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
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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.
