what is digital identity

What is digital identity? Understand your customer in 4 steps

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“If a tree falls in a forest and no one is around to hear it, does it make a sound?” This is a philosophical thought experiment that’s sparked discussion for ages.

“If a person visits your website and you never capture his/her identity, does the person exist?” is a significant business challenge. Those potential buyers most certainly exist, and a brand’s inability to establish their digital identities means opportunities to start valuable relationships are passing by without a sound.

What is digital identity?

A digital identity is you, in internet form. Meaning that a digital identity is the online or networked identity that a person, electronic device, or organization adopts in cyberspace.

The digital identity is used for identification purposes when connection from cell phones, laptops, PCs, tablets, etc.

A customer’s digital identity should grow organically over time through an ongoing exchange of information and value. The end result: A trusted relationship where customers are treated as people, not as account numbers.

Identifying visitors to digital properties is not a straightforward endeavor. Marketing teams work hard to create and offer content that inspires clicks, registrations, and other transactions that ultimately establish a visitor’s digital identity with their brand. But unfortunately, this hard work is not often rewarded.

Many potential buyers – especially millennials – are skeptical of being identified. And it’s hard to blame them; filling out a lengthy registration form can unleash unwanted follow-up from a myriad of digital channels, the most popular being emails and phone calls.

The same can be said of e-commerce teams, who lose layers of customer lifetime value when an online shopper purchases anonymously – rather than creating an account – often for fear of being bombarded with unwanted messages or endless retargeting ads.

Digital footprints and privacy: A new era of trust

Now, regional governments are adding a new twist in the form of consumer data privacy regulations. From the European Union (EU) to the California coast, new laws dictate how businesses should and should not collect personal data from customers and use it.

The solution to this complex situation is to build customer relationships the right way, and it starts with a progressive identity strategy.

Progressive identity establishes trust-based relationships by offering value to visitors in a voluntary exchange for a minimal amount of their personal data. This allows brands to gain a better understanding of customers’ wants and preferences over time while complying with privacy regulations.

There are the four key phases of the strategy.

How digital identity helps you understand your customer in 4 steps

1. The first digital handshake

 When you first meet someone, do you ask about their birthday, home address, and phone number? Most likely, the answer is “no”. This type of information is gained gradually and naturally over time in most relationships.

It’s the same with customers. If a brand doesn’t offer visitors a chance to start small, those visitors may never choose to identify themselves at all. Conversely, offering chances for quick, simple registration – for example, signing up for a newsletter or wishlist with just a name and email address – enables visitors to get to the information they want without the hassle of a major hand-raising moment or the prospect of creating yet another password. Meanwhile, the business gains the initial building blocks of a digital identity.

Even in this early stage, customer control of personal data is critical. Offering a portal through which these new customers can control their communication preferences, basic information, and even delete the account if need be gives the relationship a better chance to progress further. It’s also a main focus of consumer data privacy regulations, including the EU’s General Data Protection Regulation.

2. Progressing to registration

Over time, the initial digital handshake will lead to a full registration if a business can offer relevant, personalized engagements to those early customers. After all, Accenture research has found 83% of consumers are willing to give personal data in exchange for a more personalized experience.

This payload of rich first-party data is a significant sign of trust, no matter if it’s an individual consumer or a business buyer. To reward this trust, the registration process should be frictionless and fast. Also, consent for terms of service should be clear and transparent. If brands can adopt a policy of transparency to collect, manage, and use customer data for specific customer experience benefits at every stage of the digital customer journey, customer trust will thrive.

3. Seamless log-in

When registration is set, the customer relationship evolves again. Registered customers expect seamless experiences. At the same time, they also expect high levels of security.

To exceed these expectations, brands can offer persistent tokens, password-less authentication, multi-factor authentication, and biometric access. They can also design an experience that enables customers to use the same account credentials, no matter if they log in from Perris, CA, or Paris, France, while addressing the applicable consumer data privacy regulation.

In the B2C space, brands can offer social log-in options. This enables users to manage fewer passwords while allowing a business to access social data in a permission-based framework.

Let’s look at an example from the airline industry. When a customer consents to link her existing membership or frequent flyer ID to her social media account, an airline can remove any log-in friction, which means she can research flights and buy tickets without entering a password.

Behind the scenes, when the airline is granted access, they can understand the passenger’s social media likes and preferences. This information can inform other aspects of the business, for example: new products, more accurate segments, or better recommendations for offers and deals.

Meanwhile, in the B2B space, access control is a high priority for any log-in flow. Users need the right access to the right information appropriate to their role in their organization. Meeting this expectation helps speed time to market and reduce business risks, while breaking this promise can lead to lawsuits and significant brand reputation damage.

4. Personalization at scale

In most organizations, customer data resides in multiple silos. This causes fragmented experiences, the delivery of irrelevant content, and limited product innovation.

So, it’s vital for a brand to move customer data effectively and efficiently across the business. As an example, look at B2B e-commerce platforms. The ability to offer customers an experience where their buying preferences are pre-selected will help them find the products and services they need faster.

Or, consider a direct-to-consumer fashion brand, who can combine social data and a shopper’s historical purchase information, then use AI to inform a dynamic storefront that is tailored specifically for that person, and improves each time he or she interacts with the brand. In addition to these customer experience benefits, the data can unlock key insights for product teams to understand the next priority or strategic initiative. Yet, none of this can happen if the platform is unable to tie the e-commerce platform to the customer’s identity.

And these are just a few examples. Defining a successful strategy to orchestrate and govern customer identity data across customer engagement technologies – bi-directionally and in near-real time – will help ensure consistent, personalized engagements no matter the property, touchpoint, or region.

Digital identity: The key to treating customers like people, not account numbers

Digital identities contain the rich data marketers can analyze to their advantage, but an identity shouldn’t be built overnight. Instead, it should grow organically over time through an ongoing exchange of information and value.

In other words: a trusted relationship where customers are treated as people, not as account numbers. This approach – known as progressive identity – is key for today’s market-differentiating customer experiences.

A Fortune 500 company saw a 10% jump in e-commerce revenue by focusing on customer identity. 
Learn how.

Ratul Shah
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Ratul Shah

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