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5 Ways to Stop Revenue Leakage and Earn More with Magento 2

5 Ways to Stop Revenue Leakage and Earn More with Magento 2

If you manage one of 5,500+ Magento Enterprise stores, you know what it means to take Ecommerce to the next level. While you may be firing on all cylinders, it’s no secret that every Magento store gets a flat tire once in a while. It’s all part of the journey to exponential growth. Whether your revenue is stagnating between $5M and $10M, or you’ve hit a plateau somewhere between $100M and $1B, we’ve seen all the ‘growing pains’ rapidly scaling companies face. So what can you do?

 

As an online merchant, your future success rests on a key decision: To outsource additional resources and expand your team’s abilities, or to integrate new technology to get things trending upward again. However, there are many factors to consider here, and Ecommerce is never a one-size-fits-all scenario. To help you make the right decision, here are our top 5 recommendations for increasing revenue with Magento.

 

1. Staff Augmentation

staff augmentation can help you climb higher and teach your team along the way.

 

Striking a revenue plateau is a sign you may have outgrown your team. Between fulfillment, account management, marketing, and more, it’s easy to hit capacity on your team’s bandwidth. Enter, an agency partner: your new Ecommerce support arm. Doubling your capabilities with dedicated resources can deliver the bandwidth and platform know-how to start driving stable growth.

 

Even if you’re opting to integrate technology, the best way to capitalize on your investment is to hire a trained expert to teach your team to use it. We’ve sent developers and engineers around the world to train on-site, though some prefer weekly or daily video-chat sessions. Either way, there’s no shame in asking for help, and Magento support is one sure-fire way to boost your bottom line.

 

If you needed to fly your company to a new destination, you’d book tickets on a reputable airline or hire a seasoned pilot. It would be much more costly (and risky) to send your team to flight school. In the same way, it takes more than the average programmer to keep your site secure and reduce the costs of fraud…

 

2. Magento Security

Just as a lighthouse helps ships steer clear of danger, every ecommerce site needs good security software.

 

Just as a lighthouse helps ships stay safe, the right security software can help your site steer clear of danger.

 

In the connected world of commerce, cyber security is a must for any business, from burgeoning B2C brands to long-established B2Bs. With hackers and fraudsters becoming more sophisticated each and every day, online retailers are losing millions. It’s estimated that online payment fraud losses will total $61 billion annually by 2023. But what can Magento merchants do?

 

With the proper security solutions in place, merchants can cash in big rather than letting revenue walk out the door. We’ve found that “fraud prevention systems” for many SMBs consist of a single person who approves or rejects every order on a site — manually… If this sounds like your first line of defense against fraud, it’s more than likely you’re rejecting real orders, approving fraudulent orders, and losing revenue in all directions.

 

On top of these challenges, you’re facing the constant threat of hackers stealing customer and employee information. Once they have it, they’ll use the data to fuel further fraud, causing enough revenue leaks to sink a cruise ship.

 

Luckily, top security and fraud prevention technologies are here to help you face these threats. From falsified “Item not Received” claims to hijacked shipping accounts and even counterfeit paper receipts, Magento partners like Signifyd and Sucuri help monitor customer activity and prevent cyber-crime. With the right tools, you can keep your revenue pipeline from leaking. Shop around for some solutions, plug your revenue leaks, and return to smooth sailing.

 

3. Mobile Optimization

Mobile optimization drives 95 thousand dollar revenue increase for U.S. Mattress company

 

Even leading B2Bs earn 40% of revenue from mobile devices. Guiding this trend are millennials, who now make up more than one-third of all U.S. workers. Combine this with the ease and popularity of shopping on sites like Amazon, and it’s no wonder so many B2B buyers prefer mobile-optimized buying experiences. Over the past two years, we conduced a series of experiments to help merchants maximize revenue from shoppers on different devices. We hypothesized that each device required different tweaks for different kinds of customers.

 

With more than 200 merchants in the testing program to date, it’s clear that customers of all kinds want better mobile experiences. However, the test results show what works for one site may not work for another…

 

Take for example one test, where U.S. Mattress experienced an 8.27% increase in revenue per visitor (RPV) and a 10% conversion rate lift by using a simplified cart header in their mobile checkout. These simple tweaks drove a $95,000 revenue increase for U.S. Mattress, with only 3 months of testing. Other merchants who implemented similar changes saw little change, however. 

