Merchants process thousands more online transactions during the holidays than any other time of the year. We saw 2016 holiday e-commerce sales increase 34% over the prior quarter and 14% over the fourth quarter in 2015, according to the U.S. Census Bureau. Given the significant growth last holiday season, marketers should expect more online business this year.
As you plan to ramp up your holiday advertising and customer marketing programs, you have one goal: convert more customers. But you need to balance delivering a good customer experience with preventing fraud during your most important selling season. A friend’s recent experience highlights a situation that you’ll want to avoid.
How to lose a good customer
A good friend of mine visited a store to buy a new smartphone and smartwatch. The store didn’t have the watch in stock, so the salesperson suggested she order it online. She set up an account, paid for her phone and went on her way. At home, she logged into the store’s website with her new account, bought the watch, received her order confirmation email and happily awaited delivery.
Two days later, she received an email stating her order couldn’t be processed and she needed to call the company. Confused, she made the call. The company rep asked her several questions to verify her identity. Unable to hide her irritation, she asked why they didn’t trust her when she’d just set up her account in person.
Unfortunately, the associate persisted with the verification script. My friend said thanks but no thanks, cancelled the order and bought the watch from another retailer. Not only did the original company lose the sale, they also lost any future business, as my friend she said she wouldn’t shop there again.
My friend’s experience is not unique. Companies lose perfectly good customers all the time because orders are rejected by fraud prevention systems. To avoid this problem and ensure a smooth customer experience this holiday season, I want to share four identity management strategies you can include in your holiday planning now.
Four identity management strategies for balancing a good online shopping experience while preventing fraud
- Know your customer’s true identity – When a customer presses the “buy” button, you don’t have much time to verify their identity. You have to make a decision in real time or risk losing the sale.
Look for ways to use more information about your customer’s identity in your decision-making process. Online and offline data, combined with machine learning, can identify patterns of behavior that are difficult for fraudsters to replicate.
For example, device-level information can help identify if you’ve seen this customer before and if their device is real. Additionally, use past customer behavior to determine if what they’re buying matches the behavior of an actual person rather than a fraudster’s bot.
- Set the right balance of customer satisfaction and fraud detection – You spend a lot of time, money and energy making it easy for consumers to find your website and transact once there. Don’t let fraud management get in the way of acquiring, keeping and growing customer relationships.
Confer with your risk management and ecommerce teams now to review how your online fraud prevention process is working. Use data from orders reviewed by your fraud team to determine if your system is over-flagging potential fraud.
If your system and processes can’t adjust for more or less risk tolerance, it’s time to switch systems. Look for one that uses a mix of analytics to let as many good customers transact smoothly without exposing the business to unnecessary risk.
- Integrate into your existing ecommerce systems and processes – You strive to make your customer experience easy – that’s even more critical during the holidays when people are stressed over buying gifts, booking trips and planning parties. Ensure your platform and back-office operations are able to support the business during the holiday crush.
Streamline your identity management and fraud detection systems by integrating them directly into your ecommerce platform and fraud decisioning process. This helps let good customer orders flow and enables fast fraud resolution by your back-office team. Also, save time and money by using an identity management platform with standard, real-time APIs that are flexible enough to meet current and future needs.
- Proactively prepare for the unexpected – Preparing for the unexpected is just smart business. You want to be sure you can respond to new and emerging fraud threats while also keeping customers happy.
Preparing for the unexpected is just smart business. You want to be sure you can respond to new and emerging fraud threats while also keeping customers happy.
Make the holidays a happy season for your good customers
I hope your customers don’t have the frustrating, online shopping experience my friend had. Delivering a good customer experience while preventing fraud is no easy task.
Luckily, you have time to review your fraud prevention systems and processes now— before the busy holiday season—to ensure they’ll deliver a smooth customer experience. If you need help, reach out to us using the form below, or check out our identity management solutions.