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Fraud for thought for marketers: Are data silos harming your customers’ experience?

Mention fraud to a marketing professional and the chances are their first thought will be around programmatic, as the industry worries about bots, fraudulent impressions and wasted expenditure around campaigns.

Far less attention, however, has been paid to the impact of online payment fraud on customers in the age of e-commerce.

According to analysts at Pymnts, there was a 45 percent increase in fraudulent account takeovers in the second quarter of 2017, leading to US$3.3 billion being lost by merchants and significant distress being caused to customers.

With the retail e-commerce market tipped to top $4 trillion by 2020, and Asia-Pacific sales expected to double to $2.725 trillion, the pitfalls for brands that don’t have credible fraud detection and resolution systems are substantial.

Already, one-in-three APAC consumers have either experienced fraud themselves or know an acquaintance who has, and in India, Vietnam and Indonesia this rises to nearly one-in-two.

While there may be a temptation to think of this as being only an issue for finance, and maybe customer services teams, marketing and communications professionals need to get to grips with the problem too as it can cause significant damage to a brand’s reputation.
Data from Experian’s recently-published Digital Trust Index (DTI) – which took into account fraud rates, digital adoption, fraud management and industry preferences – highlighted the scale of the challenge already being faced.

We assessed the financial services (FS), retail and telecommunications (telcos) sectors. FS topped the trust index in the eyes of customers, but still only recorded a score of 4.95 out of 10.

Retail which is far more susceptible to customer churn when customers get good service, let alone bad – achieved a score of just 2.4 out of 10. For telcos, it was 2.14.

This is a problem that is likely to be heightened as retailers and brands understandably seek to drive sales by making the online path to purchase for customers as speedy and seamless as possible.

While we all know from our own experience of e-commerce that great gains have been made in this regard, it appears far less time and effort has been made to prevent fraudulent transactions and to provide great service to customers when it occurs.

One of the main barriers to this is the fact that very few brands or retailers have a single view of the customer journey across their channels. Indeed, for the latter, the figure stands at just 10.3 per cent.

Data and internal company silos are exacerbating the problem, and, crucially, customers are noticing this.

Seventy-five per cent of our respondents said that the absence of a single customer view was obstructing the effectiveness of online fraud management in the retail space.

Adopting third-party technology can help improve this situation, with analysis of customer behaviour by fraud detection systems often able to reduce the risk of illegal transactions by 30 per cent.

Marketers, with their experience of tracking customers’ multiple touchpoints across their journey to purchase, are as well-placed as anyone to emphasise the importance of gaining this holistic view.

After investing so much time and resources in campaigns and strategies to secure a sale, failing to have the tools to help prevent fraud or facilitate exceptional service after an incident occurs may mean these customers will never return.

In the omnichannel age, businesses need to take a holistic approach to fraud management, incorporating it into areas such as technology infrastructure, data collection and, crucially, the overall customer experience.

To achieve this, it is vital marketing and communications teams are engaged in this process to use analytics and customer insights to help turn a negative experience into positive.

Sisca Margaretta is the Chief Marketing Officer at Experian Asia Pacific.