For many businesses, peak season is just around the corner. You know how critical it is. Some merchants earn half of their yearly revenue in the span of just a few months.
Here’s some good news.
You’ve probably already noticed: Peak season is expanding. Remember when U.S. consumers waited until after Thanksgiving to start their holiday shopping? Those days are long gone. Today your customers start ordering online in October or earlier, and they keep spending until after those post-holiday sales are over.
A lengthening peak season is a huge opportunity for boosting revenues. But to make the most of peak season, you need to maximize order acceptance. Sure, you still want to control fraud and minimize chargebacks. However, your highest priority is delivering a fast, seamless customer experience that keeps revenue flowing.
Now here’s the challenge: Since peak season is starting earlier and ending later, you have less time to prepare for it. You need to make sure you’ve optimized your fraud management strategy long before the first orders start streaming in. And because peak season is so important for your business, you don’t have much margin for error.
Here are a few best practices to help you make the most of this next peak season.
1. Consider taking on a little more risk.
Your business might have aggressive revenue goals this peak season. Hitting those goals might mean allowing a slightly greater percentage of chargebacks. Fortunately, a very small amount of added risk can translate into much larger revenues.
For example, in some cases, allowing your chargeback rate to increase from 0.20 percent to 0.30 percent (a change of just 0.10 percent) could help you move from 98 percent acceptance to 99 percent acceptance (a change of a full 1.0 percent). Do the math for your business. Does it make sense to accept more risk during peak season? Or are you already accepting as much risk as possible?
2. Coordinate fraud management with sales and marketing teams.
Your sales and marketing teams might have plans to kick off peak season on a particular day or launch a variety of promotions while peak season is underway. They might even create new peak sales periods. A clothing retailer might have a back-to-school peak, a digital merchant might have a peak season following the launch of a new video game, and a business could invent a peak day or week for a seasonal sale or promotion.
You need to make sure that calendars are aligned among fraud management, sales, and marketing teams. When you understand what’s coming, you can have your fraud tools, manual review team, and other resources fully optimized and ready to go.
3. Test your strategies in advance.
Let’s say you’ve decided to take on a little more risk for an upcoming promotion. You decide to adjust your threshold for acceptance and alter your velocity rules to accept more orders per day. How do you know those changes will work as you planned?
Make sure you test your strategies before that peak period is underway. With the right fraud management tool, you can define a new strategy, replay the strategy against historical data, test it against live data, and evaluate potential results before going live. Given data-driven insights, you can implement your new strategy in production with a high degree of certainty about how it will perform.
4. Staff up—or not.
Many businesses are moving away from the manual review process, largely because it can be time-consuming and costly. Over the past two years, Cybersource has cut review rates almost in half for clients that do review. Today, a third of our clients do no review at all. Automated tools that accept or reject orders based on your predefined strategy can often deliver a faster, more responsive customer experience—which is crucial when your competition is just a click away.
Nevertheless, manual review may still play some role in your fraud management strategy. And as peak season approaches, you need to make sure you have sufficient personnel to handle the increased volume of orders. Optimally, you should start planning to staff up several months ahead of your peak season, and you should use data from your last peak season to determine how many people you need. Right-sizing your staff can help minimize the time it takes to review orders and maximize the good orders you accept.
Don’t hesitate: Start preparing today
With the right preparation, you can turn peak season into the revenue windfall it should be. But don’t wait to begin planning. Those orders will start appearing before you know it.
Interested in tips on how to fine-tune your fraud management strategy for the busiest—and the most profitable—time of year? Contact us to speak with a Cybersource fraud management expert.