Omnichannel

Transforming trust: Rethinking retailer-consumer relationships

Trust is not just an intangible concept but rather carries genuine value for retailers.

Photo: Adobe Stock

November 7, 2023 | Doriel Abrahams/Head of Risk at Forter

In a retail landscape where the customer experience is paramount, it's clear the dynamics between consumers and retailers have evolved. The foundation of this evolution is built on trust, and understanding its role is crucial for success in the retail sector.

A report from Forter delves into this relationship, illustrating the intricate bond that exists between consumers and retailers. The report reveals trust is not just an intangible concept but rather carries genuine value for retailers. Specifically, the "Trust Premium" plays a decisive role in consumers' shopping behaviors — and this year tells us that consumers are willing to spend 46% more with a retailer they trust.

The Trust Premium

With trust proving to be an essential factor in the buying process for the next generation of consumers, the need arises for merchants to continually elevate their consumer relationships.

This sentiment is mirrored by the report's findings, which suggest nearly 90% of consumers also prioritize a safe, secure checkout process and personal data protection — a demand that's evident across all regions.

Consumers are encountering an alarming rate of negative experiences — including false declines and different types of friction in the purchase process. As such, there's an immediate call for retailers to work on redefining the trust paradigms that guide their interactions with customers to capitalize.

Millennial & Gen Z lifetime value

Millennials and Gen Z shoppers stand at the forefront, embodying the zeitgeist of online shopping. Accustomed to the digital world, they've set the tone for the future of retail, with unique preferences and deep-rooted values.

Yet, the data reveals an unsettling vulnerability regarding data breaches and compromised information.

Surprisingly, these tech-savvy generations face a higher rate of false declines and information compromised in data breaches. 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). This means the retailers must go above and beyond when it comes to safeguarding user data — or risk missing out on the lifetime value of these consumers.

Retailers must prioritize impeccable customer experiences to harness these consumers' spending power and ongoing loyalty. Aligning with the values of these digital natives and fostering trust isn't merely a strategy — it's a crucial element for survival in a market teeming with informed and discerning shoppers.

Seamless experiences & security

A seamless customer experience is simply indispensable. Even more so, over 75% of consumers stated they would abandon a purchase if the checkout experience fell short. In some regions, like China, that number skyrockets to over 84%.

False declines are a significant issue for many retailers, often jeopardizing future sales. Astonishingly, over 56% of consumers in the U.S. said they'd been falsely declined for a transaction over the past 90 days. To put this in perspective, more than one in every two consumers is being falsely declined despite being legitimate customers.

Clunky customer experiences and false declines aren't just a quick inconvenience — they can have a lasting effect on your business. Not only are you losing the transaction at that moment, but according to the report, you're likely losing their lifetime value.

This situation reflects a broader concern where some retailers, to combat fraud, are implementing overly stringent measures. Such a heightened emphasis on security can create obstacles in the buying process, leading to additional verification requirements or the imposition of one-time passwords. This also prolongs checkout procedures and contributes to higher cart abandonment rates.

While securing transactions is crucial, it is a balancing act. Protecting against fraudulent activities and laying out hurdles in customer experience potentially harm consumer trust and loyalty in the long run.

Why retailers need to take the lead

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 eight out of 10.

But this, paired with a high rate of consumers noting false declines or security breaches, invokes a need for reflection among retailers. Failing to trust consumers leads to negative shopping experiences — and consumers are noticing.

However, 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 while enhancing trust in the process.

It's clear that trust levels are profound when it comes to shoppers' buying patterns. Retailers must seek to earn the trust of younger consumers before it's too late. This is vital, and it starts by thinking holistically about the entire digital commerce journey rather than single decision points. It also means focusing on lifetime value over lone transactions.

As we step into an era marked by the centrality of trust, it is pivotal for retailers to harmonize security with consumer experience, cultivate mutual trust, and understand regional and generational nuances in shopping behavior.

It is about building relationships that are not just transactional but interlaced with confidence and reliability. This paves the way for a future where trust is the cornerstone of retail customer experience.

Doriel Abrahams is the Head of Risk at Forter