- 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:
- 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).
- 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.
- behavior data.This category includes transaction details such as purchase histories, product usage information (eg, repeated actions), and qualitative data (eg, mouse movement information).
- 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.
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.
What are companies doing with our data? ›
The main thing companies do with your data is build a customer profile of you so they have a better understanding of who you are and what you're interested in.How do you think companies collect and use data about you? ›
There are essentially three different ways that companies collect data about their customers. By asking them directly for it, indirectly tracking them, and by acquiring it from other companies. Most firms will be asking customers directly for data at some point – usually early on – in their relationship with them.Why do companies collect data? ›
Companies use data collection when they want to obtain information about either internal or external operations. Effective data collection involves an analysis of the company's existing processes and understanding of how changes impact the company.How do big companies use your data? ›
Companies use this data to send targeted marketing, make credit and loan evaluation, medical research, and crime analysis for financial benefit.How do big tech companies use our data? ›
The types of data collected by Big Tech companies and other digital platforms can include location, search history, purchase history, emails both written and received, and more. For example, companies can use data internally to figure out who to send coupons to or how to improve their efficiency.What companies collect the most data? ›
Out of all the companies on this list, Google collects and stores most of your information by far. That's not surprising, as their business model relies on knowing as much data as possible (and making it super easy for you to access).How does Nike use big data? ›
Nike uses their data to serve customers more targeted offers, including products and services. Through the Nike Plus rewards program, customers can get access to personalized workouts and sports experts.What are the 5 ways of collecting data? ›
- Surveys and Questionnaires. ...
- Interviews. ...
- Observations. ...
- Records and Documents. ...
- Focus Groups.
- Optimize your product for users.
- Improve customer experience.
- Make personalized offers.
- Run personalized marketing campaigns.
- Use it to predict the future.
- Fine-tune your loyalty program to grow sales.
- Improve your content marketing.
- License Plates. ...
- Cookies. ...
- Heatmaps. ...
- GPS Tracking. ...
- Signal Trackers. ...
- In-Store WiFi Activity. ...
- Credit or Loyalty Cards. ...
- Social-Media Activity.
How do companies use data? ›
But why do companies need so much data? Data can help them with many things, but most importantly, it can help them identify new business opportunities which can generate more sales and create a better customer experience. It also makes decision-making faster and solving problems more efficient.What is are the main purpose for data collection *? ›
The main purpose of data collection is to gather information in a measured and systematic manner to ensure accuracy and facilitate data analysis. Since the data collected is meant to provide content for data analysis, the information gathered must be of the highest quality for it to be of value.Why is data collection important in the workplace? ›
Collecting and analysing data is important as it can help you: Provide information about the effectiveness of your well-being activities. Identify well-being activities that may need improving or removing.How does McDonald's use data? ›
McDonald's is partnering with IBM on the AOT initiative, relying on their expertise in delivering customer care solutions with AI and natural language processing. AOT automates customer interactions, using customer data and order details to accelerate order accuracy and fulfillment with minimal human intervention.How does Walmart use data analytics? ›
Walmart uses data mining to discover patterns in point of sales data. Data mining helps Walmart find patterns that can be used to provide product recommendations to users based on which products were bought together or which products were bought before the purchase of a particular product.How does Starbucks use data? ›
Data analytic & Product and Sales decisions:
The data assists in identifying a potential new store location. Before recommending a new location, the tool analyzes a wealth of data, including accessibility to other Starbucks locations, demographics, traffic patterns and more.
Data science solves real business problems by utilising data to construct algorithms and create programs that help prove optimal solutions to individual problems. Data science solves real business problems using hybrid math and computer science models to get actionable insights.What data does Amazon collect? ›
Amazon is also collecting data on what browser and device you use, what links you clicked, what pages you visited, and what products you searched for. All of this is helping the company create a complete picture of you as a customer, and therefore hopes to provide you with a better shopping experience.Which industry uses the most data? ›
- Banking and Securities.
- Communications, Media and Entertainment.
- Healthcare Providers.
- Manufacturing and Natural Resources.
- Retail and Wholesale trade.
- Forms and Questionnaires. ...
- Interview. ...
- Observation. ...
- Documents and Records. ...
- Focus Groups. ...
- Oral Histories. ...
- Combination Research. ...
- Online Tracking.
Who uses the most data in the world? ›
|Characteristic||Number of internet users in millions|
Data-Driven Product Development
Using this data, Coca-Cola could pinpoint popular flavor combinations and, based on that information, essentially, crowdsource new product ideas. For example, Cherry Sprite was inspired by the data pulled from Freestyle dispensers.
Taking it a step further, Starbucks has also been collecting data on weather patterns and their relationship with customer order patterns. Doing so allows the company to provide even more personalized experiences and promotions such as targeting a customer with cold drinks on hot days.How does PepsiCo use data? ›
PepsiCo relies on huge volumes of data to accurately supply its retailers in more than 200 countries to serve a billion customers every day. Supplying too much product results in wasted resources. Supplying too little means risking profit loss—and the company must reconcile with unhappy, empty-handed retailers.What are basic methods of collecting data for companies? ›
Some common data collection methods include surveys, interviews, observations, focus groups, experiments, and secondary data analysis. The data collected through these methods can then be analyzed and used to support or refute research hypotheses and draw conclusions about the study's subject matter.What is an example of collecting data? ›
Some data collection methods include surveys, interviews, tests, physiological evaluations, observations, reviews of existing records, and biological samples.What are the 4 main sources for collecting data? ›
The main techniques for gathering data are observation, interviews, questionnaires, schedules, and surveys.What do companies use to manage data? ›
These include accounting software, customer relationship management (CRM) software, point of sale software, credit card processing software and more. These systems feed a wide variety of data into the business, including customer data, financial data and more.How could a company use data to improve customer experience? ›
- Personalize. Treat every customer interaction with your business as a data point. ...
