Customer expectations can often outpace the digital capabilities that many retailers can provide with their current technology. In response, online retailers can leverage consumers’ digital identities, for which Amazon is a ‘prime’ example. Amazon leverages what it knows about its customers to enable “one-click” ordering feature which reduces the time it takes to complete a transaction, a process that has been very profitable.
However, storing the highly sensitive information associated with digital identities can cause privacy concerns from consumers, and storing digital identity also requires businesses to adhere to the compliance and regulations standards demanded by data privacy laws, such as the European Union GDPR and the California Consumer Privacy Act.
In order to address customers’ privacy concerns, comply with regulations and maintain a competitive edge, businesses must put privacy at the heart of the customer journey. According to a PwC report of customer buying habits, 87 percent of consumers will take their business elsewhere if they do not trust a company is handling their data responsibly.
How can this duality of achieving a competitive edge and enabling trust in consumers be achieved? According to Ben Goodman, CISSP and senior vice president of global business and corporate development at ForgeRock online retailers must leverage digital identity approaches that leverage customer identity and access management features. Goodman explains more to Digital Journal.
Digital Journal: How important is digital identity for retail?
Ben Goodman: Customers are engaging with online retailers through mobile apps, desktops, product reviews, social media, online advertisements and more. However, the cart abandonment rate averaged 75.6% in 2018. The fact is that today’s customer expectations far outpace the digital capabilities that many retailers can provide with current technology. However, online retailers can leverage consumers’ digital identities to augment the user experience and increase the company’s competitive edge.
To successfully leverage digital identity, retailers will need each customer’s trust, consent and knowledge of data that is gathered. Customer identity and access management (CIAM) tools allow retailers to leverage digital identity by enabling them to identify, protect and respect the preferences of each customer regardless of the devices, app or service they are using. By appealing to the customer’s specific criteria, retailers will obtain consumers’ trust and be able to reduce friction along the buying process and boast increased sales figures by reducing cart abandonment.
DJ: How important is data, in general, for retailers to grow their businesses?
Goodman: Retailers that want to grow their business, maintain a competitive edge and promote longevity must build meaningful customer relationships and adopt a data-driven strategy to increase sales. According to a recent report by Harvard Business Review, 84% of retailers seek better customer insight as a top priority since they are under pressure from competitors and investors to deliver a superior user experience and increase overall customer satisfaction. However, just 5% of retailers have embedded data and analytics into all business processes and decision making.
These differences illustrate a massive gap in retail that separates the market leaders and losers. Several companies, including Toys ‘R’ Us, Sears and Brookstone have all closed or filed for bankruptcy as of late while retailers like Amazon, Target and WalMart that leverage customer data continue to thrive.
Digital identity enables retailers to combine customer data about buying habits and history across channels, brands and business units all while securing the appropriate levels of consent. Possessing enriched customer profiles can allow online retailers to reduce friction in the buying process, therefore making the most of each customer interaction.
DJ: What technologies enable retailers to leverage consumers’ digital identities?
Goodman: CIAM allows retailers to leverage consumers’ digital identities by implementing a single view of the customer to deliver a consistent brand experience at each touchpoint. Retailers can then implement technologies like single-sign on (SSO), touch and face ID, and multi-factor authentication (MFA) to cater to each user’s specific login preferences.
DJ: What can retailers do with consumer identity information?
Goodman: Retailers can leverage digital identity to accelerate registration conversions, verify user identity on any device, enhance login experience, reduce the time it takes to complete a transaction and more. This allows retailers to build meaningful customer relationships and provide a seamless, secure shopping experience.
DJ: Are there any examples of companies successfully using such data?
Goodman: Yes, Amazon is an exceptional example of this. Amazon leverages what it knows about its customers to enable “one-click” ordering feature to greatly reduce the time it takes to complete a transaction. However, depending on the item, Amazon triggers additional authentication to reduce suspicious purchases based on the customer’s previous behavior and buying patterns. The proof of leveraging digital identity is definitely in the pudding as Amazon’s revenue for the twelve months ending March 31, 2019 was $241.545 billion, representing a 25 percent increase year-over-year.
DJ: How can retailers ensure they are meeting legislation like GDPR and the CA Consumer Privacy Act? How are data privacy issues best addressed in this space?
Goodman: GDPR and the California Consumer Privacy Act have forced US companies to address how they view privacy and consent. Retailers will need to be able to explain to consumers why they need personally identifiable information (PII) about the customer and consumers will need to be able to have the right to be forgotten by any company.
Retailers can best deal with data privacy issues by granting customers a new level of power over their data. This needs to be engineered as early as possible, it can’t be added as an afterthought. CIAM allows enables retailers to facilitate secure user experience on any device, and tailor it to the customer’s data-sharing preferences. With CIAM, customers will even be able to leverage technologies like user-managed access (UMA) to determine who and what gets access to personal data, for how long, and under what circumstances.
DJ: Are any further legislative reforms required?
Goodman: Besides GDPR and the California Consumer Privacy Act (CCPA), retailers must be able to adhere to compliance standards including PSD2, SOC2, OpenID Connect, PCI DSS, ISO27018, ISO27001 and more. Even additional U.S. states have broadened their data security requirements, including Arkansas, Connecticut, Florida, Indiana, Maryland, Massachusetts, Nevada, Oregon, Rhode Island, Texas and Utah, meaning that the adoption of a U.S. national data privacy law is not a far-fetched idea. More generally, Europe tends to lead in setting standards for data privacy with the consumer in the driver seat. The United States is catching up, but these are typically state-driven legislative efforts, such as CCPA.
DJ: How willing are consumers in terms of freely giving their personal data?
Goodman: People are now more aware about their individual privacy. Consumers want to do business with companies that respect their privacy and can keep their data secure. In fact, 88 percent of consumers agree that their willingness to share PII is predicated on how much they trust a given company and 87 percent of consumers say they will take their business elsewhere if they don’t trust a company is handling their data responsibly according to PwC’s recent survey of consumer behavior.
