Winning the Next Generation of Online Consumers
Trust lies at the heart of the consumer-retailer relationship, and the shoppers of tomorrow are placing more value in trust than any previous generation. However, building trust requires effort from both sides. And while consumers seek trustworthy retailers, retailers must gain the confidence to trust their consumers.
The brands that win the next generation of shoppers will provide fast, frictionless and fraud-free shopping experiences — and establish a mutual trust with their consumers.
Coined the “Trust Premium,” consumers are willing to spend 46% more on average with a retailer they trust.
And depending on the region and demographic a retailer serves, the Trust Premium may be higher. At a time when many consumers are cutting their spending, trust can make or break the bank for retailers.
Average percentage of total shopping conducted online
How much more would you be willing to spend with a retailer you trust compared to a retailer you do not trust?
% increase in spend with a trusted retailer
To tap into the Trust Premium, brands must invest in the customer experience at every level — from account creation to checkout and shipping — to build confidence and trust
How important, if at all, are the following things when determining your trust in an online retailer?
Feature
% Stating important to any degree
A secure checkout process/protection of personal data
Younger consumers care about brand reputation, affordable prices but trust is the biggest factor
CHAPTER NAME
Younger shoppers face the most friction in online shopping for various reasons – from smaller digital footprints to fewer proof points for retailers to trust.
Millennials and Gen Z are up to four times more likely to be falsely declined at checkout and up to 10 times more susceptible to having their information compromised in data breaches (compared to Gen X and Baby Boomers).
How much more would you be willing to spend with a retailer you trust (compared to a retailer you do not trust?)
Generation
% increase in spend with a trusted retailer
Ensuring efficiency and effectiveness in fraud prevention provides consumers with a secure, efficient consumer experience and fuels revenue growth.
ASICS’ move from a rules-based solution to Forter’s automated approach to fraud prevention enhanced transaction security and provided a more efficient consumer experience.
This strategic transition resulted in a 4.52% reduction in false declines – and a significant boost in consumer trust. And beyond trust and security, it also drove revenue growth, creating a 1,100% ROI for the company on its fraud prevention investments.
ASICS’ transformative decision underscores the value of combining fraud prevention with a customer-centric approach — reinforcing that building trust and focusing on the customer experience are essential revenue drivers.
In the race to win the next generation of shoppers, ensuring the legitimate ones have a friction-free experience is critical. One of the worst experiences consumers encounter when shopping online is being falsely declined.
When a legitimate consumer is falsely declined, more than just their discarded transaction is at stake. The consumer feels alienated and less likely to return — with over 40% of shoppers stating they won’t retry a purchase if it’s declined on the first try.*
While worst in the U.S., consumers across the globe noted that false declines were a significant problem – with nearly 40% of those surveyed having had a payment wrongly declined in the last three months.
Have you been wrongly declined when making an online purchase in the last three months?
of those surveyed having had a payment wrongly declined in the last three months.
Consumers in the U.S. face a higher risk of being falsely declined — with 56% of survey respondents noting they’ve faced a false decline in just the last 90 days.
Many factors are likely at play. Amidst economic uncertainty and a rising fear of fraud, many U.S.-based retailers over-rotate on fraud prevention, often at the cost of the consumer experience. With so many new shoppers venturing into digital commerce, retailers often turn away new — but trustworthy — customers simply because they’ve never encountered them. A lack of historical shopping data ultimately leads to false declines instead of an opportunity to secure the consumer’s lifetime value.
Then there are antiquated rules-based fraud prevention systems. To these systems, consumer behaviors often look like fraud (even though they’re legitimate) – falsely declining the consumer and putting the lifetime value at risk. These behaviors are problematic for rules-based systems, which naturally drive up false declines.
Why are U.S. consumers wrongly declined more vs. other countries?
of survey respondents noting they’ve faced a false decline in just the last 90 days.
