First of all, what is this fancy term ‘behavioral data’? It is all the information gathered from consumers’ buying habits, product usage, and preferences, that is further applied for marketing campaigns and communication.
It is a concept that is the implementation of writer Seth Godin’s idea stating “Don’t find customers for your products, find products for your customers”. An idea that makes perfect sense during the time of the Fourth Industrial Revolution. For most companies now, understanding Behavioural Data is one of the key factors to their sustenance and success.
Some of the major benefits of Behavioural Data are the ability of anticipation and hence innovation. Once you are able to understand the trends of your consumers’ wants and behavior, you can pretty much customize your products according to them. So how does it work exactly?
Step 1: Collection of data
There are plenty of sources through which data from the consumer is gathered such as websites, applications, CRM platforms, etc. The consumer doesn’t even realize when a lot of the data is being captured from them in the form of ‘cookies’. These delicious sounding treats are like files that are available on various platforms that store all your information. Those cookies are then swung around the web sharing that information further.
Step 2: Segmentation
This step involves breaking up of all the data into smaller clusters that represent a certain category. To take a simplified example, it could be people who have been active on Netflix in the past month vs people who haven’t. The segmentation criteria would completely depend on the kind of business you run and there may even be multiple segments, since the same dataset can provide you with various information.
Step 3: Implementation
Now comes the part where all the data is put into play and targeted ads are presented to specific segments of the audience. In the case of Netflix, it could be the advertisement for a new show or movie in a way that will catch your eye. They customize the whole page according to your tastes, based on your list of viewed shows. This also applies to the highlighted show on top of your account. It could be the last Netflix Original series or an anime or the last season of your favorite show.
Benefits of behavioral data
1. Understanding the customer
The basic idea and motive behind the collection of behavioral data is to understand the customer. Once you have understood the customer you can provide them with goods and services that are more in line with what they are looking for.
2. Anticipate customers’ needs
As mentioned at the beginning of the article, this is one of the most important benefits of behavioral data. Once you have understood the needs of your current customer, it wouldn’t take long before you can understand the need of your future customers. At the same time, you are able to understand your customers’ needs, you can offer them things they did not even know that they wanted.
3. Innovate faster
Through all this valuable data, you can figure out trends and patterns that you never could have imagined on your own. Through that, you can propose additional offers and capture the mind and market share. This is also many times the inception of innovative and disruptive product innovations.
4. Drive your business more efficiently
Thanks to all this data, the concept of doing business through predictions and intuition are concepts of the stone age. Through the process of customization, you no longer need to post ads targeting every single person in the audience, nor do you need to shoot out a thousand emails every day. You can benefit from more efficient usage of resources such as time, money and employees.
But there are some challenges…
Data collection and privacy
This is the biggest challenge when it comes to behavioral data. As mentioned earlier, companies are going out of their way towards unethical means for the collection of data. There have been several instances of high-profile companies attempting and succeeding in doing so.
The costs of data storage
In the long run, you must consider this as an investment however collection and the proper utilization of this data can come at a cost. Especially when you consider just how valuable data has become today and the fact that everyone is running after the same piece of the pie.
The technical challenges to process large datasets
To be able to process the vast amounts of data, there is a need for not only processing capabilities but also technical proficiency. There is a need for a comprehensive IT infrastructure composed of large databases, processors and other IT capabilities. Not to mention that the costing that will be involved to process such large amounts of data will be substantial.
The ever-changing industry
It is a cliché to mention just how volatile and dynamic the technology market is today’s world. However, this dynamic nature is also the reason for the rapid developments that are taking place and collateral damage is bound to happen.
What if people refuse to give their data?
There are a lot of people out there who value their privacy and they feel that this is the kind of information that should be kept private. Though this sentiment is respectable, the concept of privacy is slowly fading away. In fact, in the words of the American entrepreneur, privacy will soon be the new celebrity. Although there are ways through which we can try to keep our data private such as deleting cookies, not linking our online accounts to one another, etc., most of our efforts will be futile. Corporations are now able to capture data through various mediums and ways, both ethical and unethical.
Lastly, we must also understand that the most valuable thing today is Data and without it, there’s not too much development that can take place. However, at the same time, we must be responsible for it, whether you’re civilian or cyber law enforcement. Be aware and be safe.
About the author
Anoop is a Content Consultant, a freelance Content Writer, and an Educationist, with more than 6 years’ experience in the field of content writing. He is also a proud father of four rescue dogs and two flemish giant rabbits and a rabbit home planner.