July 13th, 2018

Customer Identity Management: What It Is, Why It Matters, How It’s Done

As your brand spreads out across any number of addressable channels — from email to targeted ads, and from call center to catalog drop — how well can you coordinate your customer engagement across all of them? And when the customer comes into view of any one channel, how effectively can you turn that moment into an opportunity?

The answer to these questions rests largely on customer identity management: the marketing method of connecting a customer’s data across every channel — and activating that information into more effective engagements at every turn.

For one example, consider what happens when a valued customer dials your support desk. With strong customer identity management, you can connect the phone number with the customer’s past purchases — and immediately recognize the caller for the high-value customer she is. You can then route her call past the automated voice system, and connect her directly with a live operator who’s waiting with the caller’s complete account details in hand.

Or, say a shopper downloads your brand’s digital coupon. Customer identity management can link a shopper with her coupon ID in the online environment so you can deliver targeted online messages that move her through her customer journey, from consideration to coupon redemption, to purchase.

And if a home furnishings store customer moves across town, customer identity management can match current records with updated residency listings. Your data will know that she’s moved and where she’s moved to, so you can “greet” her in her new home with your store catalog.

Customer identity management lets your brand recognize and connect with customers on the spot — wherever they are; leverage all you know about them to make engagements more impactful; and bring together the available information for a fuller understanding of who your customers are, and what makes them act.

What’s Customer Identity Management Good For?

Customer identity management provides the data infrastructure for a number of key strategic initiatives.

To name four:

Optimizing the Customer Journey. As the examples above demonstrate, if you can identify customers anywhere, and link your knowledge about them across channels, you can turn every interaction into a more impactful experience. You can also manage a customer’s experience across channels — such as through targeted messaging that builds across addressable media.

Measurement. By connecting your knowledge of the customer across channels, customer identity management lets you measure and analyze the entire customer journey. Multi-touch attribution — which evaluates the incremental impact of every marketing touch across every channel — is a good example here. If a customer receives your print catalog, sees your ad in a browser, downloads your app, and finally makes a purchase in-store, identity management allows your marketing team to connect all these interactions back to a single person — the critical first step in calculating how each step influenced the final sale.

Responsibility. Data Governance is the term for overseeing customer data collection, targeting and personalization in ways that are respectful, engaging and delightful — not annoying, creepy or afoul of the law. To do data governance right in the age of GDPR and the California Consumer Protection Act you need to coordinate the customer data in a respectful, responsible way or risk losing customers and spending more time on compliance than engaging with them.

Customer Acquisition. Customer identity management gives you a clearer picture of who your customers are, and of how different marketing levers drive them to engage. That’s information you can use for look-alike models and smarter audience segmentation — to find new customers who are similar to your current fans, and to draw them to your brand in the most effective ways.

That’s a high-level overview of what customer identity management can achieve. But how do you create a successful customer program for your brand? It takes a three-pronged attack: a combination of data diversity, data accuracy and data strategy. I’ll outline each of those elements below.

Learn how to create an identity management strategy that helps turn customer data into true intelligence. Ryan Engle and Forrester’s Joe Stanhope tell the steps to take.  Listen to the webinar.

3 Steps to a Successful Customer Identity Program

1. Diversify the Data

Every customer is a complex, multi-faceted individual. To understand customers’ identity, you need a data set that captures their many sides. You need data diversity — combining information from digital and offline sources.

Go Omnichannel

Some marketers equate forward-thinking data initiatives with digital data alone. But the truth is, you can’t do effective customer identity management without online and offline customer data alike.

One reason why is that online and offline channels provide different inputs about the customer — so to get the whole picture, you’ll need to combine the data. Digital data provides a granular view of (certain) customer behaviors; but data sources like cookies, device IDs, and IP addresses are pseudonymous and won’t tell you who you’re interacting with. Offline data, by contrast, reveals very little behavior — but knowing a physical address, an alternate email address, or an actual phone number can identify a customer more precisely. Look at just digital or just offline data alone, and you’re missing half the picture. A privacy-sensitive omnichannel view is a more complete view.