- Reduce friction. ...
- Understand customer behavior. ...
- Target the right customers. ...
- Predict future trends. ...
- Build customer loyalty.
- Use Existing Data.
- Solicit Customer Feedback.
- Customer Journey Mapping.
- Input from Service Team.
- Study Competitors.
- Social Media Listening.
- Keyword Research.
Is it ethical for companies to collect data? ›
Just as it's considered stealing to take an item that doesn't belong to you, it's unlawful and unethical to collect someone's personal data without their consent.Is a company allowed to use the data they collect from their customers? ›
Since there are no federal privacy laws regulating many companies, they're pretty much free to do what they want with the data, unless a state has its own data privacy law (more on that below). In most states, companies can use, share, or sell any data they collect about you without notifying you that they're doing so.How are companies using data analytics? ›
Data analytics help to improve business management by helping leaders assess the effectiveness of current workflows, analyze the outcomes of the processes, automate new workflows, and refine them over time. Data also allows leaders to determine if processes are burdensome, draining the budget, or challenging to use.How do companies use data analytics examples? ›
- Increasing the quality of medical care. ...
- Fighting climate change in local communities. ...
- Revealing trends for research institutions. ...
- Stopping hackers in their tracks. ...
- Serving customers with useful products. ...
- Driving marketing campaigns for businesses.
Social media keeps a record of everything a user does on its platform. So, you can get social data metrics like response rate, response time, click-through rate, reach, impressions, and engagement. Expert marketers use these metrics to make informed decisions about different aspects of their business.Why data is so important? ›
Good data allows organizations to establish baselines, benchmarks, and goals to keep moving forward. Because data allows you to measure, you will be able to establish baselines, find benchmarks and set performance goals. A baseline is what a certain area looks like before a particular solution is implemented.What are the five importance of data collection? ›
In this article, we will cover five broad areas that significantly increase data's importance. Those five areas are (in no particular order of importance); 1) decision-making, 2) problem solving, 3) understanding, 4) improving processes, and 5) understanding customers.What are the challenges faced during data collection? ›
Lack of quality assurance processes
Additionally, the sophistication of record keeping systems can vary and data quality is often reliant on the person entering the data correctly. Depending on the resourcing of an organisation, time may not permit staff to review information for completeness and obtain missing data.
Diagnosing. Predicting. Prescribing. These are the four main uses of data.Does Mark Zuckerberg sell our data? ›
“We don't sell people's data, even though it's often reported that we do,” Zuckerberg wrote in a lengthy Wall Street Journal op-ed. In fact, selling people's information to advertisers would be counter to our business interests, because it would reduce the unique value of our service to advertisers.
How do I stop companies using my data? ›
- Enable multi-factor authentication for all your logins around the web. ...
- Use a password manager to keep track of your credentials. ...
- Read app and website privacy policies. ...
- Lie while filling out web forms. ...
- Just say no to unnecessary data collection.
Since there are no federal privacy laws regulating many companies, they're pretty much free to do what they want with the data, unless a state has its own data privacy law (more on that below). In most states, companies can use, share, or sell any data they collect about you without notifying you that they're doing so.Can I ask a company to delete my data in the US? ›
Answer. Yes, you can ask for your personal data to be deleted when, for example, the data the company holds on you is no longer needed or when your data has been used unlawfully. Personal data provided when you were a child can be deleted at any time.Does Amazon sell your data? ›
Does Amazon Share Your Personal Information? Information about our customers is an important part of our business, and we are not in the business of selling our customers' personal information to others.Who owns the most data in the world? ›
Google collects the most amount of data out of its users, according to a new study done on companies that collect them.Does Google sell your data to the government? ›
“We never sell people's personal information and we have strict policies specifically prohibiting personalized ads based on sensitive categories,” Google spokesperson José Castañeda told the San Francisco Chronicle in May.Can a company steal your data? ›
Theft of confidential information law is a legal area that covers both business information and customer data stolen from a company. When confidential data is stolen from a computer or a network, a company has the right to file a lawsuit against the responsible party under the Computer Fraud and Abuse Act.Can my data company see what I search? ›
Yes. In order to connect you to the internet and allow you to visit websites, your data must pass through your ISP's gateway servers. This can allow your ISP to track the websites you visit and any downloads you make.How to stop data mining? ›
One of the best ways to stop data miners from getting your information is to use a secure VPN. Normally, when you want to access the internet, you would need an IP address. This IP address contains private information about you such as your location.Can you refuse a data request? ›
You can refuse an entire request under the following circumstances: It would cost too much or take too much staff time to deal with the request. The request is vexatious. The request repeats a previous request from the same person.
Who collects the most data? ›
Out of all the companies on this list, Google collects and stores most of your information by far. That's not surprising, as their business model relies on knowing as much data as possible (and making it super easy for you to access).How long can a company hold data for? ›
The answer depends on the type of data. For applicant data, we recommend six months. For payroll information, three years. For employee records, six years.How long can companies keep data about you? ›
If an employee claims that you've breached their contract, they might take you to the civil courts. They can do this within six years of the alleged breach. As a result, you should keep personal data, performance appraisals and employment contracts for six years after an employee leaves.How long does a company have to erase data? ›
An organisation has one calendar month to respond to your request. In certain circumstances they may need extra time to consider your request and can take up to an extra two months. If they are going to do this, they should let you know within one month that they need more time and the reasons why.