Data mining doesn’t always have the best reputation. Scandals like the mining of Facebook data by Cambridge Analytica that came to light in 2018 have impacted consumer views on data mining and similar processes. However, what is underestimated is that there are many ethical ways to use data mining to improve customer satisfaction, service offerings, and even your company’s credit rating.
But how can data mining be ethical? And how can its use impact a company’s credit rating? During data collection and implementation, ethics are key to your long-term success. Indeed, an ethical approach to data mining balances benefits and risks to more effectively enhance business potential.
Start by understanding what ethical data mining is, then use these strategies to improve your funding opportunities and reputation.
What is ethical data mining?
The modern economy runs on data. Big data, or packets of data too large to be processed by a human using conventional means, inform and inform about customer trends and much more. Data mining is therefore the process of exploring and evaluating these massive data sets to produce informative models and actionable insights.
Data mining is more or less interchangeable with many other areas of data science and analytics that inform business intelligence. It is a means to an end, a process that begins with identifying a business objective and exploring ways to achieve it. That said, data mining is a tool, neither good nor bad in itself.
So what does ethical data mining entail? Simply put, ethical data mining is an error-free approach to harnessing and applying data-driven insights.
We’ve all seen examples of companies applying marketing data in ways we’d rather they didn’t. From those times when you notice your phone listening in on your conversations to scandals like the Facebook/Cambridge Analytica incident, there are times when your information is clearly being used outside of your intentions and/or best interests.
Instead, ethical data mining is an approach to enabling a business to dispose of data without sacrificing integrity or customer trust. It puts the focus on the customer and enhances their overall experience without cheating or selling them short.
By applying ethics to all your data mining efforts, you can produce a range of significant business benefits. Among these is an improved business credit rating.
How Data Mining Can Improve Your Business Credit Score
Every adult has at least a passing concern for their individual consumer credit score. These numbers are critical to how public and private institutions assess our ability to borrow and repay funds. Similarly, companies maintain credit ratings that impact both their ability to raise funds and their brand reputation.
What is a business credit score? A range of variables affect your company’s credit rating. These include
- Duration in business
- Number of borrowing requests
- Number and size of accounts
- Payment history
- Debt to income ratio
As you can see, these factors are not much different from those that affect personal credit scores. Similarly, improving them requires careful calculation, precision, and consistency. Too much debt or missed payments can hurt your business’ credit rating. But where does data mining come in?
Data mining is a means of innovation. It exists to optimize work efficiency. Even human resources departments can benefit immeasurably from the applications of careful and ethical data mining. Indeed, data collected from the workforce can be used to support workers, improve safety and streamline efficiency at almost any level. In turn, workers enjoy the benefits of reduced burnout and more satisfying jobs.
For example, employee burnout has been found to increase corporate healthcare costs by $125 billion to $190 billion each year. These are costs that will undoubtedly impact your bottom line and your ability to pay your bills and debts on time.
Instead, companies can supplement their workforce with data-driven insights. Since investing in your people is one of the most valuable business decisions you can make, exploring employee pain points and challenges through data mining is just smart business. Improvements in employee health care costs alone can support a higher business credit rating.
Ethical data mining enables you to collect and apply actionable strategies with transparency and care for optimal business results. This not only means a more financially sound company, but also a more reliable company. The implications of this stand for improving your credit score through a variety of efficiencies.
Ethical Data Mining in Financial Efficiency
An ethical approach to business is inherently able to last longer. This is because consumer confidence is essential to longevity. A breach of that trust through unethical activity can cost you millions in everything from legal settlements to lasting reputational damage. Here are some statistics that demonstrate the value of ethics for financial efficiency and business credit:
- Organizations lose an average of 5% of their revenue due to unethical behavior.
- Unethical behavior results in $7 billion in losses worldwide every year.
- Companies with a weak ethical culture have 10 times higher rates of misconduct than those that prioritize ethics.
That said, your data usage can help mitigate these losses. But only if it remains ethical. Ethical data mining supports workers in using their data to improve their working conditions. In the optimization of products and services, it focuses on producing real positive value in the lives of customers. In supply chain and business administration, this reduces waste and increases sustainability.
Data Mining for Ethical Business Success
All of these benefits are possible due to the inherent transparency of data mining. This process reveals the facts, and then business leaders can use those facts to improve their operations. Every improvement amounts to a boosted corporate credit rating and a business model capable of greater longevity in the tides of public opinion.
Embrace data mining as a way to improve your business model. Then use ethics to make sure your actions don’t alienate or mislead consumers. When ethics apply to the power of big data, everyone wins.
By Indiana Lee, BOSS Contributor