Rapid growth in the adoption of ecommerce has reaped huge benefits for retailers. But it has also created a dilemma. In the fight against a growing online retail fraud problem, how do businesses balance digital trust with the level of customer experience that consumers have come to expect?
For well-established brands, the challenge of maintaining the high standards they’ve spent decades cultivating in-store can be even greater. It’s a conundrum that athletic apparel brand Brooks Running became all too familiar with.
Founded in 1914, the company started out in a small Philadelphia-based factory specialising in the manufacture of ballet slippers and bathing shoes. More than a century on, it’s known for designing and marketing high-performance running shoes, clothing, and accessories to rival major players in the sportswear segment. Today, Brooks is headquartered in Seattle, with retail and global ecommerce operations that span 60 countries.
The journey has been a challenging one. But throughout its transition from brick-and-mortar to the ecommerce big leagues, the brand has managed to retain its firm following, in large part due to an ironclad digital trust strategy.
Consumers appreciate the fact that the business they are purchasing from is doing its due diligence
As the retail landscape evolved and ecosystems became increasingly digital, the business expanded its revenue channels and adopted ecommerce. Of course, alongside rapid growth came a rising threat of fraud, specifically, fraudulent websites stealing credit card information from unsuspecting customers and using the Brooks website as part of a drop-shipping scheme.
The chargebacks that ensued threatened Brooks’ ability to process cards from key issuers. While the fraud prevention team were quick to react to new evidence of fraud, when the problem first cropped up, they lacked the tools to deal with it effectively. Their first line of defence against chargebacks was carrying out a manual review of transactions, a laborious process incurring high operational costs.
There was a growing awareness among the fraud team that they needed technology to stay ahead of fraudsters. This understanding was swiftly tempered with concerns for the impact enhanced security could have on the customer.
For any retail business, customer experience is a top priority. It’s sometimes presumed that any amount of friction can dampen shoppers’ desire to spend. Bringing in additional security and ID verification steps are seen as a barrier rather than an enabler to positive purchasing journeys. But this couldn’t be further from the truth, according to Ben Charlton-Hibbert, account executive at Kount.
“Consumers appreciate the fact that the business they are purchasing from is doing its due diligence. Presenting them with an element of friction before they can check out - as long as it is the right friction, at the right time, in the right scenario - can actually be a boost for customer experience,” he says, pointing to a recent Equifax survey which found that 37% of people were happy to answer additional security questions on transactions over £1,000.
In its hunt for a technology partner, Brooks partnered up with Kount to establish an AI-driven, all-in-one fraud detection strategy. The platform’s data analysis capabilities and automation enabled Brooks to reduce its chargeback rate by 92%, eliminating the threat of card processing fraud monitoring programmes while accepting more good orders. Most importantly, bringing in a degree of friction allowed the company to maintain the high standards it set for itself more than a hundred years prior.
Although no one likes to be dragged through a convoluted string of security procedures, there is a consensus that online spaces require another layer of assurance. On-premises and online experiences can’t be like-for-like - nor should they be, Charlton-Hibbert explains. It’s that slight push-and-pull that helped to make Brooks’ customers feel confident in the company’s proactive approach to dealing with online fraud. The trick is building a strategy that accounts for a spectrum of scenarios.
“The advantages of this type of fraud protection technology are much more nuanced than simply driving more customers to a website and getting them to return more often,” he says. “It’s not a ‘yes or no’ tool. It can be refined. We say ‘yes’ to the people who deserve that response, resulting in a quick and simple checkout process for the 98% of customers who are engaging with a business in the right manner, but we can layer in friction for purchasing situations that might potentially be identified as risky.”
With chargebacks under control, and a dramatic reduction in time spent carrying out manual reviews, Brooks started to focus on new overseas markets and was able to accept international credit cards. That technology solution allowed Brooks to achieve the right balance between automation and customisation, minimising fraud without creating too much friction or fallout for legitimate customers.
So, what constitutes a good customer? Technically speaking, ‘good’ in this context could be someone who has always checked out using one of three devices, the same laptop, phone or tablet, over their transactional history and always used the same email address. Several years down the line, that trusted customer may be using a known device, but something has changed - a new email address, perhaps. It’s the fraud protection technology’s job to pick up on that change in data and apply an appropriate level of friction to the transaction, Charlton-Hibbert explains.
“The customer is allowed to transact, but until the system can confirm that they have changed their email, the goods won’t be shipped,” he says. “That might delay delivery by a couple of days, but the customer has the peace of mind of knowing that the retailer is being careful; potentially, this could have been his credit card information that had been stolen or compromised.” In essence, better customer experience is contingent on consumer trust.
Some retailers might offset the inconvenience of delayed delivery by offering the customer a discount on their next purchase, further enhancing the customer experience and nurturing the future relationship. Charlton-Hibbert’s case is clear: fraud protection and customer experience can’t function under two distinct strategies. He maps out a Venn diagram, where the two intersect as core pillars at the centre of a trusted brand strategy. Running the risk of neglecting either could see retail’s MVPs cutting off their biggest supporters.
For more information, visit kount.com
