Know your customer or know your client is a data-driven approach to gauging the value, risk and opportunity of each individual customer. However, there are other reasons why you need to implement know your customer or KYC solution based on the latest technological solutions. Let’s learn why you need to know your customer.
The Value of Customization
Customers expect you to do better than average, and you’ll stand out if you provide better value to your customers. It isn’t always possible to offer a better quality product at a lower price. However, you can use data analysis to learn what your customer and others like them want.
Customization is more than a buzzword. It is a practical way to increase customer engagement and improve sales when you take the time to do it right. Track the purchase history and demographics of a given customer, and you can offer them related purchases they’re more likely to purchase. Or you can offer tailored discounts and sales that will interest them, based on a good understanding of their purchase history and analyzed aggregate data of similar customers. This shows that you understand them. And that will show that your company cares about them.
On the flip side, you’ll lose customers with generic newsletters or, worse, emails that say “dear customer” instead of referring to them by name.
The Legal Necessity
Know your customer or KYC at a minimum means having key demographic information about your customer. What is their name? Where do they live? When were they born? What KYC means to your business is the ability to meet various legal requirements. For example, gambling and porn websites are not supposed to be available to minors. Age verification systems allow you to automatically block most unauthorized access attempts without unduly interfering in legitimate customer use of the site.
Furthermore, an automatic age verification system allows you to tell regulators that you did try to prohibit access by minors. It is a more concrete way to interfere with access by minors than having a text-based warning on the bottom of the site. Customer identification procedures that require scanning of someone’s identification card has the side benefit of preventing money laundering and identity theft. For example, facial recognition systems that compare someone’s current photo to a driver’s license may reject a younger sibling or child using an adult’s ID to try to buy tobacco or other restricted substances online.
Know your customer systems also allow you to remain in compliance with regulations that prohibit the collection of personal information about minors. If you actively try to prevent minors from using the site, you aren’t liable for accidental information collection when they lie about their age. And you have far more protection from potential lawsuits than if you relied on a de facto honor system.
Note that your website needs age verification if you sell anything that is prohibited to minors. This includes alcohol, vaping products, adult products and age-restricted video games. In fact, your license to sell these products may depend on having a robust age verification system in place.