 

In the end, every site is different, and every customer is different. You can increase RPV by up to 25% by implementing simple changes (view case study), but you need to run a few tests to find out what works. It’s up to you to start testing, because not doing so only results in lost revenue.

 

4. Business Intelligence

data visualizations from powerful business intelligence tools make actionable business decisions easy.

 

Powerful business intelligence tools make finding actionable data easy.

 

According to the 2018 BI Survey, “58% of enterprise companies say their organizations base at least half of their regular business decisions on gut feelings or experience, rather than data.” If there’s one thing we’ve learned from years conducing mobile optimization tests, it’s that gut feelings and “intuition” are usually wrong. Instead, every merchant needs a way to track, test, and manage their customer data in order to guarantee revenue growth.

 

Magento Business Intelligence is a powerful tool that helps merchants create a one-stop shop for actionable insights on customer data. The platform is covered under a Magento 2 license agreement, but takes a bit of Magento development know-how to set up. If you’re already using Magento and not taking advantage of Magento BI, you’re holding yourself back from success. In a few hours, a good Magento 2 developer can set up your Magento BI Dashboards and get you on your way to discovering new trends in your business.

 

For instance, Magento BI helped one merchant notice that customers referred by their blog delivered strong, consistent long-term spending. The merchant found out that engines and other channels referred customers who spend a decreasing amount over time. Find out what your customers are telling you with the tool you already have! By year 3, top Ecommerce companies generate nearly 60% of revenue from repeat purchases. How are you using your data to ensure success?

 

5. Magento 2 Accelerators

ecommerce accelerator packages make launching a new site faster than ever thought possible.

 

For many merchants, setting up a new store or migrating an old store can be a daunting, time consuming endeavor. However, as a Magento specialized agency, we were able to put our heads together to help B2B and B2C merchants cut time and costs significantly.

 

The engineers and developers at Redstage combined a series of DevOps tools we developed in-house to help B2B companies get up and running on Magento 2 in just 40-60 days. The full toolset is known as B.A.S.E., the B2B Accelerator Suite for Ecommerce. With B.A.S.E., manufacturers and distributors can transform their online businesses by increasing ease-of-use for customers and internal teams across the board.

 

The M2 accelerator is loaded with useful features developed specifically to enhance B2B operations, from sales to logistics. From one-click reordering and advanced order approvals to highly customizable pricing configurations and more, Magento 2 accelerators drive massive value for both customers and businesses by creating a single source of truth for all your customer and product data.

 

If you’re planning to bring your ecommerce ambitions online or migrate from an older platform, accelerators are the best and fastest way to get it done. Work smarter, not harder.

 

 

Final Thoughts:

From strengthening your team to preventing fraud, mastering your data, and even migrating, today’s B2B and B2C Ecommerce companies have a few revenue-boosting tools to take advantage of. The question to ask before embarking on any of these transformation paths is: What’s the right fit for my business?

 

Is it worth more to invest in keeping the revenue my Ecommerce business already generates through Magento security and fraud prevention? Or is it more valuable to expand testing to increase new business? Is it in your best interest to upgrade to a new platform? These are the questions only you can answer, but when you’re ready, we’re here to help! 

Find out what clients are saying about Redstage here.

Not All Chargebacks Are Created Equal… Here’s Why.

Not All Chargebacks Are Created Equal… Here’s Why.

If you read the last two articles in this series, you know “killer customers” often take advantage of DTC companies’ return and shipping policies. By now you’re probably thinking “What else can go wrong?” Well, we’re sorry to say, the list is quite long.

In 2018 Chargebacks 911 reported chargeback fraud cost merchants up to $40 billion per year. With increase in ecommerce activity over the past 2 years, we can expect that number to be even higher today. While the holiday season is behind us, the chargeback season has just begun. Continue reading to learn 2 more ways abusive customers attack your profits and how you to prevent them.

1. Friendly Fraud

 

woman looking at computer and smiling possibly committing friendly fraud

 

“Friendly Fraud” is when a customer files a refund or dispute with the bank instead of with the merchant. Committing friendly fraud involves no malicious intent and can be easily overlooked by the customer. In many cases, a customer may notice an unfamiliar purchase, receive an item that doesn’t match the description, or can’t reach a customer representative.

