Are new shoppers falling out of your funnel forever?
Digital commerce has been marked by significant changes in recent years, and pivoting to digital channels has propelled higher rates of new online shoppers than ever before. While this offers enormous growth potential, it has also caused a corresponding increase in the number of new shoppers being falsely declined — something we refer to as New User Missed Opportunity (NUMO).
2.
Instead of trying again, she goes to a competitor’s service, which doesn’t decline the transaction.
What is NU•MO
(New User Missed Opportunity)
1.
Mary decides to try a food delivery service for the first time. She spends time reviewing options and then places her order. Without any good reason, the transaction is declined. Mary is very frustrated.
REQUEST A DEMO
NEW USER MISSED OPPORTUNITY (NUMO)
Table of Contents
What is NU•MO?
Key Facts
How much revenue is at stake?
The way forward
New online shopper rates soar with the wave of digitalization, but these newcomers are up to 7x more likely to be declined.
With the increase in new online shoppers has also come an increase in the number of those new shoppers being falsely declined. Forter’s first-party data shows that new users are up to 7x more likely to be declined than returning customers because merchants do not have enough data on these new shoppers.
New User Missed Opportunity, or NUMO, is a stark reality costing merchants millions in lost opportunities and hundreds of millions more in the lifetime value of each lost customer. NUMO is the fear of missing out manifested for merchants. No business wants to miss out on an opportunity to convert a potential buyer into a loyal customer. Below is an all-too-common scenario that is currently hurting those in digital commerce:
3.
Mary never returns to the first vendor.
Her second attempt elsewhere was successful, and she has found her new food delivery service.
Customer loyalty
RETAILERS
Retailers have long known and measured the value of customer loyalty.
Simply put, you cannot grow the lifetime value of a customer if they’re never given the opportunity to become a customer in the first place.
Decline good users
SHOPPERS
Over 40% of shoppers declined on their first transaction
won’t try again.
So if Mary is a casualty of NUMO, where an eCommerce system incorrectly labels her initial attempt to buy something as fraud,
she isn’t likely to return.
“Improving our approval rate is a major focus for us, especially because we have legitimate transactions that are potentially being declined. Improving our conversion and approval rates enables us to deliver a better customer experience, which drives repeat business. With Forter, we have accurate automated decisions that have helped boost approvals.”
Nitish Pandit
Sr. Director Finance
More online shoppers. The volume of new online shoppers has increased 2x since 2019
False declines. New online shoppers are up to 7x more likely to be declined by current fraud tools than returning customers
Key facts
Loss of new customers. On average, 40% of new shoppers who are declined on their first visit do not try again to shop at that merchant’s site
Home and garden
The value per customer per year
$798
A merchant could be leaving in lifetime revenue on the table due to NUMO
Up to $275.4 M
Apparel and Accessories
The value per customer per year
$930
A merchant could be leaving in lifetime revenue on the rack, thanks to NUMO.
Up to $261.3 M
beauty and health
The value per customer per year
$798
A merchant could be leaving in lifetime revenue on the table due to NUMO
Up to $275.4 M
How much revenue is at stake?
What you aren’t seeing in your dashboard or your P&L sheet are the transactions that don’t happen. Simply put, you don’t see the money you turn away. Falsely declining these new users means you’re not just turning away good business — you’re potentially turning away the entirety of that customer’s lifetime value.
Using data from Forter’s robust global merchant network, which processes over $200 billion annually and protects hundreds of millions of identities, it is possible to estimate the real missed opportunity cost when a new customer gets turned away.
Merchants can lose up to 75x more revenue to false declines than they do to fraud
beauty and health
False declines
75x
Fraud
5
Industry
Missed annual revenue per customer
x
Purchase per year
Average purchase price
=
Missed annual revenue per customer
x
=
$186
$930
apparel and accesories
9
$118
$1,062
x
=
Food & beverage
3
$266
$798
x
=
Home Furnishings & Garden
3
$81
$243
x
=
Beauty & Health
METHODOLOGY:
Seller’s total processing volume (TPV)
Seller’s decline rate
(in USD)
Additional likelihood
of declining new users
The average rate
of new users
Likelihood of return
of a declined new user
Frequency of user purchasing on the website
So what is behind the challenge of NUMO? While new online shoppers can account for significant revenue, many are being wrongly declined by merchants’ fraud prevention systems that don’t have enough identity data. Such data includes:
1
Not enough data
Purchasing behavior and history (purchasing patterns, value spent, financial instruments, etc.)
