Fraud Prevention and Happy Customers - You Really Can Have It All

Customer Data

By: Tim Prugar

Ponemon Institute found that “more than two-thirds (70 percent) of [executives surveyed] said they plan to increase their investments in next-generation security technologies.”  Maybe you’re one of these executives – What’s your plan?

Next Caller and IntraNext Systems recently sat down to discuss call center fraud prevention and customer experience - areas both companies are extremely passionate about.   The discussion explored how different vendors complement and support each other to prevent fraud while adhering to regulatory guidelines and providing a seamless customer experience.  

If there’s one definite that this conversation surfaced, it’s that call center security leaders need to take a holistic approach to call center fraud and customer experience. Here’s a closer look at why:

 

The Push-Pull of Fraud and Customer Experience

Defeating fraudsters and improving customer experience is not about checking boxes. There isn’t one solution to solve each respective problem; conversely, solutions always have effects on both problems.  For example, if you implement an in-depth screening authentication technique that cuts down fraud, it probably adds some friction to the customer experience.  On the other hand, adding solutions that make it easier to access your account often makes it easier for fraudsters to access your account too.  Luckily for consumer-facing businesses, there are solutions that don’t force this tradeoff, helping to both prevent fraud and improve customer experience.

 

Passive, Multi-Layered Authentication

Authentication is a big buzzword these days.  It should be - preventing fraudsters from gaining access to accounts plays a huge role in fraud prevention, and saving customer time plays an equally important role in customer experience.  With new authentication methods, customers can complete a transaction via any customer service channel they choose, be authenticated quickly, and move on to carry out their business.  That is a game changer for customers.  Compare that to customers getting stuck in the IVR loop, repeating information multiple times, or being interrogated to prove their innocence and only then being allowed to carry on with their inquiry. As call centers move to technically advanced biometrics and call analytics, they must employ an integrated multi-layered approach to authentication with as passive a process as possible.  That way there will be multiple catching points for fraudsters along their path to account access that combine to form a comprehensive case for suspicion, and the customer experience will be more seamless than any password or knowledge-based authentication.

 

Compliance, Regulation, and Fraud Prevention

Regulations and guidelines cannot just be a box to check off either.  Call centers handle an extraordinary amount of Personally Identifiable Information (PII).  Companies in the financial sector, the healthcare industry, or anywhere in between are responsible for adhering to different compliance standards and security regulations.  Compliant doesn't necessarily translate to fraud prevention or data security for your customers, so working with a vendor that can help bridge the two should be something to consider.

 

Continuous Cybersecurity Throughout the Call

Similarly, implementing layered passive authentication and rigorous regulatory compliance do not mean that fraud will not occur during the call. Call centers must spend time looking at vendors that offer data security options within live agent transactions as well. Technology exists that completely eliminates the verbal exchange of sensitive data and allows customers to control the input of their information - reinforcing a company's commitment to security and customer experience. If sensitive information is not heard or seen, it makes it difficult for it to be misused.

 

Choosing the Right Solutions for You

Preventing call center fraud while delivering a seamless customer experience can seem like a daunting undertaking when faced with stats like

But it doesn’t have to be.  Vendors exist that can help call centers excel in integrated multi-layered authentication methods, biometrics, call analytics, regulatory compliance, and security measures in live agent environments. Both Next Caller and IntraNext Systems propound that when call centers employ a holistic approach and engage with the right group of multiple vendors they can significantly cut down fraud and improve customer experience.

What Does a Customer Experience When You Handle Fraud the Right Way?

PositiveCX.jpg

By: Tim Prugar

This morning, tens of millions of Americans woke up and experienced the same, sinking feeling:

Was my information exposed in the Equifax Breach? Am I at risk for being a victim of fraud?

As a business, your customers are frightened right now. They're worried about their accounts, and their identities, and the lives that they have worked hard to build for themselves and their families. What they want more than anything is the peace of mind that if something goes wrong, it can and will be taken care of in a timely fashion.