Friendly fraud may sound harmless, but it can severely threaten your bottom-line. In fact, the method accounts for 86% of all chargeback volume and is difficult to identify.

Preventing Friendly Fraud

Most customers don’t understand the negative effects a chargeback has on merchants. Therefore, preventing friendly fraud requires a multi-step, ‘nip it in the bud’ approach. Here is how it’s done…

      1. Make it easy for customers to quickly contact you.

Don’t give your customers a reason to go to their bank to file a dispute. Your customer service contact information should be accessible to anyone at any time. Include this information in all communication correspondence and social media platforms. Proving 24-hour support via phone or live chat (with these options clearly visible on your site) are great ways to ensure your customers come to you first.

      2. Provide clear product descriptions.

To prevent unnecessary chargebacks and increase conversion rates, customers should receive the same product described in the product description. Making sure your product descriptions are detailed and accurate can save you major losses.

By centralizing complete product data and then enriching product descriptions and specifications, product information management systems help reduce the chances of errors across multiple channels. This results in more users getting exactly what they are looking for.

–– Lynn Torbert, Director of Sales, Jasper PIM

      3. Verify all shipping and tracking information.

With all so many reports about new shipping scams, it’s important to create detailed shipping terms and conditions. Once tracking information is verified and the purchase is complete, customers should also receive a copy of all shipping and tracking information. This could come in hand in case a customer claims an unauthorized purchase. However, that’s another, more malicious type of fraud…

2. Deliberate Chargeback Fraud

 

Woman holding cash after commiting Chargeback Fraud

 

Opposite from friendly fraud, deliberate chargeback fraud is when a customer contacts a bank with the intention of disputing a purchase. Similar to an “Item Not Received” scenario, a customer intends to obtain the product or service for free. This type of online fraud is equivalent to brick and mortar shoplifters, accounting for 35% of all fraud losses.

In less extreme cases, chargeback fraud occurs when a customer experiences buyer’s remorse. They don’t want to confront the merchant, so they dispute the charge with their bank instead. In extreme cases, customers may dispute large orders by claiming they are fraudulent charges. This hurts the retailer’s reputation with the bank and pulls profits out from under them.

Providing a fast and frictionless customer experience is a priority for merchants, but can be costly without the right considerations. For example, most sites allow customers to file a dispute with one click. This makes it difficult to prevent chargeback fraud and leaves merchants empty-handed.

Preventing Chargeback Fraud

Since deliberate chargebacks and friendly fraud both heavily impact profits, your best option is to get customers to handle their disputes with you, rather than their bank. Whether it’s buyer’s remorse or an unauthorized purchase claim, you need to protect your bottom line. Consider implementing the following defense mechanisms on your online store…

       1. Provide a clear and flexible return policy.

Customers should know what items they can return and how to go about returning them. For example, add a 30-day deadline on returns and provide return labels with all online purchases. With this flexibility, customers are more inclined to resolve their return issues with you. Also, this will make customers less likely to take advantage of your return policy.

       2. Be prepared to fight back

For customers who claim an unauthorized purchase, evidence is key. There are many places you can acquire proof of purchase to protect yourself, especially during the checkout-process. Double-check shipping and tracking information, replay phone conversations and track down social media accounts if you choose to fight a fraudulent chargeback. This information can be the difference between saving your profits or watching money walk out the door.

Final Thoughts

Modern merchants need to understand the differences between deliberate chargebacks and friendly fraud. To protect customers and your relationships with them, you must successfully weed out the bad actors who purposely seek to defraud you. Remember, your goal is to protect your merchandise, revenue, and profits. Finding the proper fraud defense can be time-consuming, but we’ve done our homework to make it easy for you. If you’re interested in learning more about Redstage’s Security and Maintenance Bundles to help you strengthen, monitor, and maintain your site, schedule a FREE consultation today!  