A seamless checkout experience is one of the most essential pieces of building trust with consumers. While many shoppers enjoy the hunt — that is, browsing for goods to put in their cart – when it comes to checkout, time literally equals money. Over ¾ of consumers report abandoning a purchase altogether if the checkout experience is anything less than perfect.
How likely are you to abandon your online shopping cart if the checkout process is too difficult/time-consuming?
% increase in spend with a trusted retailer
Any friction, particularly during checkout, can significantly deter consumers from finalizing purchases – especially those engaging with a retailer for the first time.
First impressions are everything, making it crucial to understand that the consumer’s journey is sensitive and can be easily disrupted. Shoppers today are craving a seamless experience, devoid of any unnecessary steps or hurdles, including:
What types of friction turn customers away?
Consumers aren’t the ones with trust problems. Retailers are.
Average percentage of total shopping conducted online
Retailers trustworthiness rating
The answer boils down to a lack of trust on the part of retailers. Too many retailers can’t accurately assess the trustworthiness of the consumers visiting their sites, resulting in unnecessary friction and lost revenue.
But it’s not all bad news. By confidently filtering out fraudsters early in the digital commerce journey, retailers can optimize the customer experience and win the next generation of consumers — and their lifetime value — while enhancing trust in the process.
Regardless of region, industry or demographic, the consumer experience is paramount. To capitalize on the Trust Premium, brands must invest in the consumer experience at every level — from account creation to the shopping experience, all the way through checkout, shipping and returns — fostering true consumer confidence and trust.
ABOUT THE REPORT
Forter is the Trust Platform for digital commerce. We make accurate, instant assessments of trustworthiness across every step of the buying journey. Our ability to isolate fraud and protect consumers is why Nordstrom, Instacart, Adobe, Priceline, and leaders across industries have trusted us to process more than $500 billion in transactions.
The research was conducted by Opinion Matters. The survey gathered responses from 5,000 adults aged 18+ who have at least two active eCommerce accounts and shopped online at least once in the last three months in the U.K., U.S.A, Germany, Singapore and China. There were 1,000 respondents from each territory.
Our deep understanding of identity and use of automation helps businesses prevent fraud, maximize revenue and deliver superior experiences for their consumers.
About Forter
Opinion Matters is an award-winning insight agency. Their consultants create bespoke market research solutions for businesses, organizations, and agencies worldwide.
They are experts in creating concepts, implementing, and managing projects, analyzing results and reporting.
About Opinion Matters
They are experts in creating concepts, implementing, and managing projects, analyzing results and reporting.
The agency operates internationally, offering highly targeted niche panels that are more pertinent to specialist audiences and media requirements. Generic samples are also available.
Reduction in false declines
61%
89%
Affordable pricing
88%
Reliable customer service
88%
Seamless checkout process
85%
Free shipping and returns
85%
The availability of varied payment options (Buy Now, Pay Later [BNPL], PayPal, etc.)
79%
Strong brand reputation
76%
Customer perks such as loyalty programs and discounts
73%
4.52%
40%
56%
61%
8
/
10
Product/item/purchase didn’t arrive on time
38%
Limited payment methods
26%
Poor customer service
26%
Expensive and/or difficult returns policy
25%
Poor user interface/mobile application
21%
Transaction was wrongly declined
17%
Personal information compromised in a data breach
16%
In the last three months, which of the below have you experienced when shopping online?
© 2023, Forter Inc all rights reserved.
We process more than $500B in transactions
As retailers scramble to win consumer lifetime value (CLTV) and the next era of online shoppers, the data holds the key to understanding who will triumph in this high-stakes game of consumer trust. From generational nuances to key findings in the consumer experience, the following offers insights into who will win the next generation of shoppers – and how.
What you need to know, by region:
While many trust-related trends are globally apparent, there are some region-specific nuances to consider.
