How to reduce customer friction and increase business resilience
Businesses across industries have changed the way they think about identity and trust. In the past, many businesses had a “perimeter” mindset. They wanted to build walls around their businesses, employees, and customer data. But that’s no longer sustainable.
“The ‘perimeter’ does not exist anymore,” explained Merritt Maxim, VP and research director at Forrester, in a webinar with Kount. “Your partners are mobile and interacting in different ways. Your customers are the same way.”
According to Forrester’s research, in 2020, organizations saw the biggest changes to customer engagement models, business planning, the macroeconomic environment, and their workforces. Yet, even amid changes, one thing became clear: Resilient businesses come out on top.
3 ways to increase resilience and customer confidence
As more businesses and consumers have adopted digital channels, they’ve been met with more payments fraud, account takeover fraud, and malicious bot activity. All of these events can erode customer confidence and damage revenue.
Being resilient is the ability to adapt to threats. And because digital threats aren’t just at the perimeter, businesses have to meet them however and wherever they appear. Maxim says there are three key ways businesses can increase resilience as well as customer confidence.
1. Protect the entire customer journey
Fraud can affect every part of the business and every part of the customer journey, so the best approach is a proactive one. A digital fraud solution can protect customers who are creating accounts as much as it can protect customers making purchases. Not only that, but the right solution can help you automate decisions.
25% of consumers would not return to a website if it turned down their legitimate transaction, according to a 2020 Kount report. A digital fraud solution can use AI, machine learning, and a global data network to deliver a safety rating for each transaction. And it can automate decisions according to business policies. So, in the end, you aren’t needlessly declining good customers. You’re accepting more orders with confidence instead.
2. Prevent account takeover attacks
A 2020 report found that losses from account takeover fraud were up 72% from the previous year. And as more businesses entice customers with user accounts and loyalty rewards, that percentage is only expected to rise.
Bad actors can carry out account takeover attacks in several ways, but one of the most common is programming a botnet attack. Bad actors can program bots to test stolen usernames and passwords rapidly on targeted websites. If those attacks are successful, bad actors can steal loyalty points, lock customers out of their accounts, and crash an e-commerce website, and more.
An account takeover solution can detect malicious bot attacks, prevent account takeover fraud, and help you monitor customer account activity. A solution can assess when a user is exhibiting abnormal or potentially fraudulent behavior. Once the solution detects abnormal behavior, it can block it entirely or challenge it with multi-factor authentication.
3. Deflect disputes with a friendly fraud solution
A friendly fraud chargeback solution can help you deflect disputes and minimize chargeback losses from friendly fraud. Whether friendly fraud is accidental or intentional, being able to adapt is key to retaining customers. That means acting on disputes as soon as customers initiate them.
As soon as you receive a dispute inquiry that indicates friendly fraud, you can quickly relay additional transaction details to banks and customers. If you’re responding to accidental friendly fraud, you can help customers recognize their purchases and keep revenue from the sale.
If you’re responding to intentional friendly fraud, you may also be experiencing promo abuse. In that case, you can stop the bad actor and fill gaps in policies that make promo abuse possible. Either way, deflecting disputes means stopping chargeback costs that add up quickly and put your relationships with major card brands at risk.
Let resilience be your new competitive advantage
“The traditional disaster recovery and business continuity part of the business was viewed as a not-very-exciting part of the business,” Maxim explained. “Now, there’s a realization that business resiliency is absolutely essential.”
When businesses practice resiliency, they’re not just fortifying their systems. They’re also giving themselves the best chance at stopping malicious activity from within every part of the customer’s digital experience.
But businesses can’t be resilient if they’re hurting customer experiences. So they must balance digital identity verification and customer friction. According to Forrester, reducing the latter is the most important factor in customer acquisition and retention.
“Fraud and security are all part of resilience,” Maxim said. “The risks to customer loyalty can be significant because customers are paying more attention to data and privacy. If you can demonstrate to your customers that you’re doing a good job with privacy and consent and how you manage their information, you’re more likely to retain those customers.”