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3 Shipping Scams That Are Killing Your Ecommerce Profits

3 Shipping Scams That Are Killing Your Ecommerce Profits

In our last article, Are DTC Companies Risking it All For Killer Customers, we discussed the 4 common return tactics abusive customers use. Unfortunately, the abuse doesn’t stop at your return policy… With the holiday season in full effect, killer customers are on high alert and merchants should be too, considering more than 2.5 billion packages are expected to ship this holiday season. We teamed up with our fraud prevention partner Signifyd and the team at ShipStation to help online merchants stand clear of the 3 most common shipping scams killing ecommerce business profits this year.

1. Package Rerouting

 

Fedex truck on street with smoke on the side

 

Package rerouting commonly occurs when a customer commits payment fraud and uses a stolen credit card to make an online purchase. In most cases, the transaction is cleared because the legitimate cardholders address is used without being flagged. However, once the customer receives shipping confirmation and the package is en route, the original address is changed.

In another case, the customer purposely provides a false shipping address and monitors the package through the online tracking information given upon confirmation. Once they’re notified that the package is undeliverable, the customer contacts the shipping company to provide a new delivery address. Unfortunately for merchants, additional fees may occur when the package is successfully rerouted.

Lastly, a customer can make an online order and after confirmation, call the merchant to ask if their preferred shipping service can be used. Most likely, these customers have an established relationship with outside shipping services and are confident about receiving shipped items unflagged, making it harder to track and prove the package was ever delivered.

In all three cases, by the time the legitimate cardholder notices the unauthorized purchase, the scammer’s already enjoying their products free of charge. These types of fraud leave the online business with losses up to $10,000 in shipping fees, lost product, and lost profit… so now what?

 

Preventing Package Rerouting

Solving this issue requires a multi-step approach. First, it’s important to note not all customers have malicious agendas. In fact, many may have good reason to reroute a package. To avoid upsetting or offending legitimate customers, merchants should start with a clear shipping policy stating there’s a zero-tolerance for package rerouting on their website, social media profiles, and email confirmation.

Creating detailed shipping terms and conditions that address various errors that arise during shipping is important when dealing with customer claims. One major way to gain clarity into issues is to offer tracking. Tracking lets you know that an item has been delivered.

                                                            -Jennifer Ruben, Partner Marketing Manager, ShipSation.

 

In addition to providing these details, make sure a customer’s zip code and address are validated before shipping. Lastly, be sure to ship only to the original address provided in the confirmation details, especially for a large order.

 

2. Item Not Received 

by Mike Cassidy at Signifyd

 

4 Wrapped gifts on doorstep

 

One of the most insidious shipping scams occurs when the item marked ‘not received’ actually was received. False INR claims cost retailers millions every year, but they also cost merchants their reputation. Once word’s out that a retailer tends to give in to INR claims, be it via social media, dark web forum, or even a legitimate publisher, similar claims will flood in.

The scam is popular because it’s easy. No need to commit online identity theft by stealing someone’s personal information, or hack into a customer’s retail account. All abusive customers need is the will to cheat the system without care.

To put it simply, scammers accomplish this by ordering a product, bringing the product into their homes, and then telling  their credit card companies their orders never arrived. Such claims create one of the thorniest situations in the retailer/customer relationship.

If the retailer challenges an item-not-received claim and it’s legitimate, chances are the retailer just lost a customer for good. Signifyd’s consumer survey, conducted by market research firm Survata, found that nearly half of consumers will endure no more than one bad experience before abandoning a retailer for good. Let’s agree that being called a thief by a retailer counts as a bad experience.

On the other hand, if a retailer accepts the INR claim and it’s not true, the merchant is out of the goods and the revenue it would have received. You can up your fraud protection game, by adding a few things to your to-do list.

 

Preventing INR Claims

The first step is to make sure your return policy is clear, and your return process is easy. You also want to be clear in your descriptions and presentations of the products you’re selling. Not only does this provide your customers with a better shopping experience, but it also reduces the possibility they’ll be unpleasantly surprised when their order arrives.

Some consumers become frustrated with the work required to return a product and decide to get a refund by claiming the product never came. Being clear about returns and the products you’re selling helps reduce the incidence of unhappy customers who suddenly feel entitled to game the system.

There are also ways to challenge an INR claim, of course. Finding photos on social media of a customer with a product they claimed they never received, for instance, is fairly strong evidence that the item was received — as is a customer’s signature accepting the order. (It happens.)