In-store interactions including returns or item exchanges, coupon usage, loyalty or reward point memberships, personalization of interactions, etc.
Behaviors, past actions, and connected identities from other eCommerce sites
Many merchants’ fraud prevention systems currently have limited visibility. They only see data from their site and don’t benefit from a larger data network. This results in higher decline rates of legitimate buyers — especially new shoppers.
Customers expect “1-Click” real-time experiences that allow them to sail through to checkout without added friction.
When new shoppers are asked to provide more personal information or data than required, this adds friction. First-time online shoppers often feel nervous about sharing their details with a store, so prompts for more information may frighten them away. The result is higher cart abandonment rates and missed opportunities for customer acquisition.
Most fraud prevention systems currently rely on a combination of risk scoring, machine learning, and manual review teams, causing delays and added friction. Manual processes and the use of multiple separate fraud tools prevent instant approve/decline decisions or “1-Click” experiences.
2
Obstacles in the purchasing journey
Why do merchants turn away new customers?
“Every little piece of data that we have to make a good decision about the customer is key.
With Forter’s machine learning and global network of user data, we’re able to make real-time decisions and scale automatically without adding more resources. Prior to Forter, embracing these new customers without creating friction would have been difficult and would have resulted in them potentially shopping elsewhere.”
Jess Carstens
Global Director, eCommerce Operations
“Forter allows us to monitor transactions in a way that is safe and efficient and doesn’t harm anything about the customer experience. There’s also a lot of competition out there; if our retailers don’t trust the technology we’re using, they have the right to go somewhere else, so maintaining trust is super-important.”
Brian White
Director of Customer Experience
Access to knowledge and insights gained from a wider set of data across enterprises, banks, payment providers, geographies, and industries offers retailers a more accurate view of legitimate consumer behaviors and interactions, resulting in higher approvals. Instead of requiring shoppers to provide more information, adding friction to the buying journey, a robust network of data powers the ability to make instant and accurate decisions — no added friction.
A global data network
Say hello to more customers and revenue
Instead of looking at fraud prevention from a risk-aversion perspective, consider risk management a growth engine — enabling merchants to capture as much revenue as possible and approve more good customers. Ultimately, this shift in perspective drives more business growth and encourages increased customer lifetime value (CLTV). To do this, merchants require:
Real-time decisioning, made possible through machine learning, provides greater accuracy and allows merchants to expand and improve their customer benefit offerings to include competitive and seamless services — such as BOPIS/BORIS, next-day shipping, and flexible returns policies — without the fear of fraud or abuse.
Automation
With the right approach to risk management, you hold the power to be an eCommerce and customer lifetime value enabler. Using Forter’s network of identities, combined with the power of data and real-time decisioning, you can ensure the customer’s experience — and the hundreds of experiences to follow — is the fast, frictionless experience it should be.
© 2022, Forter Inc all rights reserved.
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, Sephora, Instacart, Adobe, Priceline and leaders across industries have trusted us to process more than $500 billion in transactions. Our deep understanding of identity and use of automation helps businesses prevent fraud, maximize revenue and deliver superior experiences for their consumers.
Want to see it in action?
Learn more
Transaction Declined
Oh no! Please try another payment method.
strawber**@hotmail.com
TOTAL PURCHASES:
$455,000
TOTAL RETURNS:
$255,000
50% of all online order attempts contained a gift with purchase item
So if Mary is a casualty of NUMO, where an eCommerce system incorrectly labels her initial attempt to buy something as fraud, she isn’t likely to return. Retailers have long known and measured the value of customer loyalty. Simply put, you cannot grow the lifetime value of a customer if they’re never given the opportunity to become a customer in the first place.
Over 40% of shoppers declined on their first transaction won’t try again.
Why do merchants turn away good customers?
