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Your Digital Self

When Did Companies Start Collecting Data?

Data has been the core of any marketing strategy since the beginning. But as technology has advanced in the past few decades, so has the data-driven marketing strategy. In fact, we lost track of when did companies start collecting data to plant their marketing. In this article, we are talking about data collection by companies. So let’s get to it:

Table of Contents

Companies begin collecting data through commerce

Data about consumers has long been gathered by businesses. Keeping track of who purchased what at what times allowed vendors to plan their sales accordingly. At first, it was done through simple observation, noting information about a consumer, like when they were shopping and what they purchased.

Businesses would use the knowledge gained through observations to implement their marketing strategies. Although they could draw connections between their advertisements and customers’ in-store activities, the information was still largely conjectural. Once tracking could be done electronically, business owners began gathering detailed customer data and developing more accurate projections. Marketing that was driven by data was coming.

Below is a look at some of the methods businesses use to collect customer data, what they do with it, and how you might adapt these strategies to meet your company’s requirements.

What kind of data do companies collect?

Companies are gathering more information than your name, birthdate, and address. So, what kinds of data do companies collect?

The four categories of customer information that businesses gather are as follows:

1. Personal information

This group includes personal identifying information, including Social Security numbers and age, and nonpersonally sensitive data, like your IP address, internet browser cookies, and system IDs that all your smart gadgets have.

2. Engagement data

This type of data describes customer interactions with a company’s website, mobile applications, texts and emails, social network pages, forums, sponsored advertisements, and customer care channels.

3. Behavioral data

This group comprises data from previous transactions, such as purchase patterns, data about how a product was used, like repetitive behaviors, and qualitative techniques.

4. Attitudinal data

This type of information involves assessment for client satisfaction, buying criteria, product appeal, and much more.

How do companies collect your data?

Businesses get data from numerous sources in a variety of methods. Although some data gathering techniques are extremely technical, others are more logical.

Customer information may be gathered in three ways:

1. Directly asking customers

2. Implicitly monitoring customers

3. Supplementing your own customer information with data from external sources.

A successful company system involves all three methods.

Businesses are skilled at gathering data of various kinds from almost any source. The most apparent sources include consumer behavior on their websites and social media sites, customer texts, calls, and chat support. Still, there are also other, more intriguing techniques in play.

One illustration is location-based marketing, which creates a tailored data profile using tracking technology like an internet-connected device’s IP address. Using this data, the users’ devices are then targeted with hyper personalized, pertinent marketing.

Companies also delve deeply into their customer support databases to learn more about how customers have previously dealt with sales and support teams. Therefore, they are taking into account, on a large scale, direct input on what customers liked and disapproved of, what succeeded and what didn’t.

Companies that sell customer data and similar information to third-party sources have grown prevalent, in addition to gathering information for business objectives. Once obtained, this data frequently trades around in a particular data market.

How do they use the data they’ve collected?

There are a number of ways to use customer data. Below are some of the methods:

Turning data into a knowledge base to create a better product or service

Companies turn the sea of data into manageable information to enhance their products and services. But the challenge of organizing and evaluating massive amounts of data is apparent. No individual can spend all day reading through pages and paragraphs of consumer data, and even though they did, it’s doubtful they would create much of a contribution.

But computers can process this information more rapidly and easily than people can, and they can work nonstop for a full year without taking a vacation.

So companies leverage Artificial intelligence and advanced algorithms to sift through a pool of data and turn it into manageable and useful information. In addition, based on contextually relevant data, some AI applications will alert decision-makers inside a company to irregularities or suggest actions. Without programs like these, every piece of data ever collected would be completely meaningless.

Improving the companies’ customer experience

Consumer data presents a means for many businesses to enhance client interaction and further know customer requirements. Companies may quickly adapt their online presence, products, or services to fit the current industry if they study client behavior in addition to vast quantities of reviews and comments.

Companies use customer data to make choices on a personal level in addition to using it to enhance consumers’ overall experiences.

By developing personalized promos and limited-time offers based on consumer information, a business can enhance the customer experience. Personalization is crucial because each consumer will have their own unique tastes.

Planning an effective marketing strategy for the target market

Companies that use relevant and meaningful data can better understand how customers interact with and engage with their marketing programs and make necessary adjustments. This extremely accurate use case helps organizations estimate customers’ want based on past behavior. Sales promotion is increasing about customization, just as in other areas of consumer data research.

It is increasingly crucial to map consumers’ trips and personalize them as they go from your website to other social media websites.  You may advertise to only the individuals you understand are most likely to respond by successfully dividing data. These have created brand-new opportunities in previously extremely difficult sectors to sell to.

To secure more sensitive and contextually relevant data

Even some companies use customer data to secure more sensitive or confidential information. For instance, banking institutions occasionally use speech recognition data to allow users to view their financial records or shield them from unauthorized efforts to steal their data.

The combination of information from a customer’s customer service conversation, machine learning techniques, and monitoring technology allows these systems to detect and flag unauthorized activities to acquire a customer’s account. 

Businesses will discover novel and more efficient methods to gather and interpret data about everything, particularly consumers, as data collection and analytics technology advance. For firms to be successful, doing this is crucial; failing to do so is equivalent to performing a task with your hands bound together. In the contemporary business world, information is the supreme ruler, and insight is gained via contextually relevant data.

Putting a price on data

Businesses that collect data can benefit from it. Following the growth of big data, a new business called “data brokers,” or “data service providers,” has emerged. These companies buy and sell customers’ information. Collecting and marketing present prospects for new sources of income for companies that collect a lot of data.

The desire for additional data is rising since advertisers value this data highly and will invest in it. In other words, data brokers may increase their profits by providing this data to each other and advertising if they can assemble more comprehensive data accounts from a wider range of data sources.

The Takeaway?

Data collection is at the core of every marketing strategy. Turning a pool of information into meaningful data is the ground reality of every business. A business can generate revenue with useful customer data.

Michiel Top
Michiel Top
While working on strategic positioning, marketing and sales programs for various companies, I was shocked again and again by how easily accessible private information actually is. Around 2017, when I was designing an online customer management system, it occurred to me how we could turn the tables. Then in mid-2020, when my own GDPR application to a well-known data enrichment company failed, I knew something had to be done.

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