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The secret to driving e-commerce sales: Increasing customer confidence

Brady Harrison, Director of Customer Analytics and Solution Delivery, Kount, an Equifax Company

Customer confidence should be a key driver in any e-commerce sales strategy. Confidence reflects the level of trust a consumer has with your brand. It’s the key to generating new sales and retaining loyal online customers for the long term.

Customers who feel confident in their online purchases are more likely to buy from you again and again. But customers who aren’t confident in their online purchases may be more likely to return purchases or commit friendly fraud — and less likely to bring in repeat business.

Amid rising inflation rates, soaring gas prices, and ongoing supply chain issues, customer confidence is, no doubt, waning. And many businesses are having conversations about how to preserve customer loyalty as shoppers tighten spending.

But regardless of an economic downturn, customer confidence should always be something businesses prioritize and strive to increase — even in times of prosperity. Confidence can drive sales during prosperous times and leave businesses less reactive in uncertain ones. The good news is that it’s never too late to start improving customer confidence.

Consumers reveal factors that most significantly affect confidence in online purchases

A recent survey of customer confidence statistics found that 53% of consumers aren’t confident in online purchases from direct sales companies. But the reasons behind their lack of confidence might surprise you and reveal insights from which all businesses today can learn.

The highest majority of surveyed consumers said credit card fraud would most significantly affect their confidence in online purchases. Second, consumers said paying for shipping and returns significantly affects their confidence in online purchases.

The third highest majority said companies using deception to sell more products or services would most significantly affect their confidence in online purchases. Finally, the fourth highest majority cited too much friction in the buying experience would most significantly affect their confidence in online purchases.

All of these reasons align with larger emerging trends around changes in consumer spending. Protecting sensitive information is now table stakes in e-commerce. Customers want to know they can shop stress-free, and companies need to catch up fast in this area if they’re going to thrive in e-commerce. Similarly, consumers want fast, reliable purchasing experiences. They want businesses to recognize if they’ve shopped with them before. And even if their buying behavior suddenly changes, customers want businesses to let them through seamlessly. Too many controls will push customers elsewhere to find their products.

Businesses would be wise to take note of deceptive practices. It’s another low-hanging fruit crucial to online merchant survival in the coming months as customers rein in their spending. Looking at highly returned products and descriptions could be helpful in this area.

The No. 1 way merchants can increase confidence in online purchases

As for things that would most increase confidence, customers cite free shipping and returns. Unfortunately, this flies in the face of many strategies businesses are deploying to combat the squeeze they’re feeling from increased returns and lower spending.

Many businesses are using strategies like charging customers for returns to combat more returns and decreased spending. But seeing as customers say free shipping and returns are the best ways to increase confidence, strategies like the former could blow back on merchants. Furthermore, offering free shipping and returns may present a good opportunity for businesses to siphon customers away from merchants deploying adverse customer policies.

Outside of that, consumers say more transparency in purchases, better protection of personal payment information, and surprisingly, seeing ads relevant to interests can most significantly increase their confidence in online purchases.

Almost 67% of respondents in the survey say online ads are only somewhat or not relevant at all to their interests. This is shocking considering consumers crave personalization, particularly Gen Z and Millennial buyers. One source suggests almost half of consumers in 2020 made a purchase as a direct result of a personalized ad.

Increasing customer confidence drives sales, customer loyalty

Customers who aren’t confident in their online purchases are more likely to return purchases or commit friendly fraud. For example, in the customer confidence survey, nearly a third of respondents said they’d disputed an online purchase from a direct sales company.

Most of the top reasons for the disputes are friendly fraud-related, an issue that seems to be increasing across the board for merchants. The issue is so pervasive that, last month, Visa announced expanded requirements for compelling evidence in dispute resolution. Under the changes, merchants must submit more specific evidence to combat customer disputes, which is where something like a friendly fraud chargeback solution will come most heavily into play.

By shoring up vulnerable areas, merchants can greatly reduce disputes and increase customer confidence, casting a wide net for revenue. Additionally, merchants who listen to customers’ desires for personalized, streamlined experiences will be able to harness more customer confidence and revenue. Those who don’t will likely fall behind.

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