Why Do Companies Collect Data About You?
Companies collect, store, and process customer data for a multitude of reasons, all aimed at enhancing their business operations and customer experiences. This customer data provides invaluable insights into customer behavior and trends. This knowledge empowers companies to tailor their products and marketing strategies to better align with customer demands. This can help increase sales and customer satisfaction.
Companies can use data to understand their customers and create personalized content and offerings. This personalization fosters stronger customer engagement and long-term relationships. It allows companies to prioritize resources and offer exclusive perks for specific target audiences. This customer data also helps the company be efficient. By studying things like purchasing patterns and demand cycles, companies can optimize inventory management and streamline their supply chains. Businesses can also track the effectiveness of campaigns, monitor customer feedback and make data-driven business decisions.
Companies that collect data must ensure data privacy and security. Transparent data collection practices and security measures are important to maintain trust and compliance with data privacy regulations like the GDPR and CCPA.
What Data Do Companies Collect?
Companies collect a wide range of data from their customers to gain insights and improve their services. They often collect basic demographic information such as:
- age
- gender
- location
They user quantitative data collection methods to gather:
- transactional data
- recording purchase history
- browsing behavior
- interaction patterns with their websites or apps
- Social media activity and engagement
Companies may also collect qualitative data through feedback, focus groups, and customer service interactions to gauge satisfaction and identify areas for improvement. Additionally, some companies gather more advanced data like:
- biometrics for authentication
- geolocation for targeted marketing
- sensory data from wearable devices
However, these data collection techniques must adhere to data protection regulations and privacy concerns to maintain customer trust and safeguard sensitive information.
How Do Companies Collect and Use Data About You?
In the world where information drives revenues, it comes as no surprise that most businesses rely on creative ways to collect data on consumers. Most buyers don’t notice these techniques, but companies use them to sell more or target specific interests.
Companies use a variety of data collection methods to gather information about their customers. The most common types are:
- Primary data collection methods
- Secondary data collection methods
- Behavioral data collection methods
Primary data collection methods involve gathering firsthand information directly from sources. Examples include surveys and interviews. Primary data can also be collected digitally through online forms or in-person interactions.
Secondary data collection methods are very different. These data collection methods involve using existing data that has been collected by others for different purposes. This data can include published research papers, government reports, or historical records. This type of data can provide a broader context and offer insights over extended time periods or larger populations.
Companies also collect behavioral data to gather information about how individuals or groups behave and engage with their products or services. These methods are used to understand actions and patterns in real-world contexts. Examples include social media monitoring and website analytics.
Companies collect a variety of information on their customers using the methods we discussed above. We review some of the most common types of data companies collect on their customers.
- Social Media Behavior
- Unrelated Online Browsing
- GPS Tracking
- Past Receipts
- Motion Monitoring
- Surveys and Feedback
- User Generated Content
- Customer Loyalty Programs
- Connected Devices and loT
- Browse and App Permissions
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Social Media Behavior
As platforms where people willingly offer personal information, social media websites are perfect for data collection. They let companies get a hold of applicable information that may help them increase sales. The way that this is achieved boils down to user tracking. In other words, people who have social media accounts are always subjected to activity monitoring. That way, the insight on their browsing will give a clear-cut depiction of things that they researched, liked, commented on, shared, and so on.
Unrelated Online Browsing
One of the most basic marketing techniques revolves around the so-called pixel. For those unfamiliar, this is a piece of code that tracks one’s movement on the internet. So, for instance, someone who visits a website will often become a part of that website’s pixel. As a consequence, the company whose website was visited will have an overview of all other online locations that the visitor went through. Thus, if a clothing store has an abandoned checkout, they could use their pixel to see where the buyer went. From there, they can conduct analyses that will minimize the number of abandoned checkouts in the future, per se.
GPS Tracking
Given how important location services are nowadays, it is practically impossible to rely on mobile apps without enabling them to track where someone is. Expectedly, this is one of the most blatant customer data collection methods. By tracking the person’s location, they get important information about their movement, proximity to certain stores, and much more. So, for example, if someone visited a car shop, GPS tracking will allow companies to send them various car-shop-based ads.
