The following was published as Chapter 2 of our series, The Seven Deadly Sins of Digital Customer Relationships. This chapter can be read by itself as a great introduction to the many benefits of decentralized identifiers (DIDs). However, if you’d like to start from the beginning, you can find the entire series here.
Most organizations have been designed ‘inside-out.’
By inside-out I mean that businesses mostly focus on what they can build and offer, their own strengths, what activities are the most profitable, and which capabilities make them special. They think about their product ‘vision’, their commercials, their market position and the next quarter. They think about churn. They think about customer transactions and optimizing for metrics like ‘average revenue per user.’
They don’t really think about the customer or their needs at all. Not really.
This perspective, this inwardly-focused way of doing business, shows up when you look at how they design and manage their customer relationships. Customers are forced to enter the same data over and over again across similar customer journeys. And because this happens at each different company – and sometimes even at different business units within the same company – customers end up getting bounced around, from business to business, system to system, and team to team.
These awful, fragmented and repetitive experiences are often due to legacy IT systems not being joined up, poor service design and out-dated organizational structures. But at the core they’re really about a lack of focus on the customer and understanding their needs and outcomes, their jobs to be done.
All of this behaviour is pure laziness, paying little or no attention to the customer. So I’m suggesting this is the second deadly sin of business: Sloth. Apparently ‘slothfulness’ is a translation of the Latin term acedia and means “without care.” How accurate.
One of the best examples of this laziness is the outsourcing of customer relationships to third-party providers. This has become a huge new growth market globally and a number of large ‘identity providers’ now provide business-critical services around customer identity and data: helping companies understand which customers go where, who does what and when. They offer rich customer profiles and insights, and critically, provide identity and login services – in many ways, the very core of the modern digital customer relationship.
Vast numbers of businesses around the world now completely rely on these providers for customer identity and relationship information, but what’s often missed is that there’s been a huge unintended consequence. For many years now businesses have been slowly, and unthinkingly, handing over the crucial aspects of the digital customer relationship to these third parties… whose incentives are not always aligned with the core business.
Over time, the customer has been separated from the business, and the organization has been disintermediated from the customer relationship. They have become boiling frogs, unaware of what’s slowly changing around them.
Killing me softly
It’s easy to see the logic for outsourcing the digital customer relationship in this way: lower short-term costs, superior sign-up and log-in experiences, increased transaction volumes and lower friction. But this slothfulness with the customer relationship has arguably become the single biggest collective misstep by businesses since the web was born.
Because these third-party identity providers now have the primary relationship with the customer. These providers can now directly message, inform, and promote (and potentially demote) certain services. They control the data, and in many senses, they control the market. Which customers can access which services, and which businesses thrive or die.
Once a company is dependent on a third party for customer data, that identity provider can choose to change their terms of service or pricing whenever they want. It’s checkmate. Can you imagine, 20 years ago that Nike – one of the world’s greatest brands – would become subservient to another brand in a customer relationship? Yep: it happened that fast: facebook.com/nike. That’s quite something in brand positioning terms.
Breathing life back into the customer relationship with DIDs
It’s time for businesses to regain control of that customer relationship. And for customers to be able to deal directly with organizations, without a myriad of parties getting in the way (and watching all the personal transactions as they happen).
What if each customer had a unique, private and secure way to contact and deal with a business? And what if each business could interact directly with customers, without third parties or gatekeepers in the middle?
By using Decentralized Identifiers (DIDs) – creating a unique identifier for each and every different relationship – customers can seamlessly set up a new, highly secure, two-way channel with the business, over which they can send and receive digital data and messages, and generally interact to get things done. This new data model with DIDs is a bit of a breakthrough, as it unlocks a new layer of digital trust that we’ve never seen before in digital customer relationships.
Importantly, DIDs have the potential to jolt businesses out their slothfulness in a number of ways.
First, DIDs will trigger a step change in the customer experience. Customers can now be instantly recognized and served – across any product, any service line, and any channel. Regardless of whether they call in, walk, in or log in. Now there’s no need for third parties, like social media companies, to be involved when a customer wants to register or log in to a company’s digital services.
Second, DIDs will become weedkiller for spam and phishing. From a business perspective, a private DID channel with a customer will become a precious thing indeed. If a company abuses it with time-wasting messages and spam, then customers will simply turn it off and walk away. This channel has new incentives – and using it respectfully will soon become table stakes for any company wanting to do business.
Third – and here’s where it gets interesting – businesses and customers will be able to share different types of data, from different sources with just one tap. No more lengthy forms to complete; just simple and seamless data sharing to register or upgrade for a new service.
Fourth, DIDs will finally enable passwordless login – anywhere, with any device. Once a customer creates an always-on connection with a company, they can use it to instantly prove who they are and can be let in, instantly.
Fifth, the business will be able to keep an auditable record of who asked for what, what was sent, to whom and when. DIDs will become an audit and compliance dreamland.
I could go on. But the point is this: as DID-based connections become the norm, the lazy companies will die. If businesses keep forcing customers to fill in forms, to keep logging in, to ask for their mother’s maiden name…. Then customers will simply leave for a competitor that doesn’t. And if the organization keeps passing customers between departments and asking them once again to prove who they are, their net promoter score will tank.
We’ll finally be able to design companies ‘outside-in’ rather than ‘inside-out’
With DIDs, businesses will be able to design and deliver radically new experiences and products, all designed around the customer and their outcomes, rather than being designed around the company’s products and ego.
Smart companies will see that customers don’t want a mortgage, they want a home. They don’t want car insurance, but to travel. They don’t want groceries, but to eat healthily. DIDs won’t just be about improving customer experiences and reducing friction; they’ll be about enabling whole new service lines and revenue streams.
I believe DIDs will become the beating heart of digital transformation programs everywhere. We’ll be able to unleash the true demand side of the market (what customers want, what they need, and what they will buy), not just the supply side (what organizations sell).
Once you realize that businesses are all being run inside-out, it’s hard not to see it everywhere. With DIDs and new peer-to-peer digital channels, companies are going to be able to change how they work, what they do, and how they serve customers. It’s going to change the competitive landscape, and possibly large parts of the market itself.
Make no mistake, this is going to be a Copernican Revolution for digital relationships with organizations. Businesses will soon realize that they should not be considered the center of the universe, with customers orbiting them… but instead that customers are at the center, and in control.
This huge shift – of re-organizing digital relationships around the customer – is going to take shape over the next five years or so. In some places it’s going to be a gradual shift; in others it will happen very quickly indeed. So it’s time to pay attention, businesses: you might just become that boiling frog who never wakes up.
And you can move over sloths, DIDs are coming for you.