Many businesses collect data for multifold purposes. Here's how to know what they're doing with your personal data and whether it is secure.
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As technologies that capture and analyze data proliferate, so, too, do businesses' abilities to contextualize data and draw new insights from it. Artificial intelligence is a critical tool for data capture, analysis, and collection of information that many businesses are using for a range of purposes, including better understanding day-to-day operations, making more informed business decisions and learning about their customers.
Customer data is a focus area all its own. From consumer behavior to predictive analytics, companies regularly capture, store, and analyze large amounts of quantitative and qualitative data on their consumer base every day. Some companies have built an entire business model around consumer data, whether they're companies selling personal information to a third party or creating targeted ads. Customer data is big business.
Here's a look at some of the ways companies capture consumer data, what exactly 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 businesses collect can be broken down into four categories:Personal data. This category includes personally identifiable information such as Social Security numbers and gender as well as nonpersonally identifiable information, including your IP address, web browser cookies, and device IDs (which both your laptop and mobile device have).Behavioral data. This category includes transactional details such as purchase histories, product usage information (e.g., repeated actions), and qualitative data (e.g., mouse movement information).Attitudinal data. This data type encompasses metrics on consumer satisfaction, purchase criteria, product desirability and more.
How do businesses collect your data?
Companies capture data in many ways from many sources. Some collection methods are highly technical in nature, while others are more deductive (although these processes often employ sophisticated software).
The bottom line, though, is that companies are using a cornucopia of collection methods and sources to capture and process customer data on metrics, with interest in types of data ranging from demographic data to behavioral data, said Liam Hanham, data science manager at Workday.
"Customer data can be collected in three ways: by directly asking customers, by indirectly tracking customers, and by appending other sources of customer data to your own," said Hanham. "A robust business strategy needs all three."
Businesses are adept at pulling in all types of data from nearly every nook and cranny. The most obvious places are from consumer activity on their websites, social media pages, through customer phone calls and live chats, but there are some more interesting methods at work as well.
One example is location-based advertising, which utilizes tracking technologies such as an internet-connected device's IP address (and the other devices it interacts with – your laptop may interact with your mobile device and vice versa) to build a personalized data profile. This information is then used to target users' devices with hyperpersonalized, relevant advertising.
Companies also dig deep into their customer service records to see how customers have interacted with their sales and support departments in the past. Here, they are incorporating direct feedback about what worked and what didn't, what a customer liked and disliked, on a grand scale.
Besides collecting information for business purposes, companies that sell personal information and other data to third-party sources have become commonplace. Once captured, this information is regularly changing hands in a data marketplace of its own.
Data privacy has made it to the U.S. in the form of the California Consumer Privacy Act (CCPA). The CCPA is, in some ways, similar to GDPR regulation but differs in that it requires consumers to opt out of data collection rather than putting the onus on service providers. It also names the state as the entity to develop applicable data law rather than a company's internal decision-makers.
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Data privacy regulations are changing the way businesses capture, store, share and analyze consumer data. Businesses that are so far untouched by data privacy regulations can expect to have a greater legal obligation to protect consumers' data as more consumers demand privacy rights. Data collection by private companies, though, is unlikely to go away; it will merely change in form as businesses adapt to new laws and regulations.
Adam Uzialko also contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.