Dealing with INR claims will never be pleasant, but with some forethought, it can become much less of a chore.

3. Hijacked Shipping Accounts

 

Shipping railroad tracks with multiple trains during sunset to represent hijacked shipping accounts

 

Nothing’s off-limits when it comes to fraudsters, not even shipping accounts. If your company’s shipping account is online or accessible to the public, you should keep reading.

Hijacking shipping accounts is a free and undetectable way to use a stolen shipping account number to make large shipments. Once these account numbers can be accessed, they are often used in the same manner as stolen credit cards and become can punch your profits in the gut.

In less severe cases, employees use their company’s account number to ship personal packages from time to time. In the worst case, these stolen accounts are used to ship drugs, stolen goods, or fake checks long distances, sometimes across the country.

Take Montana State University for example, in 2010 the school had a $180,000 pile-up in fraudulent shipping costs after more than 9,000 consumers received fake checks. Fake checks are normally used to trick recipients into wiring money for a small fee.

Businesses of all sizes are easy targets, as their shipping bills typically aren’t monitored close enough. However, with little knowledge of who’s accessing your account, it becomes harder to track down the culprit.

 

Preventing Hijacked Shipping Accounts

In order to properly prevent hijacked shipping account numbers, there must be a central management system that includes these features:

  1. Make account numbers accessible only to specific and trustworthy employees. Remember, less is more.
  2. Implement a reporting system that allows these users to be able to regularly schedule pickups and track packages, without constant authorization needed.
  3. Monitor frequently. With a tracking system in place, data can be used to track user’s activity for cross reference purposes.

 

Final Thoughts

Tracking down evidence of fraud (be it wire-fraud or shipping) takes time and not many merchants got into the business to become Sherlock Holmes. However, without proper detective work, shipping scams can be a legitimate threat to merchants, their customers, reputation, and profits. Luckily, there are fraud-protecting and chargeback-management solutions that highly automate the INR dispute process and some also eliminate the merchant’s risk. Ask us more about INR Protection here. 

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5 Things You Need to Know About PayPal’s Magento Migration Loan

5 Things You Need to Know About PayPal’s Magento Migration Loan

The clock is ticking and Magento 1’s end of life (end of support) is right around the corner. For over a year, we’ve provided webinars, E-books, and security insights to help ease your migration worries. Now, Redstage teamed up with PayPal to provide access to Magento Migration loans for qualifying merchants.

With a “no merchant left behind” mentality, Redstage and PayPal are committed to making sure all business owners can scale further while fully experiencing the power of Magento 2.  Here are 5 ways to get the best out of your migration experience.

1. Why You Should Migrate

 

Hour glass in rocks for countdown to migrate

 

Magento 1 support ends on June 30, 2020. While it may be difficult for some merchants to say goodbye, more revenue is waiting to be unlocked with Magento 2. On average, a Magento 1 Migration takes 6-10 months to complete and with 7 months until the platform sunsets, merchants are running out of time. More importantly, you’re missing out on additional revenues. Migrating to Magento 2 gives merchants access to a newer and more advanced eCommerce platform that provides security, functionality, and flexibility. Grab our free Magento Migration eBook here, or read on for a quick breakdown:

Security

With good reason, we’ve shared many tips on how to help protect your online store from fraud. End of Life means the end of security, and once June rolls around there will be no more Magento 1 security patches to save you. Hackers have familiarized themselves with the platform and broken extensions make their job easier. In the past year, Magento has released over 10 security patches for M1 (that’s at least 1 a month), and developers have stopped upgrading M1 extensions to focus on M2. These constant breaches leave your store, customers, and your bottom line at risk.

A positive customer experience is measured by many things, most notably how safe your customers feel. 41 percent of consumers switch retailers due to poor personalization and lack of trust. Magento 2 shows merchants are taking security seriously as the platform provides security updates with bug fixes, back-end administration protection, and encryption for credit card information.

Functionality

60% of B2B buyers demand a seamless customer experience and 47% expect traditional retailers to be as agile as Amazon. Magento 2 is committed to delivering a better shopping experience that allows merchants to produce a fast, simple, and frictionless checkout experience across all devices. Page loading and checkout speed have increased by 50 percent and 38 percent respectively, compared to the Magento 1 platform. The Magento 2 migration is the perfect recipe for a successful customer experience.