I know that feeling well - last month I was the victim of credit card fraud. The feelings above were real, and they were intense. However, my bank was able to transform a very scary experience into a positive one by making it easy to have my problem addressed and fixed. The fundamental tension in fraud prevention is between Customer Experience and Security. However, as you'll see here, those two can very easily work hand-in-hand to protect the customer while ensuring loyalty. 

My story, originally posted over at CustomerThink, is as follows:

Speed

I had just become the victim of credit card fraud.

While sitting at my desk, I received an email alert from my bank — one of the largest in the United States — that my credit card had just been used in Iowa. Of course, I wasn’t in Iowa. And I hadn’t used my credit card in nearly three weeks.

Upon looking, to me, it was an amount that clearly showed someone was testing the card to see if it would go through — often the first step in a fraudster’s bag of tricks.

My bank prompted me to confirm the purchase — “Was this your purchase, or is something wrong?” it read. They had started on the right foot, and with 15% of banking customers who experience fraud closing all accounts with that provider, the bank knew the next steps were just as critical to keeping my business.

I clicked “something is wrong” and my card was immediately frozen. I called the support number listed in the email, was quickly authenticated by the bank, and in less than five minutes, my card was closed, the fraudulent transactions reversed, and a new card was on its way.

Efficiency

Chances are, you or someone you know has or will be a victim of credit card fraud. According to the consumer financial protection bureau, more than 10% of the US will fall victim at some point in their lifetime; indeed, the United States accounts for 47% of the world’s credit card fraud cases.

To combat this, companies are always improving their security. For example, the advent of EMV, the smart chip on your card, has led to a decline in total losses in recent years, as it has become more difficult for some fraud acquisition techniques like card skimming.

So where do high-tech fraudsters turn when they’re thwarted? The weakest link, of course. And today that is the call center. The place where customers are earned and lost.

In 2016, call-center fraud rose more than 110%. Financial institutions authenticating primarily through ANI — automatic number identification — were startlingly vulnerable to attacks carried out by phone spoofing, which remains a heavily relied upon technique for fraudsters.

Shoring up this vulnerability is a fine line for financial institutions to walk.

Too little security and perpetrators of fraud can easily game the system. Too much security, and you’re putting an already aggravated customer through the ringer.

The worst thing a bank can do is handle this poorly: bouncing someone between multiple agents, poorly thought out knowledge based authentication question that either the person may not know the answer to, or a fraudster may be able to figure out through social media, long hold times, etc.

You need a system that does this, and does it quickly, so a customer can get on with their day as quickly and efficiently as possible.

Positivity

Ironically, having my credit card stolen ended up being a pleasant experience, because now I’ve got a great story to tell — a firsthand account of how a powerful authentication system can transform the customer experience in fraud cases.

How a company handles fraud and makes the customer feel is important; a company has the same responsibility as when they’re trying to convince a customer to buy. If someone has a terrible experience dealing with the counter-fraud measures of their banking institution — that can derail the entire relationship.

Speed is a factor in situations like this, and with a solid authentication system in place, my bank and I can operate with trust and peace of mind that I am who I say and solve the problem at the speed I desire as the victim. I want to get a person on the phone as quickly as possible.

When a company can authenticate a caller quickly, they chop off the clunky knowledge based process at the beginning of the call and it allows them to green light calls like mine.

The primary benefits are twofold: identifying fraudulent calls and beginning the procedures on dealing with such calls, or authenticating the call quickly before any further damage is done by a perpetrator of fraud.

Who knows what the damage of an additional 5, 10 or even 30 minutes means in terms of fraud — but we can stop the damage before it gets that far.

When companies use efficient technology to put the customer experience first while simultaneously demonstrating a commitment to strong security measures, everyone comes out ahead.

Even though my account was compromised, even though there was fraud — I walked away with a positive feeling about the company, because of the efficiency of how my case was handled.

With brand loyalty harder than ever to win, and fraudsters continuing to evolve the way they commit attacks, smart organizations will do well to bake fraud prevention into their CX.

 

Tim Prugar is the VP of Operations at Next Caller. He can be reached at tim@nextcaller.com.

What Can AI Learn from School Teachers?

