Data As Currency: Digital Identity and the Future of Customer Experience
We’re on the precipice of a power shift in the tale of consumer data ownership, use and sale. While consumers are awakening to the true power that lies in their “digital identities,” companies are beginning to evolve value propositions, and experience ecosystems are emerging with the development of new data-driven business models.
A person’s digital identity is comprised of all information generated by online and device signals and activities, including claims made by oneself or by another person or entity. These data sources may include biometrics and voice, movement, location, environmental, online/app activity, third-party data and more. Today, specific versions of our digital identities are used to represent us in specific contexts, often in brand interactions.
The value of one’s digital identity is still not fully understood by most consumers. Unaware of what their data are worth, people regularly click through and accept inherent agreements, trading intimate data for everything from custom content to special offers. And companies are happy to trade personalization for data, as they understand the future of customer experience (CX) depends on data-driven individualization, hyper-relevancy and contextual design.
In an era of increased standards of accountability, brands must prepare for an inevitable shift in data power dynamics by providing transparency in data collection, customer protection as sound data stewards, and fair reward for data use. Consumer compensation must surpass simple personalization; that’s now table stakes.
Hopping among brands, stores, websites and apps produces multiple versions of our digital selves, with every organization understanding a different facet of who we are via multiple data sources. In the end, consumers are left with disjointed experiences that are not only uneven, but also filled with friction, as we’re consistently made to re-identify ourselves.
The fragmented nature of digital identity creates unique challenges for customers, which are further exacerbated by companies scrambling to offer reactive solutions using both traditional and AI-driven means. When customers and companies feel the pains of fragmentation, so does the ecosystem at large (see table below).
Effective data management is still somewhat of a Pandora’s box, for companies and consumers alike. The current corporate solution to CX fragmentation–brought about by a lack of unified digital identity and data hoarding instincts within companies–is to focus on what can be controlled.
As a temporary fix, companies prioritize personalization within their native environments, while ignoring the deafening roar of customer demand for more value. “Single customer record” programs create a full picture of each customer across contained, company-owned channels––so long as the customer creates an account and remains logged in. As a result, today’s consumer is forced to create multiple digital identities with the information shared varying by company, use case and industry (see graphic below).
1) Airport and travel security
2) Banking, investing and stock trading
3) Birth registration
4) Device (mobile, IoT) authentication
5) Education: student verification, transcripts
6) Government: identification “card,” passport, government services, voter registration, etc.
7) Health care: patient records, vaccinations, medication dispensary
8) Property/business registration and mortgages
9) Smarthome and IoT authentication
10) Humanitarian: Refugee status, food vouchers, aid entitlement
11) Retail: personalized offers, couponing, loyalty program, rewards, dynamic pricing, etc.
Meanwhile, seemingly “magical” customer experiences driven by artificial intelligence (AI) are keeping customers hooked, buying into the data dupe. Machine learning paired with digital identity data augments CX personalization at each stage of the journey––from awareness and consideration (as outlined in this report’s chapter Intelligence With Impact: Marketing and Machines in an Artificially Intelligent World) to conversion and beyond, as social commerce technologies like visual search and voice assistant integrations maximize impact. Predictive analytics push real-time relevancy one step further by predicting consumer needs and preemptively delivering solutions.
Consumers are largely unaware of the data practices driving real-time relevancy. Multiple studies report that people rarely know how their data is sold and shared, with many in the dark altogether about data collection and use intentions that are hidden away in lengthy privacy agreements.
However, the current data exchange ecosystem is starting to show signs of an imminent shift. As customers begin to recognize that the inherent value of their data is worth more than personalization, companies must proactively innovate with calculated impact to solidify their place in this new data marketplace.
For example, Sweatcoin, Bitwalking and Gympact reward users with virtual currency for exercising, while Charity Miles turns steps into charitable donations. In the healthcare sector, Nebula Genomics enables consumers to sequence their genomes and make them available on the platform to sell to data buyers. More “middlemen” are emerging as data brokers to buy and sell data at scale, like Data Coup, a platform that encourages consumers to connect their accounts for potential data purchasers. Data attributes are given values determined by the marketplace, and retailers, media, banks and other companies can purchase them.
The future of seamless customer experience design depends on not only unification of customer digital identities but also increased prioritization of data stewardship and control by consumers themselves.
Unifying digital identity is no easy feat. Some emerging technology capabilities (e.g., blockchain, edge computing, solar, VPNs and homomorphic encryption) serve as early contenders for the job. However, true identity attestation is decades away. In the meantime:
- Consumers must focus on practicing sound personal data stewardship by understanding how their digital identity data are being collected, used, shared and sold––and to what value and purpose. Startups like Digi.me are leading the way, helping users understand what data attributes they’re sharing with companies and apps, and even helping users select new apps that will better respect their data choices and values. Established tech giants like Apple are also throwing their hat in the data-transparency ring, recently launching a portal that allows customers to search what kinds of data the company has kept on them.
- Companies must strategize now for the increased pressure to deliver value in exchange for customer data. Personalization and AI-driven contextual relevance won’t be magical for much longer. Consider what else you can exchange that will be enticing (e.g., exclusive/VIP experiences, first access to products or monetary compensation). This has the potential to redefine “social commerce” for your company altogether. Also consider how the emergence of unified digital identities and an “experience marketplace” will impact your organization internally. How will you share data among departments to ensure visibility, what new processes and governance will exist around data tagging and classification, and how much control will the company have vs. customers? Lastly, consider which new roles and skills will be needed in order to rise to increased standards of accountability in data management and protection, and which platforms can enable internal teams.
- Ecosystem dynamics morph as reputation begins to matter as much as digital identity data itself. When a company begins to analyze individual customer data in aggregate with other data about the same consumer from other companies, industries and even the government, a new type of “user score” begins to take shape. What does the future hold when a customer’s actions (positive or negative, or simple mistakes) have a direct impact on the value they receive in exchange for their data, patronage or engagement? Within the broader ecosystem, a new intermediary of data authenticators will emerge, as verification is the critical underpinning on which the entire experience marketplace thrives.
The journey to a fair and equitable data marketplace isn’t going to be easy for companies. But it’s the only possible road to travel if leaders wish to not only attract new, data-conscious consumers but also retain their existing customer base. As data becomes increasingly recognized as an asset, ownership and stewardship become greater priorities to increase acquisition, loyalty and advocacy.
1 “Amazon Sets Its Sights on the $88 Billion Online Ad Market” New York Times. September 2018. Source: https://www.nytimes.com/2018/09/03/business/media/amazon-digital-ads.html?emc=edit_nn_20180904&nl=morning-briefing&nlid=5842541920180904&te=1
2 “Amazon’s Surprisingly Diverse Revenue Base” Statista. October 2018. Source: https://www.statista.com/chart/15917/amazon-revenue-by-segment/
3 “Dology Study Reveals Consumer Insights On Digital Identity Fraud, Points To Need For Businesses To Offer Stronger Identity Verification” IDology. June 2018. Source: https://www.prnewswire.com/news-releases/idology-study-reveals-consumer-insights-on-digital-identity-fraud-points-to-need-for-businesses-to-offer-stronger-identity-verification-300659874.html
4 “New Research Uncovers Big Shifts in Customer Expectations and Trust” Salesforce. June 2018. Source: https://www.salesforce.com/blog/2018/06/digital-customers-research.html
Want to know more?