False positives cost merchants $2 billion in 2017

A new survey reveals the staggering cost of falsely-declined legitimate orders for merchants and financial institutions.

The findings, detailed in free-ebook from Kount, show that merchants turned down $2 billion of legitimate orders last year.

The report describes the long-lasting negative impacts of false positives and provides practical solutions, including methods of minimising your decline rate and strategies to quantify the level of fraud risk in a transaction.

What are the effects?

False positives can have serious long-term effects, such as:

  1. Immediate revenue loss – every order wrongly turned down is revenue not realized,
  2. Lost customer lifetime value – lifetime customer value is the total profit anticipated from all future purchases by a customer. Legitimate customers who are wrongly rejected will often stop buying from that merchant permanently,
  3. Wasted acquisition spend – acquisition spend refers to all the costs associated with convincing a consumer to place an order (e.g., research, marketing, and advertising). If you spend $10 to convince a customer to buy but mistakenly decline their order (i.e., false positive), you’ve wasted that $10 acquisition cost on top of the lost revenue,
  4. Degraded brand image – in today’s connected world of social media and viral posts, one shopper’s experience with a false positive can suddenly reach thousands and thousands of customers and potential customers. While difficult to quantify, the impact of negative publicity is nonetheless real.

To learn more about false positives and how to fight them, download your free copy of The Silent Sales Killer: False Positives from Kount by clicking here.

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