Over at ICMI, Next Caller's Director of Customer Success, Tim Prugar, reflects on his career in education and provides some thoughts on what Contact Center AI can learn from the thousands of real-time adjustments and decisions that teachers make on a daily basis. 

Read Tim's Post Here.

The Perils of Omni-Channel and Social Media Marketing - A Philosopher's Look

A member of the Next Caller team, Zach Shaw holds a Philosophy degree from Princeton University with a certificate in Computer Science. Every so often, Zach shares his musings about the intersection of big data and technology with some age-old philosophical questions. 

 

In her recent book Reclaiming Conversation, Sherry Turkle explores the effects of our constant use of social media on our mobile devices.  Originally, the constant connection brought about by new technologies was seen as an extension of our personal identities.  However, as Turkle notes, there are many adverse effects from these information communication technologies (ICTs) - foremost the replacement of face-to-face communication by digital interaction.  People do not learn empathy through the use of social networks.  They learn how to get the most likes on their profiles.  Our self esteem is intimately linked with our popularity on such websites, and we'll do everything in our power to boost that popularity, including sacrificing an intimate conversation with a friend or family member.  Even when we are conversing face-to-face, our mobile devices make it possible for us to be 'alone together.'  We can be physically together with another person, but completely inattentive to them as a human being.  As a society this is a major development, and, in the eyes of Turkle, a major problem.  

 

Not lagging behind, the customer service space has adapted to such technologies.  We can tweet about our bad experience on an airline.  We can email the customer service department about our phone malfunctioning.  We can online chat with a representative about our order on Amazon.com.  Communication to address our concerns with a product or service has been extended by these ICTs; consequently, as customers, it is easier than ever to solve our problems.  Yet, when we really are frustrated we still resort to the phone.  

 

A customer service phone call is uniquely outside the grasp of distracting mobile technologies because both individuals on the call are focused on achieving the same goal: solving the customer's problem as quickly as possible.  You, the customer, want your concern addressed, and, until it is, you will give your undivided attention to the phone call.  Conversely, the representative will lose his or her job if not engaged.  So in this one case, the ability to have limitless distractions and data at your fingertips does not hinder the quality of your conversation.

 

Let's compare this to a typical conversation with a friend.  You both have several different goals.  You each want to improve your status on Facebook.  Maybe one of you wants some encouragement to work harder at your job from the conversation.  The other friend wants to talk about the latest gossip.  There is somewhat of a prisoner's dilemma here.  Because you both took the time to hang out, let's assume that you both enjoy hanging out more than going on Facebook.  Given that assumption, let's give the value of 1 happiness point to each of you for the action of going on Facebook, and the value of 5 for the other two activities of face-to-face conversation.  However, if you choose to go on Facebook, you are guaranteed 1 point whereas, if you choose to engage in the face-to-face conversation where you both are pursuing different goals, it is likely that one of you will not achieve your goal.

 

This analysis assumes that you cannot have a conversation where both your and your friend’s goal - in the example provided, encouragement and gossip - can be accomplished simultaneously.  Although they are not mutually exclusive, with the developments of technology and our need for immediate gratification, a conversation achieving both goals and yielding a ‘5/5’ level of happiness is becoming increasingly rare.  Moreover, there is the possibility that neither person’s goal is accomplished by staying engaged in the conversation, yielding a ‘0/0’ level of happiness.  This possibility gives further impetus to go on Facebook.

This analysis assumes that you cannot have a conversation where both your and your friend’s goal - in the example provided, encouragement and gossip - can be accomplished simultaneously.  Although they are not mutually exclusive, with the developments of technology and our need for immediate gratification, a conversation achieving both goals and yielding a ‘5/5’ level of happiness is becoming increasingly rare.  Moreover, there is the possibility that neither person’s goal is accomplished by staying engaged in the conversation, yielding a ‘0/0’ level of happiness.  This possibility gives further impetus to go on Facebook.

Even if you are very risk-averse, you would probably choose the conversation at first - that's why you both are hanging out.  But if the conversation starts to veer off course of your individual goal to another topic (I assume in my model your friend's goal instead), it is more beneficial for you to stop paying attention to the conversation and to go on Facebook.  If there is a more comfortable, egotistical alternative to genuine empathy, we will take it.  Therein lies the dilemma of being 'alone together.'

