Businesses must use artificial intelligence in customer profiling in a transparent and ethical manner.
By Johan Steyn, 15 March 2023
We live in an era in which many businesses have access to large amounts of data on their customers. They can gain a better understanding of their customers’ preferences and behaviour by utilising artificial intelligence (AI) technology for customer profiling — the automated analysis of personal data in order to assess or make predictions about the behaviour, preferences or traits of an individual.
The following are examples of how organisations can apply AI in consumer profiling:
• Predictive analytics powered by AI can assist organisations in anticipating customer behaviour based on previous interactions, demographics and other data. This can help businesses personalise their marketing efforts and improve the overall customer experience;
• Natural language processing is a tool that can help businesses analyse consumer comments, social media posts and other unstructured data to gain insights into customer sentiment, preferences and pain points;
• Machine learning algorithms can analyse client data to uncover patterns and connections that human analysts may not notice right away. This can help businesses identify different client categories, personalise their marketing efforts, and improve their customers’ overall experiences; and
• Businesses can benefit from using AI-powered image and video analysis to gain insights into customer preferences and behaviour based on visual information consumption. Chatbots powered by AI can help businesses communicate with customers in a more personalised and efficient manner, while also collecting data on customers’ preferences and behaviour.
Nonetheless, businesses must use AI in customer profiling in a transparent and ethical manner, while also respecting their customers’ privacy and data protection rights. In the context of privacy regulation, the practice of profiling can be a significant cause for worry because it can lead to persons being treated in an unfair or discriminatory manner and can also violate the privacy rights of such individuals.
Individuals have the right, under privacy legislation such as the General Data Protection Regulation in the EU, to be told if their personal data is being used for profiling, and they also have the right to object to such processing. It must be carried out in an open and accountable fashion, with proper protection in place, in order to eliminate prejudice and discrimination.
According to the Protection of Personal Information Act in SA, businesses must seek the individual’s express consent before collecting, using or disclosing any of their personal information. This is required before any of these activities can take place. Companies are also obliged to take the necessary precautions to protect the privacy of the individuals whose personal information they collect and prevent its use or disclosure by unauthorised parties.
As a requirement of the act, the process of profiling must be carried out in a way that is lawful, reasonable and transparent, and it must also take into account the rights and interests of the individual who is the subject of the investigation. In addition, it requires organisations to get the individual’s consent before engaging in any profiling activities that make use of an individual’s information.
AI is a powerful tool at the disposal of business leaders. With power comes great responsibility. Tread carefully when unleashing AI to better understand and service your clients.
• Steyn is on the faculty at Woxsen University, a research fellow at Stellenbosch University and founder of AIforBusiness.net