Why Consumer Data is Valuable to Both Businesses and Consumers - DirectPayNet

Why Consumer Data is Valuable to Both Businesses and Consumers

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Data has become synonymous with breaches of privacy in recent years. The fear consumers have of their personal data being shared, used, and sold across the world is unappealing. It doesn’t help that so many big tech, and big data, companies like Microsoft and Amazon have exposed customer information in one way or another.

Consumer data doesn’t necessarily mean it’s being sold or shared. Not every service provider does this. In fact, most businesses store user data internally to benefit both their brand and their customers. Today, we’re going to go over ways data can benefit both consumers and businesses without risking privacy or selling that data. And as a business, you can use this information to better position your privacy policy and terms of use to help consumers understand what their data is used for.

Defining What the Value of Consumer Data Is

Data comes in a wide variety of formats, holding information both unique to each consumer and broad.

Marketing data, also known as marketing research or consumer insight, is any kind of information/data collection from current customers or potential customers. It can be as simple as how many visitors came to your website this month or as complex as a customer’s lifetime value (LTV). Marketing data comes from a number of sources, including surveys, social media monitoring, and customer relationship management (CRM) tools.

The most important aspect of marketing data is that it can predict future outcomes. What you want to do with this data is up to you. You could use it to understand your existing customers better or find potential customers based on their demographics or interests. You could even use it to predict trends and anticipate what will happen in the future for your industry.

Customer data can also help you improve your marketing strategy. If you know where your target audience lives, for example, you may want to tailor your message to appeal to them. You could also use profiling data to create more personalized offers and convert more visitors into customers.

Why Consumers Are Concerned About Their Data

Consumers are concerned about their data, and for a simple reason: they don’t understand what it is being used for. The value of data comes from its potential to help solve other problems. But consumers’ understanding of data’s value does not match up with its actual value, because the problems it could be used for are too complicated to easily explain.

The result is that there are lots of ways to use data that don’t produce much value for consumers, but the consumers don’t know which uses produce value and which do not. They can’t tell which uses are important to know about, so they have to learn about everything.

The solution is to have companies be more transparent in how they use data, so that consumers can better assess how much it is worth to them for companies to use their data in different ways.

How You Can Obtain Consumer Data without Privacy Backlash

Data doesn’t need to leave your business or even your CRM, depending on what type of data it is. If the biggest concern for consumers is having their valuable data sold or not knowing what it’s used for in a digestible sense, then that’s what businesses need to clarify.

Build Personalized Customer Experiences

Consumers want it both ways: customized services yet little data sharing. If they understand that you’re using their data to better the experience, then they might be more willing to share it. But that’s too generic of a phrase. “Building a personalized experience” or something like it is blasted over every website on cookie agreement popups. No one knows what that means.

The solution is to clarify it. What does building a personalized experience for your brand mean? How can you notify customers in a clear, concise way? Here’s an example: say you run a CBD shop. When someone visits that shop, you can notify them that “hey, we want to build a custom experience for you but we need you to share some information with us to do so. You’ll share general location data (not specific addresses or streets), age, gender, product browsing history specific to our site only. With this, we can suggest products we know you’ll love.” Something like this that tells the customer they’re data isn’t so personal that they need a restraining order to feel safe.

Personalized experiences are even more possible once a customer makes an account with you. You can track their browsing and purchase history as well as request feedback to not only improve their experience but improve your product as well.

It’s all about the customer. Make them feel safe and they’ll hand over more data than they knew existed.

Improve Products and Services

Data is the new oil. Everyone is rushing to get as much of it as possible because they know that whoever has it will be able to make better decisions and beat the competition.

Data is information that you can’t make better decisions without. And this isn’t just about large companies; all businesses, even small ones, need data to make better decisions and improve their products.

The sources of data are everywhere: from apps on our phones to sensor-enabled devices in our homes and offices, from social media interactions to sales records, from online search results to GPS tracking. The key is figuring out how to collect that data and turn it into useful information that can guide better business decisions.

Insightful decision making requires a combination of two things: data and analysis. Data by itself doesn’t do anything for a business. It’s just a collection of facts and figures—raw material for analysis. Analysis by itself doesn’t mean anything either; it’s simply a way of looking at things in a different way or putting two unrelated pieces of information together in a new way.

But when you put the two together, you get something magical: insights that lead directly to business growth. By collecting the right data, you can offer more targeted products to your actual consumer base and improve the services you already offer. It’s no longer a game of hit-or-miss, it’s collection and analysis.

Understand Consumer Behavior

In the early 2000s, online retailers were looking for better ways to predict what books or DVDs or computers their customers would buy. They had a lot of data about what people had bought. But it wasn’t clear how to use that data to figure out what people would buy next.

Some researchers decided to try a different approach. Instead of trying to infer which purchases a person might make in the future, they looked at how often a person browsed without buying anything. This was less precise than knowing what they had actually purchased, but it worked better. And it had an unexpected bonus: if you combine browsing and buying patterns with information from similar consumers, you can identify new segments of consumers who have similar tastes but different buying habits from your existing customers.

The point is that sometimes you may have data that you don’t know what to do with or how to read. Try looking at it from a different point of view and you’ll gain invaluable insight into the habits of your customers.

Share Data with Customers

The more data businesses share with customers, the more value customers create for themselves. Businesses then have an incentive to share more of that value with customers in the form of lower prices, better products, or more personalized services.

The latter is particularly important. If customers can create new value by at least viewing a business’ data, then businesses will want to make their data as accessible as possible to customers.

The long-term trend is headed toward businesses using more open business models. We see this in the rise in popularity of transparency reports. But if data is locked up inside a company, customers don’t benefit from it and there’s less connection between customer and brand.

New privacy laws and regulatory movements, like the California Consumer Privacy Act (CCPA) and GDPR, aim to keep individual consumers safe by protecting consumers’ personal information and enforcing data privacy. We’ve heard a lot of groans from businesses, especially tech companies, about this. But general data protection regulation is a good thing for both your business and your customers. If your goal was never to sell that data, then this is your opportunity to use these privacy regulations to your advantage and build a rapport with your users. With proper data management, you’ll see your business flourish.

Are You Gaining Valuable Consumer Data from Your Shopping Cart?

Data is the fuel that allows businesses to reach people in new, more meaningful ways. It benefits both consumers and brands, though consumers need more incentive to share it. And that incentive comes from privacy assurance alongside personalized experiences.

But that means nothing if you aren’t obtaining data from your shopping cart.

DirectPayNet will set you up with a shopping cart and payment gateway so you can better analyze the data flowing through your site at (and just before) checkout. This data is invaluable to the growth of your business. Contact us today to get set up.

About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.


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