 

Conversely, returning to customer service calls, the conversation is actually improved by recently developed ICTs.  Certain technologies allow representatives to access demographic information about their customers which these representatives can use to better meet their customers' needs.  With new innovations like omni-channel integration, representatives can specialize their knowledge to specific products or services, and thus better achieve the joint goal of any customer service conversation: addressing the customer's concern.  Instead of destroying the quality of these conversations, new technologies are enabling better communication in the customer service space.  

 

In spite of the stigma arguments like Turkle’s have started to propagate against ICTs, customer service providers and call center professionals need to take advantage of these new technologies in order to maintain customer loyalty.  The average person’s patience is dwindling because of the immediate gratification these technologies have brought to us.  As a result, customer service needs to be better than ever before, and these new technologies are the only way to meet consumers’ rising expectations.  Without adapting to this changing landscape, customers will go on Facebook if they aren’t satisfied within a couple minutes - and choose a competitor.

 

Interested in more of Zach's philosophical musings? Contact the author - zach@nextcaller.com.

So Sayeth The Times: 3 Reasons Why Biometric Authentication Should Give You Pause

 

In Tuesday's New York Times, the Room for Debate blog took on concerns surrounding the growing use of biometric authentication in the banking sector. Typically these arguments are more polarizing, with a traditional "A IS GOOD vs. A IS TERRIBLE!" style of debate. But when it came to Biometrics, something interesting happened: both sides agreed that Biometric Authentication is an imperfect, and sometimes deeply flawed, science. They merely disagreed on the implications of that for banking security. 

Look, Biometric Authentication is LIGHT YEARS ahead of static passwords and easily-researchable security questions. It's here to stay. The debate isn't whether or not banks should utilize biometric authentication - the debate is whether these financial behemoths should be relying on biometrics as their sole, or even their main, first-stage fraud solution. To make a football analogy, the Carolina Panthers would never say to their quarterback "Hey, Cam, you're revolutionizing the quarterback position and doing things we never thought possible - we can just rely on you and don't need to have an offensive line, or receivers, or running backs - I'm sure you can do it all and won't fail." No coach would ever say that. Of course not. After all, that's the Chicago Bears' patented offensive strategy. 

                                Not Funny, Tim.

                                Not Funny, Tim.

So let's take a deeper dive into the challenges presented by Biometric Authentication:

1. Just Because It's Biometric Doesn't Mean It's Not Data

Target. Snapchat. Ashley Madison. Data breaches that have exposed the personal information, home addresses, credit card information, or even Social Security Numbers of customers and employees have made front page news on dozens of occasions. As Claire Gartland of the Electronic Privacy Information Center points out, citizens have action steps they can take when this type of information is released. They can cancel cards or apply for new SSNs. But what recourse do people have when biometric information is leaked? The Office of Personnel Management has already admitted that 5.6 million fingerprints were stolen in a recent data breach, and hackers have already shown their ability to replicate fingerprints and iris scans to game security systems. Voice biometrics has similar flaws. If your customer data can be breached, so too can your biometric data (regardless of the encryption or tokenization).  

 

2.  Do Your Customers Trust You?

Just because I'd let my friend hold $100 for me doesn't mean I'd trust him to hold onto my fingerprints and DNA. I've seen enough Law & Order to know better. Biometric authentication brings about very real Orwellian concerns on behalf of consumers. What are you going to do with this information? What assurance do I have that this will only be used for authentication? While James Lewis of the Center for Strategic and International Studies writes these concerns off as "nervous dystopian projections" and "irrational" (ouch!), the comments show a very different perception of this development in technology. 

                   "I, for one, welcome our new Biometric Overlords!"

                   "I, for one, welcome our new Biometric Overlords!"

