We live in a very digitally-conscious age where anyone can do virtually anything with a smartphone. Consumers can make a bill payment, purchase products online, and store their credit card information in their phones so there’s no need to carry around a wallet. As easy and convenient as all of these things are, the protection of customers’ data is a serious issue, and it all starts with them trusting the retailer from whom they buying.
As small and independent retailers continue to meet consumers’ demand with new technology and phone services, the risks for fraud and data protection grow. Customers need to know that they are buying from reputable retailers and that their information is being protected, otherwise you can say “goodbye” to any future sales from them.
It’s Kind of a Big Deal
In a survey conducted by Emailage with with 1,000 people in leadership roles in small to mid-sized businesses in the U.S. and Canada, research found that nearly half (48.4%) of these businesses believe they are “not big enough” to be targeted by fraudsters. More than a third (38%) still do not rank fraud as a top business concern.
Speaking about the findings, Rei Carvalho, CEO of Emailage, explained: “This research shows a lack of concern among many small and medium-sized business owners when it comes to fraud prevention. These businesses work with considerably smaller profit margins. Therefore, losing even a fraction of their revenue could have major repercussions for their businesses, impacting long-term growth and business development.”
In the last twelve months, companies with fewer than 49 employees were hit particularly hard as they reported an average of $37,258.14 lost to fraud. Meanwhile, fraud losses reported by larger businesses in the U.S. averaged $26,640.40 and $14,673 in Canada, according to the survey. This research debunks the myth around small businesses not needing to worry about online fraud, and provided advice to these businesses on how to protect themselves against online dangers.
Here’s What You Can Do
The survey also provided some common solutions that small to medium-sized businesses use for fraud prevention, such as email verification, third-party payment processing, IP address trackers, banning fraudulent accounts, and reconciling accounts daily. The most common solution is email verification, with almost 40% of businesses using this method.
“Harnessing these technological solutions can be an ideal way for small and mid-sized businesses to protect themselves and their customers from the damaging effects of fraud, all while saving time, money and labor,” Carvalho said. “With such systems in place, SMBs can be confident that they are able to provide a great experience for their customers, and have the security they need to grow and thrive into the future.”
Most Consumers Aren’t Confident Their Data is Well Protected
According to a recent study by NTT DATA Services and Oxford Economics, only 20% of consumers are confident their data is adequately protected by the retailers with whom they do business. If they are not confident they can trust your business with their information, they’ll be less likely to shop from your store.
“The idea of earning trust has to go well beyond the point of sale,” Matt Leach, Vice President of NTT DATA Services, said. “Retailers need to demonstrate meaningful value proposition for consumers to be able to share personal data. Supermarkets have done this for years in the form of discounts, so there’s a reason for a customer to share personal information.”
Nearly all surveyed retailers have experienced a recent security breach, yet only about one-third have strong protections in place for their customers’ personal or financial information. According to Leach, these organizations have clearly violated the trust they had built with customers, so when given a choice those customers will move on elsewhere.
Consumer trust will be one of the greatest competitive advantages that a company can possess in the opt-in economy. The more you know about your customers and how to better serve them, the deeper that level of trust becomes, according to the NTT DATA Services report. It’s important to use customer data to offer a personalized experience, but it’s a balancing act.
On top of keeping your security services in check, retailers also need to constantly improve their use of customer data. Customers want the organizations they engage with to use data to improve products, services, and experiences. Consider customizing and personalizing products, or equipping employees with the tools and skills to use data to make informed suggestions. Your goal is to simplify and enhance the customer experience and relationship.
“I think if you look at the future of retail, the idea of personalized shopping and recommendations enabled by consumer data is what retailers need in order to provide experiences,” Leach said. “This use of data provides the opportunity for differentiation between retailers.”