Understanding customers – who they are and what they need – is critical to businesses large and small. Here are some ways your company can keep data safe and benefit from it

While “know your enemy” might be a crucial military adage, “know your customer” is a common refrain in the battle for consumers’ time, attention and, ultimately, money.

For large corporations and sole traders alike, it’s important to be able to recognise customers for two main reasons. The first is fraud prevention and being able to confirm that the person you’re dealing with is who they say they are. The second is more nuanced and deals with market research, identifying returning customers, understanding their needs and knowing their preferences.

Understanding exactly who the customer is, what they like and want – and what they don’t – is fundamental to growing your business. But in this day and age, with rising levels of identity-related fraud and financial crime, it all starts with being confident that the customer you are dealing with is who they say they are.

From filing your tax returns online at gov.uk, you may be aware that Post Office is a leading partner of the government’s identity verification service, Verify. What you may not know is that Post Office is expanding its digital identity offering with the aim of becoming a “one-stop ID shop” that helps individuals verify, share and manage their personal information and documents in order to confirm their identity when and wherever they need to. This then enables small businesses to more easily recognise customers they want to do business with.

Then there’s the market research aspect to utilising customer data. “In the digital age, the information a customer shares with you can really support your ability to tailor and shape their consumer experience, which supports increased loyalty and repeat visits,” says Martin Edwards, managing director of identity services at Post Office. “However, you also need to make sure that their data is managed and stored securely so you build up trust and credibility with your customers.”

Beyond that, consumers are more aware of their privacy rights than ever. So you must be respectful of their feelings towards sharing their information.

“Consider ways in which you can help your customers feel in control of the information they share with you,” says Edwards. “Whether it’s their address to deliver an order they’ve made online, or an email address so you can share newsletters with offers and updates about your business. Only collect the data that you need, and if you need to store it, do so securely. And be transparent about why you are storing it and how you will use it.”

It’s one thing being compliant with legislation, but you also want to build a trusting relationship with customers.

“This is the type of ecosystem we are aiming to create beyond our current solution for government services on Verify,” says Edwards. “We have been helping customers apply for important documents relating to their identity for decades. We’ve expanded our services to meet their needs as they move into the digital economy. The critical challenge is how we help businesses to feel confident about customers’ identities – and do so quickly and easily so they can grow.”

Five ways businesses use data to support customers and grow

1. Understand the regulations
Make time to understand the implications and obligations for your business with regards to data. With the arrival of GDPR, the rules have become more stringent and you should avoid keeping personal data longer than is necessary. However, this also represents a great opportunity to review your processes and systems. Can you confirm the age of your customer without requiring them to share personal documents that you may not be able to store securely?

2. Gather consumer data responsibly
Companies can gather consumer data and insights in a variety of ways, depending on the sector. The two main ways to gather data include asking customers questions directly – through online or in-store customer surveys and information shared at time of purchase – and by gathering observational online and offline data. This can be in-store footfall monitoring or transactional data analysis: what people are buying and customer reward programmes. How ever you collect it, if you get permission to use it and are transparent about how you are using and storing it, you will see trust in your brand rise.

3. Manage data risk
At a time of heightened cybersecurity concerns, customers are more risk aware and therefore more careful about who they share their data with. With a new startup that hasn’t yet established its brand reputation, customers may be extra cautious.

Edwards says: “Some small businesses get around that by encouraging customers to log in to their websites using their Facebook or LinkedIn account. However, some social media platforms themselves have become discredited and may no longer be the first login choice for customers. Consider your potential customer identity and data partners carefully, focusing on trusted brands with credibility.

4. Make it personal
Personal data should be used for mutual benefit, with you creating something of value for the customer, too. It’s also key to always operate on a base of a confirmed and trusted identity. If you have a fraudster or underage customer in your business, no amount of clever communication will make them a “good” customer. Post Office postmasters foster close links with their customers, which allows them to understand how people explore their online and physical retail offering and the type of products they like. They can use that to tailor the customer experience, for example, by ensuring they receive the correct two-for-one special offer through their loyalty schemes, keeping them happy and coming back.

5. Provide a secure environment for the sharing economy
In the peer-to-peer or sharing economy – where people lease out access to flats or houses, car journeys and even their cars – confirming people are who they claim to be is key in establishing the trust that’s vital to the sector. More than a million people in the UK now have a secure digital identity through Post Office and this is set to rise as more businesses look for innovative ways to help their customers do business with them digitally.

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