If Yoda were to discuss hyper-personalization in 2020, he might say, “Trust leads to data, data leads to knowledge, knowledge leads to wisdom, wisdom leads to hyper-personalized experiences, hyper-personalized experiences lead to loyalty, and finally – loyalty equals survival.”
But while hyper-personalization has been cited as key to helping many businesses remain competitive, organizations still struggle to balance creepy and convenient without losing the trust of their customers. And while a personalization mishap might seem inconsequential, it can have a serious impact. According to Accenture, 41% of US consumers said they stopped using a company because of “poor personalization and lack of trust”. Scaled up, retailers could lose an estimated $756 billion of retail and brand sales in a single year. Loss of customer trust and relationships can lead to less data collected, resulting in more generic experiences, which ultimately creates a commoditized service, meaning companies must now compete with their counterparts on price. This is the dark side.
But where do digital identity and authentication fit into this puzzle? Personalization isn’t just about being digital, it’s about offering users journeys that suit their unique needs, means and capabilities. And what differentiates the organizations that will succeed from those that fail will be the ability offer personalized journeys based on transaction type, access and ability. By dynamically injecting passive and active authentication into the customer journey while allowing for timely feedback loops for learning, organizations can ultimately build trust and loyalty with customers.
One way where we can observe the role of digital identity and authentication in real time is in the airport, where travelers undergo a strategic mix of both passive and active identity checks. From before they even arrive at the airport (if they check in via their app) to when they depart their gate and board, they are faced with a number of active checkpoints to prove their identity, all the while having their identity passively checked throughout the process. This is a carefully-built customer journey, since too many active identity checks could frustrate the traveler with the amount of times they must show their ID (friction), but too few active checks on the other hand could lead a traveler to feel that the airport/airline is not following stringent security protocols, and thus the reputation of the organization suffers.
In 2020, FinTechs and digital-forward banks are succeeding in an ecosystem where changing customer habits mean there is little loyalty to a single provider, and incentive to jump from provider to provider for the best offerings and experience. But while banks and FinTechs alike can offer tailored, personalized mobile experiences related to a customer’s spending habits, banks are still mostly unable to offer personalized journeys for those who don’t have the same level of access or ability as the general population. This means that they are still digitally isolating portions of the population who may not have access to the latest smart phone or be able to leverage fingerprint biometrics, for example. As the larger banks follow nimble FinTech’s lead with the way they represent data in their apps, they will be able to more easily serve all possible populations.
So, how can organizations find the right balance throughout the journey, serve customers in all populations and keep the customer informed? Here are a few tips:
Start small: To avoid the creepiness factor, even when an organization has the right data to personalize a customer journey, they should approach it with caution. Perhaps start with diluting the personalization and corelating between other customers with a similar profile who showed interest. Then organizations should grow with the customer and build preferences over time – becoming wiser.
Present the option: Organizations should also validate assumptions by allowing them to choose whether they receive the personalization with an option, i.e., “We think you will enjoy this”, letting them validate yes or no.
Design dynamically: When creating a hyper-personalized experience, organizations should remember to consider identity and authentication as a key component. For example, a frictionless experience with minimal authentication can be problematic since the customer’s perception of security contributes to the overall experience. Similar to how the balance of the force changes over time in Star Wars, so do security needs, so it’s important to blend passive and active identity and authentication to ensure it can dynamically change over time.
Follow best practices: Organizations should also be transparent about what they intend to do with the data they are collecting, while clearly outlining the benefit to the customer.
When it comes to personalization, digital identity and authentication can truly make or break the customer experience. Overall, organizations must be able to offer personalized journeys based on transaction type, access and ability. A user looking to check their account balance at the same time and in the place each week doesn’t want to jump through hoops, and extra friction during these regular transactions could lead to huge dissatisfaction. On the other hand, if a customer is transferring money while riding a train through the countryside, authentication may need to go beyond simple SMS verification. Getting user journeys right based on transaction, location, device and passive behavior will be key to delivering personalized experiences while maintaining security.