Balancing customer experience and business efficiency

The moment of payment, whether in-person or online, perfectly illustrates the line retailers must walk between efficiency and customer experience. 

“When it comes to speed vs customer experience, finding the right balance is crucial. On the one hand, you want to get your customers through the checkout as fast as possible with minimal friction, and on the other hand, you want to sign them up to a loyalty program or have them engage with you in some way.” Holly Worst, Vice President of Retail, Adyen.

Payment technology can help, both in terms of ensuring a smooth experience and fostering further customer engagement. But, the payment landscape is evolving fast, with new methods and channels being added all the time. The challenge is to provide the best payment method and channel mix for your customers without weighing yourself down with too many complex integrations.

55% of consumers will abandon a purchase if they can’t pay how they want. But, with payment preferences evolving fast, it can be hard to keep up. For example, nowadays, it’s not just cash that’s being cast aside in some markets; physical cards are phasing out too. 27% of consumers don’t even carry wallets any more, relying on the ability to tap their phone to pay.  QR code payments are also on the rise, growing in popularity by 11% year-on-year. 

Given the speed of customer adoption, it’s not surprising that businesses continue to play catch-up. Only 28% accept digital wallets and just 17% support Buy Now Pay Later (BNPL) both online and in-store.

Shoppers expect fast and easy checkout experiences, both online and in person. For example, 28% want retailers to use technology to make in-store shopping faster and 39% want to see more self-checkout options for the same reason. 

But once again, businesses are falling behind. Only 15% enable self-checkout and just 20% have mobile point of sale (mPOS) solutions to serve customers more efficiently. Online payment experiences are also falling short, with just 19% of retailers supporting one-click checkouts.

Unified commerce is the next step beyond omnichannel. Where omnichannel uses different systems to connect various business components, unified commerce uses a single, integrated platform to connect everything in one place. In the context of retail payments, that means all your payments, from all your channels and regions, feeding into the same, unified system. 

This has some natural advantages, as Holly Worst explained: “The future success of retail will be driven by those who use data the best. A unified commerce offering can help accomplish that with a streamlined and connected system.”

This is simple (at least in theory). Connected sales channels lead to connected data, which in turn unlocks unified commerce allowing for greater operational efficiency and amazing customer experiences. But, in reality, our research shows that many retailers are still struggling to achieve this.

Highly personalized experiences used to be reserved for luxury retail. Long-serving sales assistants would keep a ‘black book’ of loyal customers, including personal details and preferences, tucked behind the counter. Now, thanks to technology, retailers can capture data and deliver tailored experiences efficiently and at scale. 

“Retailers are investing significantly in their customer data infrastructure, including tooling and loyalty programs, as well as strategies to capture more data in-store. The ultimate goal is to better understand customer behavior so they can deliver personalization and improve customer lifetime value.” Philip Ladiges, Unified Commerce Strategy Manager, Adyen

Of course, there are still plenty of challenges associated with using customer data in a meaningful way. Our research finds that retailers are still struggling to get it right. 

25% of businesses say they lack customer data and the technology infrastructure to truly understand their customers. And just 28% of businesses know the majority of their customers well enough to personalize items. This blind spot is a missed opportunity. Businesses that know the majority of their customers well, enjoyed 9% higher revenue growth compared to the average last year.

When it comes to loyalty programs, retailers’ faith seems to be wavering, with 22% halting their investment in loyalty over the past 12 months. Given that the 72% of retailers that use loyalty programs also report revenue growth, cutting investment on loyalty might be a false economy. Plus, consumers are keen to see loyalty programs continue. But it has to be done well.

Fraud is the enemy of efficiency and customer experience, eating away at both profit margins and consumer confidence. Today, retailers are battling a surge in fraudulent returns while customers are losing hundreds of dollars to scammers every year.

Consumer/retailer trust is at a premium. Customers need to feel secure enough to share payment details; they need to trust a retailer not to inundate them with unsolicited emails; and no one wants to wake up to the headline that a retailer with whom they’ve shared details has just suffered a massive data breach. By creating a safe space for customers to interact with your brand, you’ll foster a relationship of trust.

Fraud casts an unsettling shadow on what should be an enjoyable pastime. In 2023, consumers were scammed out of 234% more money than the previous year, losing an average of $808.42 each time. Not surprisingly, they are wary, especially when it comes to shopping online.

Meanwhile, analysis by the Centre for Economics and Business Research (CEBR) found that fraud cost the global retail industry $429 billion last year. To help combat this, retailers need to stay on top of security mandates and make use of strong customer authentication (SCA) methods. In doing so, they'll not only ensure a better, safer shopping experience, they'll protect their business from fraud liabilities.

The good news is that many businesses are succeeding in their fight against fraud. 64% believe their fraud prevention systems are effective, which is up by 4% from last year. The challenge, of course, is to ensure that fraud defense doesn’t come at the cost of conversion.

In an effort to improve online conversion rates, many retailers have opted for more lenient online returns policies. Unfortunately, this comes at a price, with many now battling high rates of chargeback fraud.