Businesses have many tools at their disposal that help them understand what their customers and clients do online. A company can see which pages people visit, which products they compare, where they click, how long they stay on a page, and which features they use most often. This data is valuable as it helps create marketing opportunities and provide better service and customer experience.
But there’s a difference between constantly monitoring your customers and learning from their behavior. As these processes become more complicated, businesses need to be careful and transparent about what kind of data they are collecting and what they are using it for.
Privacy, therefore, should not be treated as an obstacle to useful analytics. It should be part of the process from the beginning. Companies focused on user privacy will therefore create a new level of trust between them and the customers.
What Is Behavioral Data, and Why Is It So Valuable?
Behavioral data is information about the actions taken by the customers and clients using the business’s services. They are not demographic information, which can tell you the person’s age or gender; instead, it focuses on what the user actually does.
For example, an online retailer might collect information about the products a customer views, searches they perform, items added to a shopping cart, purchases completed, and products abandoned before checkout. A software company can monitor what features the user opens, how often, and how long they linger on one. On the other hand, Bitcoin gambling sites could follow which games the players use, how often they make or raise wagers, or even if they hesitate to make one. CCN and other crypto experts have written about the increased use of crypto for betting purposes since it provides anonymous and fast payments.
These individual actions can seem relatively harmless. The real value comes from combining them to identify patterns. They answer the questions: what is the customer actually doing? It’s more impactful than a feedback survey as it’s more honest and more transparent.
Used responsibly, combining behavioral information with customer feedback can give businesses a much clearer picture of the customer experience. For instance, if customers spend a lot of time at a certain page or function, it may indicate that they have difficulty understanding how to use it, and it’s a sign for a business to change and adapt.
The Hidden Privacy Risks behind Customer Tracking
When the data collected this way is put together and analyzed by experts, it can reveal a lot about the user. It’s therefore a privacy risk that many users aren’t comfortable with, and especially in the context of modern online usage will leave customers exposed to a variety of actors trying to ascertain personal information.
Knowing that someone visited a website might not appear particularly sensitive. But knowing which pages they visited, what they searched for, when they visited, what they purchased, which advertisements they responded to, and how frequently they return, reveals a lot more about a user.
Businesses can also create a fairly accurate profile of a user when combining all the data they can gather about one. These can include a variety of other sources such as a website, mobile application, email campaign, customer account, and online store. When all of those data points are connected, businesses can clearly identify a customer.
There’s also an issue of future use. Once the companies get the user’s data, they can keep it forever and use it for future purposes, without having to notify the user. Even when a customer is fine with their data being used to improve the site or app they are using, they may not agree to other use cases.
Modern users are very sensitive to these issues, as they are more aware of the trail they leave online and potential misuse of their data.
Why Customers Reward Businesses That Respect Privacy
Privacy is ultimately about trust. Customers are more likely to provide their personal data if they trust the company and if they understand what data is being collected and why. Conversely, one of the worst things a company can do is to track users’ behavior without them knowing and getting caught doing it.
Many businesses increasingly rely on first-party data. This means that instead of relying entirely on external data brokers or third-party tracking systems, companies are collecting information directly through their websites, applications, forms, surveys, and customer interactions. This doesn’t mean, however, that such data is privacy-friendly.
Companies still need appropriate legal grounds, transparency, and safeguards when creating detailed customer profiles. This doesn’t mean that the relationship and transfer of data aren’t useful to both parties, even when the focus is on privacy rather than on obtaining the data.
There are two main focuses to keep in mind when designing a policy towards data collection. The first is privacy, meaning that the business should honor its users’ preferences in this regard, and the second is data ownership once the data is already collected.
The ultimate goal is for the users to feel that data collection isn’t something done to them, but something they participate in and have a say about. The data should therefore be used to create a better and safer user experience and a stronger marketing campaign that would cost the company less, fulfilling the goals of both parties.
Five Principles of Privacy-First Behavioral Analytics
- Collect Only What You Need
The first principle is simple enough: you don’t need to collect data just because you can. Data minimization means limiting collection to information that is genuinely relevant to a defined purpose. It’s the principle companies should stick to by clearly defining the goal of their research and organizing the data collection to fit that goal only.
Collecting less data also has other benefits. It’s less costly for the company, and there’s less of a chance of a security incident. Hackers can’t steal the data that the business doesn’t have or hold.
2. Ask for Meaningful Consent
Businesses are obligated to ask their users to consent to their private data being stored and analyzed. However, there’s a complexity within this. The consent should be meaningful. In most cases, the user gets a huge document to agree to, and they rarely do; if they do, the language is often legalistic and too complicated to understand.
Instead, the users should get a clear image of what data they are giving away and what it will be used for. It also helps to know where the data will be stored, by whom, and for how long. If there’s any change to any of these rules, the users should know that too.
3. Separate Identity From Behavior Where Possible
Not every analysis requires the business to know the user’s full identity. Businesses can often use aggregated or pseudonymous information to identify trends without attaching every action to a named customer.
For instance, if a user encounters a certain error several times, they may give up on the checkout process. It’s useful for a company to know that so they can rectify the error, but they don’t need to know much more about the user.
However, it’s important to know that pseudonymous data is not automatically anonymous and that there are always privacy and security risks.
Give Customers Control
Privacy should not end after information has been collected. Users should have ways to keep control over the information and to manage it long after. Customers should have reasonable ways to manage their information, including understanding what has been collected and, where applicable, requesting access, correction, deletion, or withdrawal of consent.
Privacy choices should be easy to find and alter. This principle is particularly important when companies conduct customer research.
- Use Data to Improve Experiences—Not Manipulate Customers
The main reason to collect data is to make the experience better for the user and not manipulate their behavior. This is both a technical and ethical dilemma.
Behavioral data should help the business identify the problems, improve their products, and provide a better experience for the end user. A company should therefore consider not only “Can we use this information?”, but also “Should we use it this way?”
In many cases, the same information can be used to exploit weaknesses or manipulate decisions, and companies should abstain from it whenever they can.
The Future of Customer Analytics Is Privacy by Design
The future of customer analytics is to focus on privacy from the very beginning of the data collection project. This means deciding what information should be collected, how it will be protected, who can access it, and how long it should be retained before launching a new analytics system.
An important part of this approach is to carefully choose third-party services. They can introduce additional questions about storage, access, processing, and data ownership. Privacy by design is therefore about building analytics around responsible collection.
Conclusion
Businesses can collect large sets of data from their clients and use it to better understand customer behavior and improve overall customer experience. When doing so, the companies are obligated to respect the user’s privacy and to allow them control over the process during and after data collection.
