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Guest comment: ‘Are you who you say you are, sir?’

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by Matthew Spencer

The growth of the internet has had a major impact on the retail sector, both as a retail channel and as a medium to acquire and contact consumers. Over the past few years, e-commerce sites such as Amazon, and Asos have secured an attractive share of the retail market, without the need for a high street presence. Noting this success, traditional bricks and mortar retailers have ramped up their online strategies to compete. Recent entrants to the online retail world include established high street fashion retailers, Gap and H&M.

Unfortunately, the cost of customers purchasing online has been a growth in e-retail fraud. Figures from Cybersource suggest that 1.6 per cent of all orders placed online with e-retailers are in fact fraudulent. More generally speaking, the UK Cards Association reported that ‘card-not-present’ fraud cost the UK retail industry as a whole £266.4m in 2009, and while seemingly high, this figure is actually down 19 per cent on 2008. Therefore, whether you are on the high street, an e-retailer or a mail order company, identifying your genuine customers and ensuring they get through the door, so to speak, is integral.

A positive customer journey is key for any retailer if they wish to drive up revenues. The key to success is achieving an excellent customer journey whilst also detecting the small percentage of fraud.

‘Does sir know his size?’

The trick lies in equipping retailers with the tools to check that their customers are who they say they are. There may not be a ‘one size fits all’ solution for all types and sizes of retailer, but Electronic Identity Verification (EIDV) is a simple and cost-effective way to authenticate customers. EIDV allows retailers to approve a customer’s identity at a confirmed address in seconds and positively identify them with no further requirement for additional security checks.

The use of an EIDV solution enables retailers to reduce customer checkout and purchase waiting times, which is one of the most common reasons for shopping basket abandonment. It also reduces the need for costly and lengthy manual intervention. Knowing the identity of a customer will enable retailers to identify under-age consumers, as well as unusual activity and suspected identity fraud at the point of purchase.

‘How will sir be paying for that?’

An integrated EIDV solution will also enable retail companies to better identify people using false identities or impersonating other people, and in turn to better combat them. Use of accurate authentication techniques can also help reduce card-not-present and charge-back fraud, which are areas that have been targeted by retailers and banks in recent years.

This knowledge then enables retailers to quickly and easily weed out false transactions at the point of purchase, without causing lengthy and expensive delays to orders that manual fraud prevention can create. This means that genuine consumers are left to browse and purchase without being affected by the additional security checks in place, even in peak shopping times.

‘Would sir also like to try this?’

In addition to providing confidence in transactions, customer authentication can help businesses better understand who their customers are and begin the process of creating a more cohesive view of their genuine customers. The achievement of a single customer view can only happen if all data and information about each customer is integrated and stored as one consolidated record. To maximize this, attaining accurate data on customers is pertinent to achieving success and allows businesses to communicate relevant information that will maintain their customers’ interest and trust over time. Only then can organisations begin to understand each customer’s history with the brand, their service history and their propensity to buy new goods and services.

This information also allows organisations to enhance the way they target particular customers. After all, the customer is key and they will only listen if the information they receive is timely and relevant to their preferences. Building a single customer view for each and every customer can be costly, but validating customers information can help businesses better understand who are the real customers and who are the one-time visitors.

‘We hope to see you again soon’

In this context, whether the retailer is a pure online, mail order or a multi-channel organisation, the use of authentication systems can do more than simply help prevent fraudulent attempts to purchase. Accurate customer authentication can also help e-retailers better understand who their customers are and build a more detailed picture of them individually and as a group. This can help improve segmentation of the customer-base, as well as improve the marketing outreach to specific groups and individuals. Consumers will only listen if the information they receive is timely and relevant to their preferences.

Adopting a detailed view of each customer can be costly, but authentication of customers can actually help organisations better understand the real customers and where the fraudulent visitors are. EIDV technology can also be used within an integrated system to store all data and information in one consolidated file. This will provide companies with a complete understanding of each customer’s history with the brand, their service issues and their propensity to buy new goods and services.

Collectively, this knowledge can also be used to better prepare for ongoing customer acquisition projects or specific targeting to key demographic segments. So, whether a business is looking to acquire or retain customers, acquiring and holding accurate data is the key to success. An integrated authentication system can be the gateway to successfully recording this information correctly, from the first point of contact right up until the last.

‘And finally…’

While combating fraud is a benefit of fully integrating an EIDV authentication solution, the benefits go much further than highlighting fraudulent users. The ability to do this while not inconveniencing your genuine customers is a key objective, but knowing your customers and holding accurate data on them can be key to achieving success. This information allows businesses to communicate relevant information that will maintain their customers’ interest.

Electronic authentication also means that clean and genuine customers are seamlessly and quickly authenticated with minimum effort on their part. Ultimately, effectively collecting and verifying customer details will help organisations build an accurate customer database. The benefits of this will be reaped long after the customer acquisition process, and good data is the foundation for strong ongoing customer relationships.

Matthew Spencer is Head of Experian Identity at Experian

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