In a world where responsive design is trying to give customers all the same functionality we have on desktop in mobile, there may be a divergence here where we have to start thinking about different mobile experiences. Customers need to be able to go through the entire journey, from the research perspective to pricing, negotiation, approval, and purchase, ALL through their smartphones. Millennials will switch to your competitor immediately if you can’t give them that entire experience.

Adam Morris, CEO, Redstage.

Flexibility

As our ongoing Mobile Optimization Initiative shows, Magento 2 gives merchants total control over creating a great user experience. The platform includes highly customizable themes and over 2,000 extensions. Your customers are more likely to come back for more if you continue to meet their expectations, so keep impressing them by upgrading your experience on different devices. Customize your theme in a way that highlights your brand and tells your brand’s story, or highlight products and provide a secure checkout all in one place.

38.8% of total Magento Merchants (Community or Enterprise) are still on various versions of M1. By not upgrading, merchants are putting themselves and their customers at risk. Magento 1 sites, among a dwindling community of users, will face a lifetime of declining usability, patchwork fixes, increased upkeep costs, and a higher level of maintenance than if they migrate to a new site or platform.

Aidan Mcknight, Solutions Engineer, Redstage

2. The Migration Loan Explained

 

Upclose shot on open book for loan explanation visual

 

Migrating your website, budgeting for next year, and making sure you meet your end of the year sales goals can be overwhelming. The Magento Migration Loan can ease your worries, especially if you haven’t budgeted for migration.

The loan can help your businesses experience the new and improved advancements of the Magento 2 platform and provide the means to help keep your customers safe. PayPal and Redstage understand that the future of retail is digitally optimized. Online retail sales are expected to reach $735 billion by 2023. However, more than half of today’s retailers do not have access to debt or equity financing to help scale their business.

This migration loan is a first step to bridging the gap in financing solutions for online businesses. To  accomplish your migration with a Magento Migration Loan, you must first apply for the Magento Migration loan here. Loans can range from $5,000-$500,000 with no hidden charges attached2. Upon approval, WebBank will transfer funds to your business’s bank account as fast as the next business day 3.

3. How to Apply and Receive the Credit

 

close up on man filling out application for loan

 

To secure a full credit on the cost of financing your migration, start by applying for the Magento Migration loan by visiting the LoanBuilder application page. If approved, you must follow these three steps to receive the credit4.

  1. Sign a Magento renewal license invoice that shows at least one payment.
  2. Open a PayPal Business Account.
  3. Sign a 3-year processing contract or renewal agreement with Braintree and process with Braintree on your new Magento 2 website for at least 3 months.

Benefits of Braintree

Driving revenue and maximizing business opportunities are crucial in scaling your business. To fully experience the power of Magento, should also be taking advantage of Braintree. The global payment partner is the missing piece you need to combine safe and frictionless customer experience like those seen in our recent tests. Braintree is a payment platform that delivers mobile and web payment systems in a single, seamless integration.

This year, there are approximately 1.92 billion digital buyers out there. That number is expected to almost double by 2021. The smart money is using this time to plan and test new ways to unlock more holiday revenue. The Magento migration loan is your first step to guaranteeing a prosperous future.

Moreover, Braintree offers other ways to drive revenue and maximize business growth overall. The single integration allows you to reach more buyers around the world, reduce checkout friction, increase efficiency, and migrate fraud risks. Remember, a fast, safe, and frictionless checkout experience increases conversion rates.

4. How to Become Eligible

 

Woman with green jacket throwing confetti celebrating becoming eligible for migration loan

 

If you’re operating on the Magento 1 platform and have been in business for at least 9 months, you’re halfway through the eligibility process. Your business must also be located and operated in any of the 50 United States or Washington, D.C. and earning at least, $42,000 in annual revenue. That’s it!

Unfortunately, the M1 end of life comes at a time outside of the normal re-platforming strategy for many clients. When we design and build on the latest technology, we want to amortize the costs for as long as possible and switch only when the pressure from competitors and customers increases. I love that PayPal is helping our clients solve this problem by helping them fund the migration process. This makes the process much easier to handle from a cash flow perspective and allows us to invest in a customer experience that’s outside of the normal cycle.

