With retail sales on the rise in the U.S. – data for the second quarter of 2017 showed a four percent increase over the same period in the previous year1– it's a good time for companies to reinvest in their customer acquisition processes and systems. Most retailers are, at this point, omnichannel organizations with brick-and-mortar presences and e-commerce wings combining to bring in consumers at a high rate, at different times of day, and through different channels. Retailers that succeed in the future will be the ones that can offer seamless consumer experiences across channels and demonstrate an understanding of consumer needs and wants.
The consumer data balancing act
At the same time, dangers loom. Collecting too much data about a consumer can put them off. For example, some retailers have experimented with facial-recognition technology like the kind used by casinos and law enforcement. But many of those retailers determined that the costs and risks outweighed the benefits gleaned from the considerable technology investment, according to the National Retail Federation.
Not knowing the consumer, however, comes with its own costs. Following high-profile data breaches over the past couple years at retailers and financial institutions, consumers operate in a world of unease. A recent survey from Generali Global Assistance found that more than 75% of consumers don't believe, or aren't sure, that retailers are doing all they can to protect their personal information. About the same number of customers say that a data breach from an online (57%) or brick-and-mortar (22%) retailer presented the most likely risk factor in the 2017 holiday season.
75% are either very or somewhat concerned about their financial or personal information being compromised due to a data breach.
57% believe a data breach of an online merchant poses the greatest identity theft threat.
22% think a data breach of a brick-and-mortar point-of-sale system to be the most acute risk.
Source: “Holiday Identity Theft” survey of American holiday shoppers, conducted by ORC on behalf of Generali Global Assistance.
Automated, data-driven ID verification
To ease these consumer fears and concerns, ID Verification technology is becoming increasingly important for the retail and e-commerce industry. Building automated, data-driven identity verification capabilities – to ensure that customers are who they say they are, either when buying something or otherwise accessing an account – into omnichannel strategy is extremely important to help safeguard consumer data and prove identities. And the technology is available to easily fold it in: Information from a wide swath of private and government information sources, such as phone records, credit bureaus, DMV information, arrest records, utilities, court records, and business data can be accessed via application programming interfaces (APIs) during the sales process.
Professors Bala Iyer of Babson College and Mohan Subramaniam of Boston College, writing in the Harvard Business Review, point out that as digitization increases, APIs allow companies across all sectors access to a wide range of data assets that provide a full customer view. Uber, for example, had so much information in its “God View” that it faced privacy inquiries.
Retailers don’t need to go that far, but by using a range of data sources, questionable transactions can be identified early. Antifraud APIs can also integrate data about common scams, which can be important in identifying patterns that look suspicious and catching crooks in the act.
Suggestions for frictionless shopping experiences
In its Retail, Wholesale, and Distribution Industry Outlook 2017, Deloitte points out that automation will be a crucial tool in the hands of retailers who are looking to stand out in an omnichannel world. Consumers trend toward a desire for instant gratification, so shopping experiences must be as frictionless as possible in order to gain their attention and retain them in the future. The advisory firm suggests that retailers will excel by:
- Using adaptive interaction rules and artificial intelligence to optimize the customer experience according to channel preferences
- Offering predictive or prescriptive next-best action upsell, cross-sell, and trade promotions to high-value customers most likely to purchase
- Integrating both data and contextual information prior to analysis in order to enhance customer engagement
- Supporting near-real time or in-the-moment customer engagement based upon various embedded analytical techniques
- Increasing usage of multiple customer information sources inclusive of mobile, kiosk, point of sale (POS), Web, CRM, ERP, supply chain, social channels, and third-party data
Integrate and streamline from the start
Retailers must also build systems that work across silos to produce a customer identity that is accurate and adds value to the business. In its "Customers don’t have time for half-baked omnichannel" report, KPMG makes the case that "unless you create the internal organization that makes customer-centricity possible, your customers will ultimately recognize a failed promise, and few will give you a second chance." The consultancy further recommends that identity verification be integrated across the customer acquisition chain, leveraging third-party data as needed to deliver an optimized experience and avoid data-theft pitfalls.
By streamlining identity verification at the point of customer acquisition, smart omnichannel retailers can grow their bottom lines in the short term while creating an ecosystem that will keep customers coming back for years to come.
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