We all know the old saying: the customer is always right. But how true can that be in the modern world when customers are often just fingers behind the keyboard? Most companies have transferred their business operations online, completely changing how they interact with their customers. This makes it even harder to know who your customers are and, most importantly, what their intentions are toward your business.

How can you know if you are dealing with a legitimate customer or a fraudster trying to scam you when you can’t see their faces or monitor their behavior? The only clue you have is their digital footprint. Luckily, due to the development of technology, data people leave behind during their online interactions can be enough to determine whether you can trust them.

Why is it so important to know who your customers are?

Customers are one of the most crucial elements of any business. Without them using the product we make and enjoying the services we offer, there would be no need to do it at all. What is the point of the product without the audience to enjoy it or, more importantly, to purchase it? Businesses without customers willing to interact with them would quickly go under. But while the customers are essential for the success of your business, they can also become its most significant issue.

From identity thefts, account takeovers, friendly fraud, or even credit card testing, there are multiple ways malicious customers can damage your business. The increasing danger of new types of fraudulent activities that exploit trusting company/customer relationships has only made it even more important to concentrate our effort on preventing it before it can cause irreparable damage. Not only will dealing with fraud cause significant financial damage to the business, but it can also cause long-term issues like reputation damage, customer friction, or even customer churn.

Knowing who your audience is essential to know who you’re going to offer a product to and how to tailor your marketing strategy. SubscriptionFlow reported that 69% of consumers claim they are more likely to buy from a company offering personalized recommendations, with 64% of them being more likely to return to a company that offers personalized experiences. While this is already a great benefit of knowing who your customers are, it can make an even bigger difference when it comes to recognizing and preventing malicious activities. If you can ensure you are dealing with legitimate customers and not fraudsters trying to exploit your business, you can prevent fraud before it even happens.

Is it possible to gain enough customer information without causing user friction?

The easiest method of gaining information about your customers would be asking them questions. For example, you can create an elaborate login process that asks customers to confirm every single detail of their life to ensure that you are dealing with the legitimate one. But how likely is it that your customers would stay and complete the questionnaire? In an article Drip explains that having too long or too complicated of a checkout process is why over a quarter (26 percent) of shoppers abandon their carts. While you must gain information about your customers to ensure they are who they claim to be, this can’t be at the expense of losing legitimate customers. Implementing proper security methods is essential in ensuring you protect your business while minimizing user friction.

Luckily, tools such as device fingerprinting, IP analysis, KYC or even social media lookup allow you to quickly gather enough information about your users to determine their intentions and stop any malicious activities before they happen. For example, the way SEON explained KYC verification shows how organizations can use it to determine if their customers are trustworthy and prevent financial crimes such as money laundering and terrorism financing while helping businesses avoid compliance issues. Since these tools are able to gain this information in real-time and make decisions quickly, they minimize the risk of long and intrusive processes affecting legitimate users and causing customer friction.

How can we use those tools to keep the business safe?

Recognizing suspicious actors before they commit any malicious activities can keep your business safe and prevent it from experiencing significant financial consequences. The Association of Certified Fraud Examiners (ACFE) reports that small businesses lose around $125,000 due to fraud, with more prominent organizations reporting losses of at least $1 million. More than half (54%) of all victim organizations won’t recover any of these losses, mentioned by GrowthForce. Creating an effective security strategy that deals with these problems before they even arise can be the difference between having a successful business and failing.

Considering not every business has the same requirements, their security strategy also shouldn’t be the same, which is why combining different tools offers the best results throughout the industries. For example, fraudsters can try to use fabricated identities to fool the KYC verification process. Sometimes, there would need to be more data provided to verify the user’s identity. This is why combining the tools is the way to go. For example, with KYC, you ask the user to confirm their identity by providing certain data; combining it with data enrichment allows you to gain additional information that will ensure they are not using sophisticated new methods to scam your business. With data enrichment, you just need a single data point, such as an email address or phone number, to collect more data about users’ digital footprint from internal and external sources. It can discover if an email address is not connected to any social media platforms or if it was a newly created email address which might indicate synthetic identity or a user trying to commit credit card testing. This allows you to recognize any red flags that might indicate suspicious behavior and react before they can cause any damage.

Conclusion

While all of these security methods are extremely efficient in collecting information about your users and preventing fraud, most importantly, they do so quickly without causing any user friction. You gain all the needed information without your customers having to go through the lengthy sign-in process that might cause them to abandon their cart and go to your competition. Keeping customers happy is indeed a key to a successful business, but it shouldn’t happen at the expense of putting your business in danger. Implement a frictionless security strategy and ensure your business remains safe and your customers are satisfied.