Adam Morris, CEO, Redstage

Final Thoughts

With roughly 200 days remaining on the Magento 1 End of Life countdown the time for procrastination is over. Each day merchants wait, their revenue, customers, and reputation are at risk. Redstage and PayPal are committed to helping businesses grow and thrive, showing merchants how to unlock the revenue they deserve and build positive customer experiences. In the name of a prosperous and profitable 2020, revitalize your brand, enhance your customer experience, check your eligibility, and apply now for a chance to enjoy a fully credited migration loan from PayPal.

If you work for in B2B, click here to learn how you can migrate to Magento 2 in just 40 days!

 

 

Disclosures
1 The lender for the LoanBuilder Loan is WebBank, Member FDIC. This is an invitation to apply and not an offer or commitment to provide capital. Applicants must satisfy certain requirements to be eligible. WebBank is not affiliated with the offer to receive a full credit on the cost of financing and the credit is not part of your credit agreement with WebBank.
2 In addition to the fixed fee (Total Interest Charge) for the loan, the only other cost is a $20 Returned Item Fee that is only assessed if a payment is returned.
3 The lender transfers funds to your business’s bank account as fast as the next business day if the lender has received the documents the lender asked for and approved the loan by 5:00 p.m. Eastern Time, Monday through Friday (excluding bank holidays).
4 Merchants will receive the full credit from PayPal within 6-8 weeks of having fulfilled all three migration requirements. Merchant may be contacted by a Braintree Enterprise Sales Representative to receive more information about creating a merchant account with Braintree.
Are DTC Companies Risking It All For Killer Customers?

Are DTC Companies Risking It All For Killer Customers?

Let’s face it, customers have done a great job of redesigning the eCommerce industry through excessive demands and high expectations. However, what happens when these demands cut into profit, putting your company at risk? There’s a fine line between loyal and killer customers. In this 3-part series, we reveal the top 3 ways killer customers attack your profit, along with methods you can use to identify and avoid these scenarios.

Part 1. Return Abuse (This Article)

Part 2. Shipping Scams and How to Prevent Them

Part 3. The Difference Between Friendly Fraud and Chargeback Fraud

The Killer Customer

Whoever said the “customer is always right” certainly never encountered an abusive customer. Killer customers are more than unprofitable customers, they continuously drain money from your organization. Since a great customer experience is high priority, many merchants find it difficult to maintain positive rapport with the bulk of their customers while keeping killer customers at bay.

Return policies are meant to protect a company’s reputation and give them competitive advantages. However, in the hands of killer customers, returns can be the number one profit killer. The average return passes through 7 people before listed for resale, devaluing the item. After factoring in time and costs of shipping, processing, evaluating, and restocking returned items, only a handful of these items can be resold at full price, and many will be sold at a loss. Over time serial returners cause your bottom line to suffer, but modern merchants have options.

While you work hard to safeguard your store this holiday season, consider amending your return policy to combat the 4 most common abuse tactics your killer customers use against you.

1. Wardrobing

Lady in pink wedding dress sitting on bench looking to the right

Shoppers often purchase items they intend to use or wear only once before returning. This process is known as wardrobing and is most common with fashion merchandise. Today, wardrobing is a massive problem for retailers and online merchants alike, accounting for over 7.6 billion dollars in losses in 2017.

40% of retailers have seen an increase in “intentional returns” over the past year. This is proving to be an incredibly expensive burden for retailers to take on – particularly when almost half of the retailers are already seeing their margins being severely impacted by the cost of handling and packaging returns.

 -Scott Hill, VP of Product, Brightpearl

Preventing Wardrobing  

When implementing a solution, merchants must think of a cost-effective approach that doesn’t negatively impact honest shoppers. Implementing the Shark Tag is popular new approach retailers are taking. The Shark Tag is a one-time at-home removable tag attached to garments. By placing tags in visible areas, the idea of wardrobing becomes less attractive to customers. Once the tag is removed, items become non-returnable and non-refundable.

