4 Ways Payments Data Can Help Retailers Create More Commerce
As consumers and businesses adapt to a new normal, the retail sector is poised for a significant recovery through 2021. Total retail sales growth will begin to recover, rising 2.3 percent to $5.6 trillion, according to eMarketer. As retailers prepare for what will be a strong close to the year, it's critical to remember lessons learned in the past 18 months and consider new strategies for keeping your business ahead in a highly competitive market.
Pivotal to future retail success is the optimization of an omnichannel business that simplifies purchasing processes, removes friction in-store or online, and increases customer loyalty. At the core of optimization is using data to influence outcomes and create more commerce via positive customer experiences.
Here are four ways retailers are leveraging payments data to create more commerce, while also optimizing commerce models to work in their favor:
1. Understand your customer.
A core problem of brick-and-mortar commerce has always been that unless a customer enrolls in a loyalty platform, the retailer likely knows nothing about them. However, by analyzing large sets of payments data, today’s retailers can glean insights into the purchasing profile of a customer without understanding precisely who they are.
Consider the weekday warrior, a 9-to-5 worker who visits her favorite coffee shop during the daily commute and pays with a credit card every morning. The traditional interaction sees her greet the barista, order a beverage, and pay $5.99 before heading off to work. But what if payments data could inform the cashier in real time that this anonymous buyer was actually a loyal customer that visited his coffee shop every day that week? Then, on Friday, the barista could offer a complimentary pastry at checkout, or provide an incentive to enroll in the coffee shop’s digital loyalty platform.
Tapping into payments data allows retailers to better understand their customers, build relationships, and deliver more value to the consumer.
2. Connect digital to physical.
While digital purchasing took off during the pandemic, it hasn’t meant the end of brick-and-mortar stores. In fact, savvy retailers are combining the best of both the physical and online world to create value-added omnichannel commerce experiences.
For example, if a consumer is interested in buying new shoes, they could simply go online to their favorite brand’s website and select the new pair they want. However, what if while that customer was shopping on the web, the retailer presented her with local promotions that were available only at the physical location in her area — that new pair of running shoes is $99 online, but on sale for $79 just a few blocks away.
By using location-based data, the retailer is able to drive foot traffic to a physical location and potentially sell more products once that customer is immersed in the physical store. Some retailers are even using this strategy to boost foot traffic in specific stores that may be struggling with sales.
3. Optimize payment outcomes.
The ability to optimize payment outcomes can create operational efficiencies that lower costs. Consider an example in which a grocer is driving digital payment volume in-store by encouraging consumers to pay via the retailer’s digital wallet. By connecting a mobile wallet for in-store payments, that grocer can increase the volume of ACH payments, thereby lowering the acceptance costs compared to a credit transaction.
Similarly, businesses can use artificial intelligence (AI) and machine learning to analyze large sets of their own payments data to improve authorization rates or mitigate fraud. Optimizing payment outcomes to ensure that meaningful transactions are authorized, and fraudulent transactions are thwarted, creates better experiences for customers while also benefitting the bottom line.
4. Solving the problem of returns.
Returns have become a primary pain point of e-commerce merchants. As consumers have found the ease of purchasing online paired with no cost returns, a new wave of buyers are purchasing multiple items with the clear intent of returning more than they keep. For many businesses, the costs associated with shipping and receiving can quickly surpass that of the goods sold, creating unfavorable economics that drag on the broader business.
However, what if by using large sets of anonymized payments data that same business can understand ahead of time who those chronic returners are based on their purchasing patterns and return history. Now, in lieu of selling a $50 pair of blue jeans on Tuesday only to foot the bill for a return a week later, that same retailer could present the consumer with a discount at the point of purchase — potentially 10 percent off if they agree to purchase the item outright without the option to return it.
By using customer data to understand what a buyer might do before they check out, the retailer is able to create a favorable outcome while also passing new value on to the consumer.
Smart retailers are leaning heavily on data and analytics to strengthen their omnichannel commerce capabilities, delivering better experiences to consumers and building more efficiency into their operations.
Nandan Sheth is head of Carat and digital commerce at Fiserv, a leading global provider of payments and financial services technology solutions.