Passwords are an inhibitor to consumer loyalty

Easy online and digital experiences solidify relationships and make it simpler to transact, but this is still not what all Australian consumers get.

Customers are the lifeblood of any business, and so businesses naturally spend a large amount of time trying to understand their customers and prospects better, so they can have a greater chance of starting a successful and profitable relationship.

Studies have shown that businesses often err in their pursuit of loyalty. A 2010 study of 75,000 people found that going the extra mile to delight customers buys very little in the way of additional loyalty. Instead, customer service-led industries can move the needle by adopting a motto to ‘make it easy’.

“Delighting customers doesn’t build loyalty; reducing their effort – the work they must do to get their problem solved – does. Loyalty has a lot more to do with how well companies deliver on their basic, even plain-vanilla promises than on how dazzling the service experience might be,” the authors concluded.

More than a decade on and this still largely rings true.

Last year, Ping Identity surveyed 3400 consumers across five countries – including Australia – about what makes and breaks their loyalty when they interact with organisations digitally.

The results “underlined the importance of easy and frictionless online experiences” – which should sound familiar. In particular, they show how the most basic aspects of online account management – setting up an account in the first instance and then trying to sign back in – can quickly bring an online purveyor unstuck if not done right. “Brand loyalty is earned at login,” the survey declares.

It’s worth exploring a selection of these results in more detail.

Customers have so many options these days and a limited attention span. No one wants to sign up for a new service if it’s time-consuming.

Complicated password rules have good intentions around security but are terrible for user experiences. People are bound to forget those passwords and resetting them adds friction to the process. It’s exhausting and eliminates the excitement of the purchase.

In Australia, 61% of consumers have abandoned an online service when logging into it proved too frustrating – equal highest in the United States, and above the global average of 56%.

Common inefficiencies include consumers being forced to reset a forgotten password at least once per month (34%), and even more (40%) unable to answer their security questions to regain access to a locked account or to self-initiate a password reset. That contributes to 70% of Australian consumers having to call a customer service number just to access their account and start transacting again.

Feelings of frustration when regaining account access can have consequences for brands – over half of consumers (54%) indicate they would take some type of negative action, from limiting their use of the brand in the future (26%) to speaking badly of the brand (12%), writing a negative review (10%) or making a negative social media post (8%).

The rise of passwordless authentication

Given the grief and animosity that simple username-password-based interactions can cause, organisations would do well to canvas alternatives.

How to take a simple experience like login and improve it? The logical response to that question is for the online retailer or digital player to make customer authentication passwordless.

Our research shows consumers are more favourable to brands than can make identity authentication easier, specifically those that opt to replace the password requirement with other multi-factor authentication (MFA) alternatives.

In Australia, 45% of respondents say they are more likely to use a service or site that does not require a password – but instead uses other secure ways to log into an account or to complete a transaction. This might not be the majority, but it is still an influential subset of customers that have a propensity to switch brand allegiance for an easier (and no less secure) authentication experience.

Further, 56% of Australian consumers say they “feel better” about using MFA authentication to sign into a site or service over a traditional password.

Going passwordless

For digital and online organisations, the key question that will get more to move on passwordless is quantifying how many customers they are losing at checkout and registration owing to their account authentication and management posture and settings. What is the unrealised value of those customers? Passwordless promises to increase this conversion rate.

For those that decide to move, the first step is to centralise authentications and reduce the footprint to one single password, which is also known as single sign-on. They can then add multi-factor authentication to add an additional layer of security, and then slowly begin removing passwords altogether by adding things like risk scoring and enabling passwordless login using an alternative method.

There are many different methods to enable passwordless authentication, both from a user experience and backend technology perspective. On the user experience side, passwordless login can be enabled via biometrics, QR code, trusted device, magic links and so on.. The options range from simple to complex and very secure; FIDO (Fast Identity Online) falls into the latter category, and is an industry standard for passwordless authentication.

While passwords are never going to fully go away, we now just have the technology to replace passwords with stronger, more convenient methods of authentication. That’s going to take time, but is likely to occur at pace as more organisations trust the studies and chase a simpler customer experience.

Ashley Diffey
Ashley Diffey is a passionate leader with over 20 years of experience in B2B sales, key account management and business development in both the finance and ICT/telecommunications industries, specialising in security, data, communications, SaaS and hosted software. As Head of Asia-Pacific and Japan for Ping Identity, Ashley is responsible for accelerating sales and bolstering customer support and services to continue driving the increasing demand for Ping Identity’s solutions in the region. He works with organisations to achieve Zero Trust identity-defined security and more personalised, streamlined user experiences. In addition, he works closely with customers to provide flexible identity solutions that accelerate digital business initiatives, delight customers, and secure the enterprise through multi-factor authentication, single sign-on, access management, intelligent API security, directory, and data governance capabilities. Prior to joining Ping Identity, Ashley worked at leading ICT/Telecommunication companies, including F5 Networks, Commvault and Telstra. During his tenure at F5 Networks, he oversaw the organisation’s southern regional channel and Telstra partnership. He was also Director for Channel Sales Australia and New Zealand at Commvault.