A new study shows that while UK consumers cutting back on their non-essential spending, trust is a key driver for continuing retail growth.
Forter’s report found that UK consumers are willing to spend 44 per cent more on average with retailers they trust and coined the “Trust Premium.”
The report said that as economic conditions grow less favourable, investing in building customer trust and long-term loyalty is vital to help insulate retailers against market turbulence.
Forter CEO Michael Reitblat said the Trust Premium represents potentially millions of pounds in revenue uplift for retailers.
“UK retailers that lean into and invest in customer experience – from account creation to authentication to checkout – are best positioned to turn a profit over the Black Friday and Cyber Monday weekend.”
Unfortunately, the report showed that over 73 per cent of UK consumers have had a negative online shopping experience in the past three months, with high rates of false declines (14 per cent), purchases not arriving on time (37 per cent), and expensive and/or difficult returns policies (27 per cent).
A seamless checkout experience is one of the most essential pieces of building trust with UK shoppers. The report found that more than three quarters (77 per cent) of UK consumers would abandon a purchase if the checkout experience is too complicated or time-consuming.
While retailers often rely on one-time passwords, CAPTCHAs and manual order reviews to enhance security, when used indiscriminately, they deter good customers and leave money on the table.
Forter’s first-party data found that mandating account creation can cause, on average, 3-5 per cent of consumers to drop off, while requiring consumers to validate their email addresses/phone numbers can cause a 4-7 per cent drop-off rate, on average. By creating unnecessary friction, retailers are turning good customers – and their money – away.
Despite their growing buying power, younger shoppers in the UK face the most friction with online shopping. Millennials are twice as likely than Gen X to be falsely declined whilst Gen Z consumers are up to six times more likely to be falsely declined at checkout compared to Baby Boomers (10 per cent).
In the race to win the next generation of shoppers, ensuring legitimate customers have a friction-free experience is critical.
With many new shoppers venturing into digital commerce, Forter has found that retailers often turn away new — but trustworthy — customers simply because they’ve never encountered them before. Forter’s first-party data revealed that false declines are typically five to ten times higher than actual fraud rates. Forter estimates based on its first-party data that for every $1 retailers lose to fraud, they forfeit $30 by declining legitimate consumers.
“Our report reveals 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,” said Reitblat.
“Many retailers can’t accurately assess the trustworthiness, and identity, of customers visiting their sites and in turn their fear of fraud leads to unnecessary friction, cart abandonment, false declines, and lost revenue. But this situation doesn’t have to continue unchecked. Balancing the importance of fraud prevention without impacting customer experience will be the next major test for retailers during the upcoming holiday shopping season.”
