Holiday Season Risks: Customer Friction

Holiday shoppers are on a mission. They want to find the perfect gifts, and they want to find those gifts at the best prices. Now imagine finding the right gift only to have a site present a subpar shopping experience or decline a purchase altogether. 25% of American consumers say they wouldn’t return to a website that declined their transaction, according to Kount’s holiday survival guide.

Customer friction is just one of the five risks eCommerce businesses face during the holidays. Half of the consumers surveyed in Kount’s research already expect longer shipping times and items to be out of stock. What they may not know is these points of friction in their journey may result from fraud. With a number of challenges and opportunities to balance this season, don’t let customers miss out on a great deal (and miss out on a sale) because of fraud. Businesses engaged in eCommerce need to know how customer friction affects sales and how they can control it.

How customer friction can affect eCommerce sales

Customers can experience friction at key points in their journey: the account creation or login process, the payment process, and the dispute process.

Online businesses are competing for limited customer time, so fast account creation and login interactions help provide exceptional experiences. Easy, quick interactions help customers make purchases without distractions. But systems designed to catch fraud, like CAPTCHAs and manual reviews, slow down the buying process.

Unsophisticated methods to stop fraud and confirm a customer’s identity at the point of payment introduce various forms of friction. Or they block legitimate customers altogether because of false positives. These techniques, including manual reviews, can extend the time that it takes to make a purchase, which can result in cart abandonment and loss of customer loyalty.

Further, the dispute process can be a frustrating experience for all involved, but businesses can improve both the experience and the outcomes. The dispute process allows customers to initiate a chargeback to recover funds. But businesses can use post-authorization tools to intercept and deflect chargebacks, allowing them to initiate refunds quickly or better understand potentially confusing transactions. These tools speed up the process and reduce customer friction. 

Friction at key points in the customer can negatively impact brand loyalty and lead to cart abandonment. Customers pressed for time during the holidays may switch apps and stores to complete purchases faster. Plus, friction in the customer journey can lead to revenue loss or increase their risk of chargeback fines or penalties. 

3 ways a fraud prevention solution can reduce customer friction

1. It can reduce false positives

False positives (or “false declines” or “customer insults”) occur when merchants or financial institutions decline legitimate orders. If a merchant can’t quantify the fraud risk of each transaction, it stands to lose more than good customers. In 2016, U.S. eCommerce businesses lost $8.6 billion to false positives, Business Insider estimated

A fraud prevention solution with a large data network can provide insight into each shopper’s digital identity to reduce false positives. Companies can access business intelligence to gain insights from transaction and chargeback data that can improve risk assessment. The right solution provides data and analytics to track and reduce false positives and increase revenue.

2. It can use AI to deliver personalized customer experiences  

A fraud prevention solution that uses AI and machine learning can help merchants recognize good customers and deliver frictionless experiences. The right solution can even evaluate a user’s behavior and device, along with network anomalies, to assess trust and risk in real time. 

Real-time adaptive protection can reduce unnecessary authentication steps and improve the customer experience. Plus, a fraud prevention solution can automate the review process to increase approval rates and sales and decrease manual reviews and chargebacks. 

3. It can eliminate operational inefficiencies

An all-in-one fraud prevention platform can automate approval and decline decisions. Automating decisions can allow fraud teams to focus on more strategic initiatives. Then those teams can use collected fraud data to analyze operations and identify points of friction or revenue loss.

A fraud prevention platform can deliver insights and data that can help detect and stop fraud-related chargebacks and friendly fraud. For example, it can collect unique chargeback-related data such as missing phone numbers and inaccurate descriptions. As a result, businesses can look beyond chargebacks to improve operational efficiencies, profit margins, revenue, and the customer experience.

There are 5 holiday season risks — do you know them all?

Customer friction is just one risk businesses need to mitigate in the 2020 holiday season. Visit Kount’s 2020 Holiday Fraud Protection guide, and assess all five risks. Plus, get invaluable insights on consumer spending trends, and download the fraud prevention checklist.

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