3. Impact on Customer Experience

The number one concern for Fraud Analysts is "Catching and Stopping Fraud." However, "Limiting False Positives" and "Ensuring a Seamless Customer Experience" finish a close second and third. Biometric Authentication can have serious impacts on both of those exceedingly important CX metrics. Will MasterCard spring for me to become better looking if my face is consistently judged not to be my actual face? Voice biometrics necessitate 15-30 seconds of analysis at the time of connection on a call - increasing average handle time and also increasing customer frustration at the outset. Biometric authentication also requires certain technologies that can serve as a barriers-to-entry for customers that may not be able to purchase smart phones. Are banks going to be in the business of only offering security to those who can afford it?

So What Now?

While the debate in the Times cast a significant amount of doubt on the viability of Biometric Authentication as the sole solution for banks, we should refrain from throwing out the baby with the bathwater. Biometric Authentication is an enormously promising development in the world of security, but it is a mistake to view this development as a panacea, or a reliable sole method for thwarting fraudsters. Banks who are looking to increase first-stage fraud prevention at the payment and call center level would be wise to combine known fraudster block lists, Biometric Authentication, and carrier and transaction level metadata to best defend against nefarious attacks and protect their customers' assets...and peace of mind. 

By: Tim Prugar (tim@nextcaller.com)

 

Top Call Center And Telecom Trends For 2016

Authored by: Sheldon Smith is a Senior Product Manager at XO Communications (XO.com). XO is a telecommunication services provider that specializes in nationwide unified communications and cloud services.  Sheldon has an extensive background in UC and he has over 15 years of experience in the technology industry. His position involves overall product ownership of Hosted PBX, SIP, VoIP and Conferencing.

Overview

Research and Markets, a market research store, states the global contact center market is on track for a compound annual growth rate of 9.26 percent over the next four years, as companies look to outsource communication services and improve the customer experience. However, growth isn’t just happening over the long term. With 2015 almost over, it’s worth taking a look at what next year may bring for the call center and telecoms market: Here are five top trends for 2016:

Improved Mobility

Most telecom providers have built-in support for mobile devices and in some cases, wearable technology — but according to research firm Gartner, 2016 will usher in a new type of mobility powered by the “device mesh.” Put simply, this mesh extends beyond “traditional” consumer devices to also include home electronics, automotive digital systems and environmental tools. For telecom companies, this means increasing demand from users to support any device, anywhere, anytime.

The Ambient Experience

Gartner also predicts the rise of “ambient user experience” over the next year. Enabled by the device mesh, the idea here is to create a customer experience that “seamlessly flows across a shifting set of devices and interaction channels blending physical, virtual and electronic environment.” This is a sea change: Consumers are trending away from devices as discrete channels but instead view them as part of a unified whole. For call centers, the means a rise in the number of callers who expect agents with full access to historical records along with any online, mobile or previous phone conversations.

Stepped-Up Security

Breaches are now an expected outcome for many companies regardless of size or industry. The same applies to telecom providers: Personal data stored by your organization is a hot-ticket item for determined hackers. In 2016, expect to see a rise in the number of security startups and VoIP providers that offer native encryption for all communication data — in transit and at rest. Improved controls for local admins are also on-tap: C-suites and security pros alike want to know what is happening on their network, why and how they can put a stop to it, as needed.

Power to the People

According to global online community Customer Think, one big change coming to call centers of the future is the ability for customers to help themselves with minimal assistance from an agent. While CT takes the long view and says 2020 is the year to watch for this kind of transition, the tech market of 2016 should lay critical groundwork. For example, improved interactive voice response (IVR) systems will make it possible for customers to “self-serve” most of their issues, in turn putting more pressure on front-line call center staff to become subject matter experts. Over the next year, expect the view of agents to shift from one of “first contact” to “final option” — knowledge and skills must improve to match demand.

Bandwidth for Big Data

If telecom providers want to stay competitive through 2016, they’ll need to do better with big data. It’s no longer enough to simply store this steady stream of information — consumers expect their provider to offer real insight when it comes to buying habits and predicted needs. Handling the big data deluge means providers need to shore up available bandwidth and make sure they’re ready to manage the transition from steady flow to rushing river as data demands. According to business news publication Trade Arabia, companies in the Middle East — the world’s second-largest mobile phone market — faces the challenge of dealing with a tech-savvy consumer base that effectively jumped over landline adoption to embrace Internet-connected devices. The result? Massive amounts of data to analyze and insights to glean, and the chance to get a leg up on North American providers that don’t dive headlong into big data.

