-essential memberships with false information.No one would tell you to use a fake name, phone number, or address for things like your health insurance. But this is a reliable and necessary service with an independent income stream from your personal information. On the other hand, non-essential services, for example a streaming subscription, could sell your name, phone number and address details. The use of false information in this case can protect your data.
• Avoid linking your apps. Connecting your personal apps can make them more convenient to use, but these apps also share your data with each other. See if you can stop connecting apps so you no longer connect your data to the business.

The future of enterprise data usage

Privacy regulations are changing the way companies collect, store, share and analyze consumer data. Businesses previously unaffected by data protection regulations can expect a greater legal obligation to protect consumer data as more consumers demand privacy rights. However, data collection by private companies is unlikely to disappear; it will only change in shape as companies adjust to new laws and regulations.

Adam Uzialko also contributed reporting and writing for this article. Some source interviews were conducted for an earlier version of this article.