Past Receipts
If someone has a history of transacting with a certain business, they are likely to spend as much as 67 percent more on future transactions with that business, according to Business.com. This is a byproduct of establishing trust and allowing the buyer to rely on the company’s performance. It is also the reason why past receipts are commonly used as a mainstream way of collecting data on consumers. For example, if an individual has a track record of buying large amounts of supplies at the end of the month, businesses may begin sending them marketing campaigns around that time.
Motion Monitoring
Even though most of the previous alternatives are borderline unblemished, there is one more way to collect consumer data that nobody is generally aware of – motion monitoring. Retail businesses largely rely on this tactic as it helps them identify the parts of the store that seem to be getting the most visitors. It also lets them know which areas are being avoided. Courtesy of such feedback, they can customize their displays and look for ways to attract more people where needed. This approach also attests to Forbes’ claim that every company is a data-based company.
Registration and Account Creation
When a user decides to create an account on a website or app, they are typically asked to complete some information about themselves. This could be their:
- name
- email address
- date of birth
- gender
They might also be asked to provide additional details like interests or location. Some sites will also give the user the opportunity to link their social media profiles for an enhanced experience. Companies may use this data to personalize the user experience. They can make targeted recommendations or track behaviors like browsing history or purchases. These analytics help companies understand how customers use their platform. Information can also be used for marketing.
Surveys and Feedback
Surveys and feedback questions are common qualitative data collection methods used by a variety of companies. Companies carefully craft survey questions to collect specific information that will help them make decisions or improvements. Surveys and feedback questions are flexible and can include a variety of question types. These might include multiple choice questions or rating scales. Surveys can be distributed through a variety of channels to reach the target audience. You might get an email or website pop-up asking you to complete a survey. Sometimes receipts include a QR code that can take the user to a survey.
When a user responds to a survey, their data is collected and stored. Typically, this data is stripped of any identifiable information and may only include their responses or demographic information. Based on this information, companies can make decisions or improve their products and services.
User-generated Content
User-generated content (UGC) refers to any form of content created and shared by consumers or users of a product or service. Examples include:
- text
- images
- videos
- reviews
Companies collect and utilize UGC as part of their marketing and engagement strategies. They encourage customers to generate content related to their experience in order to gain authentic and relatable perspectives.
Companies also showcase UGC on their websites and social media channels. This helps them build a sense of community and engagement. It lends credibility and trustworthiness to the brand.
Customer Loyalty Programs
Customer loyalty programs serve as data-rich avenues for companies to gain insights into consumer behavior and preferences. When customers enroll and engage, businesses collect a wealth of valuable information. These programs track:
- purchase histories
- transaction details
- user interactions
This data enables companies to tailor promotions, personalize experiences, and optimize marketing efforts. Loyalty programs can also facilitate the gathering of feedback and reviews, offering direct insights for product and service improvements. As companies harness this data, they strengthen their ability to:
- foster lasting relationships
- enhance customer satisfaction
- refine strategies based on real-time insights
Connected Devices and IoT
Connected devices and the Internet of Things (IoT) have revolutionized data collection for companies. By seamlessly integrating technology into everyday objects, these smart devices gather and transmit real-time data through sensors. This enables companies to access a wealth of information on consumer behavior and product usage. From smart appliances that monitor usage patterns to wearable devices tracking health metrics, these technologies provide insights into user:
- preferences
- habits
- needs
Companies leverage this data to refine product design and personalize marketing strategies. The continuous stream of information from IoT devices empowers businesses to make data-driven decisions and enhance customer experiences in innovative and unprecedented ways.
Browser and App Permissions
Browser and app permissions offer companies a direct route to gather data from users’ digital interactions. When users grant permissions, these applications gain access to various aspects of their devices, such as:
- location
- contacts
- camera
- microphone
This access enables companies to collect a wealth of contextual information, from geographical preferences to behavioral patterns. While permissions enhance user experiences through personalized features, they also facilitate data collection for:
- targeted advertising
- improving app functionality
- refining customer engagement
However, ethical handling of permissions is crucial. Companies must prioritize user privacy, providing transparency and control over the data shared and ensuring compliance with data protection regulations.
Conclusion
Undoubtedly, there are many more ways to get a hold of relevant information. At some point, however, businesses must address potential privacy concerns by collecting qualitative and quantitative data that may perpetuate liability issues. Nevertheless, if the previously mentioned methods ever become obsolete, it is likely that companies will simply find new ways to collect data.
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