Ready for 2016? The future holds better mobility, improved user experience and security backed by a tech-savvy populace with big data focus.

Big Data and the Value of Making Repeated First Impressions

Contributed by: Ryan Cash

We spoke a couple of weeks ago about the importance of utilizing big data to create engaging and personalized content for consumers.  In today’s environment, people demand personalization in customer service and experience, and, not surprisingly, that same sentiment exists for marketing and advertising.  However, there is a crucial difference between the two.  With many services, one great interaction and a personalized experience can create significant loyalty.  And one bad interaction can serve the exact opposite purpose  

For example, if a hairdresser does a great job cutting your hair and engages you in an enjoyable conversation, you will probably go back to the same hairdresser.  Then, if they do not cut your hair as well the next time, your impression from the first experience may still drive you to return to the same hairdresser.  Conversely, most people would not return to a hairdresser who gave them a poor haircut on the first try.  Essentially, first impressions matter for good service.

Advertising, however, does not work the same way.  Personalization of the content becomes a necessary but insufficient condition to even make a first impression.  And much of this derives from the rise of the mobile internet, which has created a massive increase in data traffic.  We referenced a statistic in our last post that, according to Cisco, more data passed through mobile internet devices in 2014 than passed through the entire internet in 2000.  Consumers on their mobile phones are being blasted with content from all angles making personalization imperative to stand out from the crowd.  It’s well known that standardized, mass advertisements are less effective today.  They end up in the abyss of disregarded spam and internet trash.

In order to personalize content, you have to know your customer.  This clearly is where data is important.  It’s self-evident that knowing more about who you want to reach empowers you to better reach them.  It allows you to understand what they desire, and why they desire it; it allows you to make your message relevant to them.  In essence, you are practicing the art of effective communication, that is summarized succinctly by author Stephen Covey, who teaches the maxim, seek first to understand, and then to be understood.  Until you fully understand who you are trying to reach, you cannot really expect to know how to be understood by them.

But, it is still a necessary but insufficient condition.  You have to understand to be able to personalize and you have to personalize to be able to make a first impression, but it requires more.  Why?  People are bombarded by a surplus of information and they have a scarcity of attention span.  We need to be reminded.  Something may catch my eye on a web page, but I may accidentally click the back button, or change browser tabs, or a call may come through my phone, and I forget about it all together.  Even if I’m enticed to click something or take a next step from a personalized, creative direct advertisement, I may not have the time to go through with the process at the current moment, and I forget.  People need reminders.  And if you do not give them reminders, then you cannot expect that first impression to last.  An enticing advertisement is not congruent to a great haircut.

This means that you must not just know your customer, but you mustcontinue to know your customer.  You must be able to consistently put forth content that is relevant and personalized to your audience, and in order to do so, you must have accurate and current data.  It is easy to say that storing good data about your customers is key to knowing them, but is it really?  How frequently does that data become outdated?  People move, get married, change interests and jobs, and if you sit on a store of dated data, it will no longer be relevant more quickly than you think.  This speaks to the benefit of aggregating data in real time, but it also means that data collection, validation and storage needs to be a continuous process for companies.  It’s vital to be abreast of changes in the lives of your consumers and to always desire to learn more about them, their habits and their needs.  Only then can you consistently engage with your customers in ways that are meaningful to them.  And only then can you remind them frequently enough to stay current in their mind, and to entice them to action.

Cost of Social Media

contributed by: Colleen Boyce

Gossip has existed as long as humans have.  It is simple, as people are curious, social creatures who learn from one another.  It makes sense that we share our problems, our friends’ problems, our friends’ friends’ problems, and so on.  We use this information to gain a better understanding of the world around us so that we can survive.  In that sense, gossip is a blessing.  

However, in the past, gossip would only spread so far.  It would stay isolated in the area of the incident or would become so outrageous that it turned into folk stories used to scare children into behaving.  Today, gossip, whether true or false, spreads to every corner of the earth because of advancements in technology, most notably social media.  

