Prevention Is More Than Just Security – Here’s How It Helps Retailers Get And Keep Customers
By Rafael Lourenco, ClearSale
E-Commerce retailers know that screening transactions for fraud is critical to preventing losses. What many overlook is that by screening all customer orders — not simply the ones that raise fraud flags — they can not only do a better job of stopping fraud, they can also better serve their best customers. When your fraud screening program sorts reliable customers from fraudsters, you get useful and evolving datasets that you can use to pinpoint your good customers’ demographics. Rather than ignore your “positive” file, you can use it as a rich resource to increase the lifetime value of your reliable customers and find more like them.
Study And Segment Customers More Precisely
With complete positive data, you can move beyond the more general data you have on people who have opted into your email list and social media channels, many of whom may not be proven customers. Your validated-order data will show you, among other things, exactly which payment methods your good customers use most often, what types of merchandise they prefer at different times of the year, which segment is the first to purchase newly stocked items, which segments shop right before holidays like Valentine’s Day and Father’s Day, and which segment buys most often for gift recipients.
There are more ways to segment the data, of course. In each case, you can use your data to fine-tune your email campaigns to reach proven gift buyers before holidays, send new-product launch day information to your “have to have it first” customers, and so on. Done properly, this approach should result in better conversion rates than campaigns based on less specific data.
Make Trusted Customers More Valuable
Consumers now “want what they want when they want it,” as the National Retail Federation’s latest report shows. Your valid-customer data can help you give them what they want by finely tuning your offers to their shopping history with your store. Shoppers increasingly expect and respond to “truly individualized recommendations,” and with your positive file, you can meet their expectations and win repeat business.
For example, instead of emailing a general back-to-school offer to your list segment in the parent demographic, you can send more specific back-to-school offers to known customers in more refined segments. Do you have a group of confirmed good customers who all bought size 4 kids’ shoes late last summer? This summer, you can send them an email promoting your coolest size 5 and 6 shoes in stock. They save time hunting for kids’ shoes and you can boost your sales.
Special Perks For Your Trusted Customers
You can also offer perks to validated customers that boost loyalty, while minimizing the risks that would come from offering these benefits to every visitor to your store. For example, rush shipping can be a flag for possible fraud, because fraudsters want to receive their stolen goods before the merchant or true cardholder realizes what’s going on. Offering free or reduced-rate rush shipping to all customers could attract more fraudsters. Offering such perks only to customers with a record of valid purchases in your store can earn their repeat business without unnecessarily raising your fraud risk.
Reach More Consumers Like Your Most Reliable Customers
Because as many as 43% of e-Commerce orders are fraud attempts, per the LexisNexis 2017 True Cost of Fraud Survey, reducing the fraud-to-good-order ratio is an ongoing concern for retailers. Besides declining fraudulent orders, merchants also can use their positive data to dilute the percentage of fraud attempts by growing their base of reliable customers. You can analyze your positive database for the demographics of your good customers, especially repeat and high-spending customers, to find similar groups of consumers to target via social media and other campaigns.
Improve CX By Knowing Your Customers
Screening each order gives merchants another advantage — strengthening customer relationships. When your fraud controls take a customer’s purchase history into account, you’re less likely to automatically decline an existing customer, even if they order from a high-risk region, place a first rush order for an expensive item, or use a new device to place their order. Beyond avoiding costly false declines, comprehensive data allows your manual review team to reach out to the customer with the knowledge that they’ve placed valid orders before. Because customers respond positively when merchants remember them, this is an effective way to show that you recognize them and are looking out for them.
Stopping fraud will always be a major concern for retailers, but fraud prevention has benefits beyond the cost-control silo. Smart merchants will gather data from every transaction to analyze not just fraud patterns but also good customer behavior and attributes. Using your fraud-prevention data to not only block thieves but also to better serve good customers is a win-win for retailers.
Rafael Lourenco is Executive Vice President at ClearSale, a Card-Not-Present fraud prevention operation that protects e-Commerce merchants against chargebacks. The company’s flagship product, Total Guaranteed Protection, is an end-to-end outsourced fraud detection solution for online retailers. Follow on twitter at @ClearSaleUS.