2. Fitting Rooming

white-and-black-floral-cap-sleeved-shirt-

As you know by now, customers expect brick and mortar stores to mirror the same shopping simplicity they experience online. The reverse is apparently also true, with some killer customers bringing the “fitting room” home with them. This process is called “Fitting Rooming” and in these cases, customers order the same item in different sizes and colors to try on at home. Once they are satisfied with their item of choice, all the unwanted items are returned. Online stores that offer free returns are key targets for this kind of abuse.

Preventing ‘Fitting-Rooming’

Solving the issue involves a more creative approach that can increase brand loyalty and invite new customers. Retailers can adopt a “Try before you buy” service to allow customers to test out items they’re interested in before being charged (normally between 7-30 days). Subscription boxes also follow a similar approach, allowing customers to pay monthly to sample specific products before purchasing. These strategies help merchants keep track of specific items they expect to be returned, lowering the costs associated with unpredictable ‘Fitting-Roomers.’

By the end of 2019, A quarter of all retailers are expected to incorporate a “try before you buy service.” This practice allowed companies like Stitch Fix to see a 25% increase in net revenue over a year. Customers are more likely to opt into “pay later” options with confidence, knowing there’s a hassle-free return involved. Best of all, you’ll see an increase in conversion rates.

3. Counterfeit Returning

Close up on two store receipts

We recently warned eCommerce companies about cybercriminals getting creative with their hacking tactics. If you gave the article a read, you may not be surprised to learn killer customers are getting just as creative. Thieves a re now using high-quality scanners and printers to make counterfeit receipts and return merchandise they’ve previously stolen from stores. Also, customers are taking extreme measures to use fraudulent credit cards when making online purchases to return items in stores in exchange for money or store credit.

Companies like Nordstrom built brand loyalty based on their legendary “free to return everything” policy. This policy allows customers to return items without a receipt regardless of when (or if) the purchase was made. Abusing this policy can severely damage sales, gross margins, profitability, and most of all, make inventory management a nightmare.

Preventing Counterfeit Returning  

To eliminate counterfeit returns, it’s always a good practice to require receipts. Take it a step further to implement a 30-day limitation on returns and/or restrict popular items and high-volume orders from being returned. These minor tweaks will turn away customers who seek to return stolen merchandise and can also keep away Fitting-Roomers. Lastly, utilize an ERP or platform, tracks repetitive returns by requesting proof of identification. This process makes it easy to cross-reference sales and get alerts when a customer excessively returns items. Once you know who your killer customers are, you can ban them (or at least take them off your email lists).

4.Customer Service Abuse

Abuse from customers is not part of the job sign

Offering lenient return policies, providing 24/7 accessibility, and creating engaging content reflect excellent customer service, but there’s a limit. These practices subject retailers to vulnerabilities as abusive customers take advantage. Identifying and dealing with these customers becomes difficult and, in some cases, an expensive task to take on. Customer representatives spend hours handling disorderly phone calls and receiving verbal assaults. This manipulative tactic is used to further gain refunds and discounts from merchants.

Beyond assaulting your customer representative, your reputation is next in line. If customers don’t receive the shopping experience they feel they deserve, they will switch to you competitorwhile dragging your reputation through the mud. Social media is easily accessible for killer customers to provide negative feedback about their experiences with your brand, and can spread like wildfire. Upsetting the wrong customer with the right amount of influence can become a PR nightmare. If your brand has a bad reputation, 90 % of customers won’t shop with you.

Preventing Customer Service Abuse

 After implementing the previously mentioned solutions. Invest in training for your customer representatives. Focus on equipping them with the knowledge to properly manage abusive customers using proper escalation procedures. Lastly, closely monitor all social platforms to stay on top of negative comments, and have policies that clearly outline how and when your reps are allowed to pass on benefits and freebies to customers. You can also use Instagram’s “hide offensive comments” feature to automatically filter out offensive comments and block users on the platform.

Final Thoughts

Analysts predict that online and offline return fraud will cost companies $550 billion by 2020 and $3.5 billion during the holiday season. While the goal is to satisfy your customer and keep them coming back for more, be sure to protect your business in the process. However, as we pointed out above, serial returners and abusive customers can have a similarly devastating affect on your business. If you don’t have much info on your killer customers, now may be the time to rethink your priorities, especially as the post-holiday returns season looms.

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