With one click of a button, information can be sent to the world and never taken back, which in most cases is not all that bad; it might even be funny.  On the other hand, that one little tweet or Facebook post can cost a company millions in damage control.  No matter how exceptional customer service may be at a company, it only takes one person slightly faltering to cause an explosion. Anyone working in a business that interacts with people knows how serious the damage can be.  

This drives at the question, was social media a blessing or a curse for big businesses?  With it came new opportunities to advertise, a new wealth of information on customers, and a portal for users to share their exciting experiences with a company.  Some will argue that outweighs the cost of one bad mistake, and maybe it does for companies that can afford to make a mistake.

Others are not so lucky, but there are ways to prevent such disasters.  The easiest and most common solution is to have your employees trained to adhere by the age old adage, “the customer is always right.”  Another way is to have an alert set so that when a customer “hashtags” or discusses a company/brand then they are notified and are able to defuse the situation quickly and fairly quietly.  A slightly different solution would be preventing the problem before it is too far under way.  In this case, people who have a high number of followers are routed to the front of the line in the IVR because, if they have a complaint, they could cause the company the most damage.  

However, we will never be able to stop someone who, rather than seek help when they are unhappy with a product, instead turns to the internet to take out their frustration.  In this instance the only solution here is the goal of any company: produce the best product possible for your customers.  

Getting In Above the Ground Floor: The Value of Segmenting Customers at First Contact

Contributed by: Eric Eriksen

By some estimates, there are over 2 billion loyalty program memberships active in the United States, meaning that, on average, Americans actively use between 6 and 7 loyalty memberships each. Significantly, these memberships are skewed towards the prime consumer goods demographic of 18-44 year olds. The people buying the most with the most brand flexibility are the same people who have a pile of loyalty cards. Having a regular loyalty program is no longer an advantage; it’s the norm. In order to stand out today, companies need to have outstanding customer service from the start. Pre-purchase analysis is the next great frontier in this evolution. By leveraging data early in a relationship, companies can boost revenues and build brand loyalty.

It’s no secret that the rise of Big Data has reshaped targeted marketing. The ability to analyze a customer’s purchase history and demography to provide personalized products, services, and ad messages has changed the entire game of mass marketing. Data analytics has allowed modern businesses to incorporate the personal aspects of small business with the scale and performance of a major corporation.

Biology dictates that familiarity and positive experiences breed loyalty through an inherent sense of reciprocity. The more a customer feels that a business cares about her, the more she’ll feel an emotional attachment to the service provider. Before mass production and the bureaucratization of business, personalized service and products were the norm. Eventually, this gave way to the “take-it-or-leave-it” product-focused strategy of marketing. Companies turned their products into regularized commodities, and customers responded by becoming more rational consumers and eschewing loyalty.

Today, a business thinking of a single product and a single marketing strategy seems antediluvian. Big Data allows a company with two million customers to treat each one as an individual. Knowing about a customer’s personal life, preferences, and spending habits allows a company to leverage small-business charm on a big-business scale. Unfortunately, most companies fail to take this principle to its logical conclusion and go even further than a small business can.

Too many corporations wait until a customer has already had a number of contact points to begin customization, chiseling out an idea of customer needs from a standard template. Relying on internal data maturation requires a number of inefficient initial experiences, which bleed revenue. By looking outside of an organization for existing customer data, a company is able to skip the rough beginning stages of a relationship. Knowing a target’s demography from the beginning allows a better baseline specialization which the company can enrich to quickly build loyalty. The first few months of a business relationship are vital. In that period, the new customer does not have the tunnel vision that will eventually make a particular company his default option. By giving the customer what he wants from the moment of first contact, it’s possible to build flexible market segments from the beginning and to skip the most difficult stage of a relationship. 

This improved baseline also enhances omnichannel integration. By working in every channel from the same baseline, an organization can boost message conformity and contact points from the start. Making a good first impression through the power of baseline market segmentation means that a company can begin building a customer for life the moment contact is established, gaining an important competitive advantage in an over-saturated loyalty marketing world.