Ecommerce professionals are constantly measuring success by focusing intently on click-throughs, conversions and sales.
They pay close attention to the cost of acquiring customers and the value those customers bring to the business. Sometimes it seems the entire retail game is about turning browsers into buyers.
And that makes sense. You can’t know if what you’re doing is working unless you have a way to measure success. But as retail strategy and thinking has grown more sophisticated — and consumers have grown more demanding — maybe it’s time to rethink key success metrics in ecommerce.
Sure, it’s important to keep track of conversions and how often visitors are buying on your site. But what about those who aren’t buying? What about those transactions that don’t end in revenue? Do you know enough about what goes wrong?
No surviving retailer has a blind spot when it comes to customer experience. It’s unanimous: in the age of Amazon and digital native upstarts, customer experience is the way to differentiate and propel a retailer to success.
Customer experience doesn’t end with the purchase
But are you thinking of customer experience broadly enough? Customer experience doesn’t end with a purchase. It’s not enough to make a sale and declare victory.
Forward-thinking retailers are taking a bigger view, a more careful view, of the entire buying experience — including order management, fulfillment and customer support. They are more closely examining their sales funnel to figure out what happened to those shoppers who never made it to the buy button, or who didn’t receive their orders on time or never received their orders at all.
And it has them looking at various ecommerce operations in a whole new light. Consider risk management, an area that my company works in. The old view is that preventing fraud is a cost centre — a necessary evil. The new view? Fraud protection and managing chargebacks is a revenue centre — a way to boost margins by a significant amount.
Doing fraud protection right, the new thinking goes, is a way to improve the customer experience and build customer loyalty. How so? Take the clearest example — legitimate orders incorrectly declined for fear of fraud.
Such false declines cost merchants an estimated 2.9% of total revenue, according to CyberSource. That’s nearly three times the cost of actual fraud — chargebacks and the value of lost merchandise, according to the same report. Given that the UK’s ecommerce market is about £153.6 billion, false declines are costing retailers £4.5 billion a year.
(In fact, if you add the cost of false declines, the cost of actual fraud and the operational cost to manage risk, the UK’s annual fraud problem comes to £8.3 billion for retailers.)
Not only do false declines represent a whopping financial loss to the merchant, consider the effect on the other side of the transaction: a loyal customer places an order and waits in anticipation for its arrival. Instead, the order is cancelled, because the merchants suspects the loyal customer is a criminal.
Shoppers don’t return to sites that insult them
What do you think the chances are that customer is going to shop with that retailer again? Signifyd conducted a survey with polling firm Survata and found that 65.5% of consumers would not shop with a retailer again after having an order declined for no apparent reason — the exact experience a consumer has with a false decline.
If we dig in to the problem of managing fraud, we find that much of the cost of managing risk comes down to fear. Fear of fraudsters. Fear of dishonest customers. Fear of, quite literally, giving away the store.
When merchants are afraid, they erect barriers in the form of rules that decline orders or policies that require consumers to go through tedious checkout processes.
The wise thing for merchants to do is to rise from their defensive crouch and recognise that proper fraud management is a way to bring in more revenue. The wise thing is to stop using data as a weapon to prevent fraud and start using it as a tool to serve customers.
With proper data, you not only know your customer, you understand your customer. It allows you to serve customers in a way that will keep them coming back and inspire them to recommend you to their friends.
Data allows you to take down barriers to a smooth checkout process. When combined with machine learning and human expertise, data can help merchants sift the fraudulent orders from the legitimate ones at a pace and scale not possible by humans or rules-based systems.
Guaranteed fraud protection is gaining in the market
Such constantly learning systems are being increasingly embraced as the new way to build excellent customer experiences that drastically reduce false declines while still protecting merchants from fraud. Some providers of such fraud-prevention models are even guaranteeing their machine’s decisions by making merchants whole on any approved orders that later turn out to be fraudulent.
Such guaranteed fraud protection models are now available on every major ecommerce platform. The same combination of data, machine learning and expertise can be used to manage non-fraudulent chargeback, such as disputes over items not received or over items that customers say aren’t what they thought they’d be based on their descriptions.
That is opening up a new frontier of customer experience by helping merchants identify which consumer claims are legitimate and which are being filed in an effort to take advantage of a retailer. Again, customers feel better about you when you’re not accusing them of being dishonest.
All of which opens up new insights into how customers are experiencing retail. And it provides a road map, beyond click-throughs, conversions and sales, that retailers can use to make that customer experience — from start to finish — even better than it is today.
By Stefan Nandzik, Signifyd Vice President of Corporate Communications