Data is the Knowledge that Fuels the Digital Economy
User data is being collected at an accelerating pace as companies run their own predictive analytics based on consumer behavior. This information is highly valuable to companies actively searching for comprehensive insights into their customers.
Data can offer companies many advantages, especially if they know how to use it to increase their impact on consumers in the market. They would be able to adjust their business model according to how users respond to their brand online.
In fact, plenty of businesses already capture data by scoring social media pages and mapping the location of user devices, sometimes selling it to third-party sources without notifying the user.
What businesses are doing with consumer data
Recently, companies are turning their attention to user data and acquiring the means to store and collect it in their database monitoring systems. Although they have the tools to gather data in masse, converting it into working knowledge poses another challenge.
Data analytics algorithms must break down lines of data into actionable insights for business decision-makers, providing recommendations on how they can manage their limited resources. In short, these programs allow companies to predict consumer actions and understand what they really want.
User data is the primary source of many sound business strategies.
Data does more than just assess workplace performance, it can reveal unforeseen opportunities to build new streams of revenue from long-time clients. If data analysts are willing to look beyond their immediate dashboard and examine the key metrics, they could formulate a strategy to help the business grow faster.
Consumer data is invaluable for optimizing the customer experience.
Providing quality customer service is crucial for satisfying clients and maintaining a steady cash flow. Customer reviews and feedback can be used to modify a brand’s products and services to meet the demands of the marketplace. Businesses will be able to improve their website’s usability to deliver convenience to their online shoppers.
Consumer data lets businesses personalize their marketing campaigns.
Contextual data offers a way to refine conventional methods of digital advertising. Businesses can now identify what kind of content consumers would be interested in by checking their past interactions with the brand’s promotional campaigns. This information allows marketers to customize their social media posts and business listings to increase engagement with their audience.
Data can strengthen security by restricting access to sensitive information.
Consumer data serves another purpose in protecting business data, as a means to secure user privacy. This is important for banks where suspicious log-in attempts are disabled to prevent further access to bank accounts. Many service providers will add a layer of authentication to confirm a user’s identity after they sign-up.
Data drives product innovation by presenting an accurate report of consumer needs.
Consumer data contributes to new product developments in that businesses rely on market indicators to figure out what features they should introduce to their current product line. This approach helps them align with customer expectations to ensure they have a profitable venue to work with.
The Potential Risks of Acquiring Personal Data
Indeed, unrestricted data collection isn’t without its consequences, especially when businesses rely on their data-driven technology to provide personalized customer experiences before they know what the customer is trying to accomplish.
While these machines can remember what people buy online, and recommend related products to them, they don’t understand human boundaries and may accidentally intrude on the personal lives of people who are unaware that their activities were being watched by a built-in algorithm.
Moreover, a large number of consumers have expressed their concerns about the loss of data privacy, becoming wary of web browsers that track their digital footprint without asking for permission.
Or maybe a lot of users are just tired of being bombarded with irrelevant video ads and email newsletters sign-ups whenever they go visit any site to do some reading.
What has been done to protect consumer data?
To mitigate the risks of data leaks, the government has imposed rigid data privacy regulations on businesses so they would comply with laws applied to the capture, usage, storage, and sharing of user data. This gave companies an incentive to invest in database security and maintenance despite the higher cost.
This includes asking for the user’s consent before allowing a data gathering system to proceed with compiling it for business use. Media publications are required to display notifications that inform users of third-party cookies before they land on a single webpage.
Users can adjust their browser settings to block others from seeing their search history. Some extensions even offer the option to encrypt user data thus preserving its integrity. And as always, users have control over what happens to their data, being able to access it upon request or have it transferred to a different organization.
Less is More When Extracting Private Data for Further Analysis
The goal isn’t to collect as much data as possible, but rather to create impactful encounters with clients to earn their trust over time. Otherwise, businesses run into a problem of diminishing returns on the scalability of valuable data.
Data is now a new form of currency in which users agree to submit their contact information but get to receive instant benefits such as express delivery services and premium membership discounts in return.
The point is that companies should aim to collect only the data they need to process a digital transaction and avoid prying into the personal lives of their shoppers even if this information is eventually removed from their database.
Privacy is a Concern When Companies are Mining Data
In the age of AI and big data, consumers are at risk of losing their privacy rights. If the government doesn’t step in, companies will be susceptible to greed and might resort to eavesdropping on users to raise their profits. One good example of this is an incident involving Amazon Echo, a smart device that uses the virtual assistant Alexa.
One Alexa user contacted Amazon to retrieve his personal data but Amazon sent him more than a thousand audio recordings from someone he didn’t recognize–a large zip file of transcripts detailing Alexa’s response to voice commands which revealed too much about this person’s activities at home.
This prompted further investigation into Amazon’s data collection protocols since these audio transcripts are in violation of EU privacy regulations. It just shows that a careless mistake can easily compromise one’s privacy. Therefore, it’s imperative for companies to refrain from tracking users without their consent.
For companies to monetize everything they learn about consumers without their permission demonstrates a lack of ethics even if it was an accident. Data mining and profiling should be done responsibly to make consumers’ lives easier–not to jeopardize their right to free expression on the internet.