Meanwhile, even in our digital age, offline activity is alive and well. Shoppers still live in houses, ride in cars — and, as the likes of Amazon and Warby Parker have clearly noticed, shop offline. Indeed, close to 80% of shoppers still favor brick-and-mortar outlets for half or more of their shopping; 75% of branded apparel purchases are made in-store; and a full 67% of millennials head to brick-and-mortar locations to make purchases after first doing shopping research online. Look at the digital data alone, and you miss out on a huge piece of brand engagement.

It’s worth noting here that one common approach — often called “identity tracking,” “online identity,” or “cookie matching”— suggests focusing on digital identifiers alone. For the reasons above, I disagree. To be sure, digital is a critical component of any identity approach. But it’s also true that, simply put, there’s more to your customers than digital alone.

Not Just Shopping Data, People Data

There’s also more to people than shopping alone. To fully understand your customers, you’ll need to expand your view beyond media data, ad engagement metrics and sales records. You’ll need to dive into who people really are — capturing people data like family size, demographics and psychographics. A customer’s identity is more than cookies, direct mail addresses and mobile; it’s also human qualities like how many kids she has, what she does for a living, and what her hobbies are.

Think of it this way. Customer identity management is the process of identifying who your customers are and how they behave — so you can serve them better, and so you can acquire more customers who are like them. The better you understand the whole person — as a customer and as a human being — the more effectively you can achieve just that.

2. Get Accurate Data

Once you understand what kinds of data you’re looking for, it’s time to turn your attention to data quality. After all, your customer identity program is only as effective as the data you put into it. You’ll need to make sure your data is accurate and up to speed.

Start with a Clean-Up

A mere 3% of companies’ data meets even basic quality standards, so there’s a good chance your data is not as clean as you think. And even if your customer data was accurate at one point, a lot can change. Cookies expire, people switch email addresses, single people get married, workers switch jobs and change income brackets. Meanwhile, precious few customers update brands’ CRM teams about their life changes. Given all this, it’s no surprise that an estimated 60% of U.S. customer data becomes outdated within two years.  

The lesson: before you use your data, cleanse your data. Examine the data you have today, pinpoint flawed information, and get your records straight.

Work With Authoritative Data Sources

Of course, the only way to know if your data is accurate is by having a reliable information source to check against. That’s why it’s critical to get access to an authoritative data set.

Some data sources are more dependable than others. On the one end of the spectrum is a fly-by-night data reseller or a local grocery store; at the other is customer lists used by a major financial institution, a telecom company, or a utility. To get the right information, it’s important to partner with those sources of dependable authoritative data — to use their known data sets to guide your unknowns.

3. Set Your Strategy

No matter how accurate, diversified, and up-to-date your raw data might be, raw data is still just raw material. To put it to use, you’ll need to set sound data strategies.

Data Strategy: Methods Matter

Data strategy matters on a technical level, and on an operational one. On the technical side is linkage methodology. Data strategy is a lengthy, rich topic in its own right; but suffice it to say that when you’re pairing dozens to hundreds of identifiers across thousands to millions of customers, there’s ample opportunity to confuse one customer’s data with another’s. How you go about linking matters a lot. Before you move ahead, educate yourself on the data linkage approaches that make most sense for your business.

Organizational Alignment: To Link the Data, Link the Teams

As I said, there’s also the operational side of identity data. In customer identity management, you’re connecting signals from an array of channels. To succeed, you’ll need to align data across the many different teams that manage that data, groups as diverse as traditional and digital media, sales and customer support. You’ll have to foster cooperation between teams with divergent KPIs, compete for share of budget, and may even work under separate P&L’s. All of this takes an incredible amount of cross-organizational coordination and cooperation — complete with adjustment, learning curves and politics.

When you’re thinking customer identity, don’t just think in terms of the data alone. Think about the corporate strategy it will take to get all that data in sync.

If you can do that, you’ll be well on your way toward more successful customer identity management. You’ll also be on your way to a true customer-centric business: a company that has broken down the silos and united its teams around the customer.

Ready to begin creating a workable identity management strategy for your business?  Learn how.

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