When it comes to the balance between fraud prevention and customer experience, many online retailers resist their best instincts and instead act against their own self-interest.
“We tend to overreact to painful situations in the ecom space, which ends up turning away good orders,” Signifyd’s Skye Spear told a group of merchants gathered for MagentoLive Europe 2018 last week.
Spear, vice president of sales & partnerships, explained that merchants constantly find themselves wanting to provide a fantastic customer experience at the very time they are throwing up barriers to good customers who merely want to buy things.
The barriers go up out of fear, Spear explained to those at MagentoLive in Barcelona. It’s a natural, if self-destructive, reaction to the growing challenge of ecommerce fraud. Spear took a group of merchants through the competing goals that merchants face during a presentation called, “Embracing the Dark Side: Striking the Balance Between Fear, Risk and Customer Love to Unlock Omnichannel Growth.”
“If you ask 10 merchants, 100 merchants or 1,000 merchants, what is the most important part of their business, you’ll probably have a good portion say it’s all about the customer experience,” Spear said.
Retailers want to provide a great customer experience at scale
It’s a nice line, he added. Of course retailers want to serve customers well. But very few run businesses that allow them to carry inventory, for instance, that means they will have the exact thing that each individual consumer wants. Very few can offer individual white glove treatment for every single customer who arrives at their stores or on their digital sites.
What most retailers really want, Spear said, is a way to provide a positive customer experience at scale. That’s where technology, artificial intelligence and machines that learn come into play. Smart machines paired with good data can act faster than humans and they can act on massive amounts of data that humans can’t even imagine processing.
The result is that retailers can offer their customers the kind of experience they’ve come to expect in the era of same-day delivery. Spear cited a series of statistics that indicated that ecommerce retailers in general have a long way to go before they are taking full advantage of what technology partners have to offer.
Over 50 percent of consumers in an American Express survey say they’ve turned away from a merchant in the midst of an online shopping excursion because of a bad experience, Spear said. Nearly a third of those gave up on the merchant for good, he added.
“There are so many choices out there,” Spear said, “I can likely go find what I’m looking for somewhere else.”
Retailers at times act against their own self interest because of fear. Consider cross-border ecommerce, Spear said. It’s the fastest growing portion of ecommerce today. By 2020 it will account for 20 percent of ecommerce sales and by 2022 it will generate $627 billion in sales.
And yet, he said, retailers turn away three times more cross-border orders than domestic orders, even though the ecommerce fraud loss rates for the two categories are essentially the same.
Successful merchants turn to tech partners to ensure success
“It’s like cyber-xenophobia,” Spear said, “this idea that there is something happening that I’m not super familiar with. We overreact to a situation and put walls up. Those are just good transactions that we’re losing out on.”
It all calls for new thinking. Spear pointed to the Internet Trends report produced annually by venture capitalist Mary Meeker. She laid out the eight key elements online merchants need to master in order to be successful. On her list, along with things like customer acquisition, customer support and payments, was fraud prevention.
An underlying message was that getting it right is not easy.
“Very few merchants can do all of these things very well on their own,” Spear said. “What makes them successful is finding strong partners.”
Speaking to fraud in particular, he laid out the case for Signifyd’s guaranteed fraud protection model, which shifts the financial liability from merchants to Signifyd. That frees up merchants to focus on their businesses and on delivering that kind of customer experience that they sincerely want to offer.
“The idea of taking liability off of a merchants’ plate,” Spear said, “is really to break down some of those walls and some of those barriers that we do put in place that cause friction for online commerce.”
And when retailers remove the barriers, he added, they will soon find that they are not just pleasing customers, they are transforming customers into fans.
Photo by Teresa Villaruz