Personalization Tech Works Great — But Only if People Authenticate First

The story, that I’ve now heard from dozens of digital experience and brand leaders, goes like this: 

These leaders believe personalization is key to unlocking exponential growth in direct online sales. (I agree.)

They invest heavily in tech and resources that allow them to create personalized experiences. (Understandable.)

After implementing this technology, they get frustrated that the overwhelming majority of their website traffic remains anonymous. Most anonymous visitors bounce quickly, and of the small percentages that make purchases, most are made without anyone signing in. So, the brand leaders aren’t able to flex their personalization muscles. And they certainly don’t feel like they are getting a return on that personalization tech investment. (Sad, yet somewhat predictable.)

In the course of discussing this anonymous visitor problem with these brand leaders, I explain that there is good and bad news. 

The bad news: No amount of personalization tech is going to unlock massive revenue growth unless you can convince visitors to shed their anonymity and create/sign into their accounts.  

The good news: There is new authentication technology (hint: think passkeys and biometrics) that can dramatically alleviate the anonymous user problem — and boost the effectiveness of personalization tech. 

Let me explain.

Password authentication: ‘It is what it is’

Since online commerce became viable — and consumers began to trust they could buy things online without bad actors immediately stealing their credit card information — a lot of work has been done to allow people to create online accounts.  

In the early 2000s, digital form-based sign-ups — sometimes similar to offline forms required to get a new credit card — were something of a revelation. Over time, user experience professionals have simplified these forms, as they realized many people who started to sign up weren’t finishing, a.k.a. “friction.” So, sign-up forms and sign-in pages were optimized — with improved designs, fewer fields, and cookies and machine learning to suggest text input — with the intent of reducing friction. 

Innovations such as social logins also improved the sign-up process, making it incrementally easier to sign up by allowing users to sign in to Google, Facebook, Apple, and others and extend those same credentials to other sites. 

And then a weird/sad thing happened. Over time, digital leaders just kind of accepted that form-based account creation and sign-in friction — while improved from the early days of Web 2.0 — was just part of the deal. That usernames + passwords were, literally, a barrier to entry that was non-negotiable. They accepted that the vast majority of their website visitors would never identify themselves by signing in. It is what it is, they would think.

So, they put authentication on the back-burner. And they put their focus elsewhere – including the anonymous experience and a focus on personalization technology.  

Investing in personalization

Personalization has been a hot topic in brand marketing circles for several years. The basic idea: If you can offer content tailored to a user’s interests, you’ll get more engagement. If you're an online retailer, that likely means sending offers based on a user's demographic info, browsing behavior, and past purchases. 

To successfully execute on personalization, companies need an impressive stack of digital tech — ranging from customer data platforms (CDPs), real-time personalization platforms, predictive analytics, and more. 

And those brand leaders I’ve spoken with – the ones who shared frustration about the ROI of those investments — suggest that, to a degree, the personalization tech was working. They were seeing improvements in KPIs including conversion rates, average order size, customer satisfaction, and more. 

However, the old problem persisted: not enough of their users authenticated. A brand leader at an agriculture equipment manufacturer recently shared that only 1% of their website visitors ever authenticate. That expensive personalization tech could somewhat improve the anonymous experience by leveraging browser-based cookies and surfacing content based on previous site visits. However,  they wouldn’t be able to fully personalize experiences for 99% of their users. Because they never signed in. Because they don’t know them. 

Put another way, if personalization can improve conversions of authenticated users by 10%, yet your login rate is 1%, you’re only effectively improving conversions by .1%. That’s 1 in 1,000. And that’s a tiny percentage if you are trying to realize ROI from a big investment in personalization tech. 

How biometric authentication can unlock personalization

Remember how I noted that many brand leaders have just accepted the password-based authentication experience — and the corresponding high percentages of anonymous users on their websites? 

The passkey revolution is slowly changing that. No longer should anyone just settle for the password-based authentication friction that leads to the vast majority of site visitors being anonymous. Passkeys, combined with biometric authentication, make signing into a site or app as simple as signing into a smartphone. 

By tapping into the same biometrics that we use on our phones — typically facial and fingerprint recognition — brand leaders can dramatically improve the number of logged-in users. Brands that have implemented OwnID passkey technology commonly see users authenticate at rates of  30% or more. As we recently wrote, passkeys can dramatically improve sales to repeat customers. And passwordless authentication makes it much more likely for companies to realize a positive ROI on their investments in personalization. 

If your customer data platform has 30 times more identified users, imagine how those percentage improvements in conversion rates, average order size, and customer satisfaction can dramatically boost a bottom line. 

Using the agriculture equipment company as an example: Their target for 2025 is to improve the percentage of authenticated users from 1% to 40%. That’s a lot more opportunity to flex that personalization tech stack. 

As I wrote at the start of this post, brand leaders believe personalization is key to unlocking exponential growth in direct online sales. I (still) agree. But personalization is not the only key. Brands need to rethink authentication by joining the passkey revolution. They need to get rid of the friction of passwords. 

Together, passkeys and personalization tech can drive more than just incremental growth in sales. It can be exponential. And it starts with authentication.

(Editor’s note: In an upcoming blog post, we’ll explain how and why some companies are using passkey technology to get customers to authenticate early in their journey.)

Colin Eastman is a seasoned professional with over 15 years of experience in software sales, specializing in Customer Identity for the last decade.  He has held leadership roles at the likes of Experian, Gigya and SAP and has partnered with many enterprise eCommerce companies and Fortune 500s on deploying their Customer Identity and Digital Commerce technology and strategy.