Top Takeaways
1. Retailers must first earn trust to generate more revenue
2. The biggest factor for the next generation of shoppers is trust
3. False declines are increasing – especially in the U.S.
4. Consumers are abandoning carts at the first sign of friction at an alarming rate
5. When it comes to trust, it’s time for retailers to look in the mirror
6. What’s next for retailers and consumers?
Data Security
U.K.-based consumers place a premium on data security – with 89% noting a secure checkout process and protection of personal data is one of the most essential elements of the consumer experience.
U.K.
Facing Friction
U.S.-based consumers face higher false decline rates (56%) than any other region – one likely reason they’re willing to spend 56% more with trusted retailers.
U.S.
BNPL Options
German-based consumers differ primarily from other regions in their favored payment methods, with 30% stating they prefer Buy Now Pay Later (BNPL) over traditional methods.
Germany
Earning Trust
Singapore-based consumers face high rates of false declines (48%) and potential security breaches (22%) and are willing to spend 48% more with brands they do trust.
Singapore
Checkout Priorities
China-based consumers highly value seamless checkout experiences – with 84% willing to abandon carts at the first sign of friction.
China
Trust is a precious commodity that must be earned. With 69% of those surveyed stating that over half of their shopping is done online, the spending power of the next generation is growing — and it will be spent with the most trusted brands.
Have you had your personal information compromised in a data breach in the last 3 months?
Generation
% that has knowingly had personal information compromised
Gen Z and Millennial consumers represent a large proportion of the market, and their spending power is accelerating.
If they encounter a poor experience, this is bad news for retailers, who are losing revenue as a result.
Despite facing a higher rate of false declines or falling subject to fraudsters, younger generations want to spend money — and indicate they’d gladly spend more with retailers they trust.
*according to Forter’s first-party data
While these roadblocks aim to enhance security, they often end up confusing or frustrating consumers, thus leading to higher rates of cart abandonment. The result is a potential loss in the consumer’s lifetime value for retailers, emphasizing the importance of minimizing friction in the purchasing process.
The introduction of a one-time password (OTP), typically sent via text message.
Extra clicks or additional steps that prolong the checkout process.
Personal verification requirements, such as uploading a picture of their ID (a common occurrence in verticals such as travel or financial services).
Order reviews, where an order’s completion is delayed due to manual review processes.
Despite the negative experiences, consumers are still surprisingly trusting of retailers. When asked how much they trust the retailers they’ve shopped with, the average respondent rated them 8 out of 10.
This disparity between consumer trust and experience underscores trust’s crucial role in the relationship between retailers and their shoppers — but not in the way you (or we) may have thought. Harnessing and realizing the full potential of the Trust Premium is a responsibility that squarely rests on the retailers
Across 5,000 consumers in five very different markets, survey respondents consistently dealt with negative shopping experiences – from alarmingly high rates of false declines to lengthy checkout processes. While this hasn’t harmed their trust in the way one might think, the obvious question remains: why does this keep happening?
*according to Forter’s first-party data
For every $1 retailers lose to fraud, they forfeit
$30
by declining legitimate consumers* — all due to a lack of trust.
Trust goes both ways. Consumers want to shop with trusted brands – but that trust must be reciprocated. And now more than ever, retailers need to double down on trust-building if they want to capture the next generation of shoppers.
Trust Premium
The Next Generation
Experiencing Friction
Building Trust
What’s next?
Trust Premium
The Next Generation
Experiencing Friction
Building Trust
What’s next?
Facing Friction
U.S.-based consumers face higher false decline rates (56%) than any other region – one likely reason they’re willing to spend 56% more with trusted retailers.
U.S.
Earning Trust
Singapore-based consumers face high rates of false declines (48%) and potential security breaches (22%) and are willing to spend 48% more with brands they do trust.
Singapore
BNPL Options
German-based consumers differ primarily from other regions in their favored payment methods, with 30% stating they prefer Buy Now Pay Later (BNPL) over traditional methods.
Germany
Checkout Priorities
China-based consumers highly value seamless checkout experiences – with 84% willing to abandon carts at the first sign of friction.
China
of respondents reported a negative shopping experience in the last three months — meaning the time for retailers to raise the bar is now.
