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Why and How Personal Data Use is Crucial for Businesses… and Consumers

Why and How Personal Data Use is Crucial for Businesses Why and How Personal Data Use is Crucial for Businesses... and Consumers

Personal data talk seems to be everywhere these days. With technology making it increasingly easier to collect, store and put to good use consumers’ personal details, enterprises worldwide are rushing to do just that. But how exactly are they achieving that – and what should companies and clients alike bear in mind when it comes to using personal data for commercial purposes?

The Power in the Numbers

There are several sayings in every language around the globe that illustrate the same point, revealing its universal value: knowledge is power. In the case of companies providing goods and services, knowledge of their consumers’ data and habits is power that generates profit and drives up sales. Take for example some of the biggest tech companies out there that store and utilize personal data: YouTube alone, currently owned by Google, has 1 billion unique visitors per month, Facebook has 1.1 billion, Yahoo more than 600 million and the Apple App Store alone has 60 million unique visitors every month.

Imagine the wealth of personal data accumulated just by those companies alone; they collect data that range from personal details such as name, age and address, to geolocation, your IP address, even your search queries, by using methods such as cookies and device-tracking software. A lot has been speculated about how companies derive profit from this abundance of information about people who make use of their services, but their main purpose is the same: to tailor the user experience to every single individual client.

Countless Uses for Personal Data

Providing individualized services and content in essence translates to loyal clients who are happy to return and put in a good word for the company, ultimately driving sales and revenue up. In some cases, using personal data gathered is by definition included in the service provided; Amazon delivery services or GoogleMaps wouldn’t be able to function without using your address details or tracking your location through GPS. On a second level, the data is used to personalize the content you are viewing, make suggestions based on your client behavior (Amazon, Netflix and YouTube users are very familiar – and thankful – for this feature), as well as to optimize marketing activities. Companies are constantly making use of your demographic details, like age group and country of residence, along with more individualized elements, such as your browsing activity, to provide targeted advertising.

Personal data is also increasingly used in innovative ways – Amazon for example is using it to perfect their customer service, saving both the client and the company a lot of time and effort. As of late, Facebook is greeting you in the morning with weather forecast regarding your location and a friendly reminder to not forget your umbrella, if need be. Taking this further, companies keeping track of your purchasing habits and general activity might use this to remind you when you need to return to their services or undertake maintenance on purchased goods.

The Delicate Balance between Optimal Use and Upholding Privacy

Yet with great power comes great responsibility – and legal rules are there to remind companies to keep their clients’ data safe from abuse. EU’s latest relevant legislative tool is the General Data Protection Regulation (GDPR) aims at ensuring precisely that. The GDPR will go into effect on May 25, 2018 and is applicable to every organization that provides goods and services to or monitors citizens on EU soil, irrespective of whether organization is actually based in the EU/EEA. Failure to comply with the rules might incur a fine of up to €20,000,000 or 4% of an organization’s total global profit.

Infographic - Trust in Companies to Protect Personal Data
You will find more statistics at Statista.

The GDPR comes with an enhanced set of safeguards that tap into the global discussion about privacy rights. And it is onto something – the public’s faith in how companies handle their personal data is not exactly high, with just 34% of Americans trusting Twitter to uphold their privacy and less than 50% saying the same about Facebook. This is evidence not only of a bad reputation on the part of some tech giants, but also a sign of consumers starting to pay more attention to how their personal details are used.

If anything, these findings illustrate that enterprises worldwide – and in the US in particular – should move quickly, not only in order to catch up with legal rules, but also to regain consumers’ trust.

Photo: Christin Hume

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