Industry
Achieving Payments Optimization Part V: Understanding and Serving Your Customers
Thank you for joining us for our ongoing series on achieving payments optimization! Thus far, we’ve discussed strategies for maximizing revenue potential, reducing the total cost of payments acceptance, and fighting fraud. Next, we’ll get into a topic that truly sits at the heart of every payment processing operation: your customers.
Customer is Life!
Just imagine us yelling this while running around the AFC Richmond pitch.
In the first post of this series, we stated that while payments are the lifeblood of a commerce business, customers are the true life source. It’s true: without customers to buy what you’re selling, you can’t call yourself a business, much less an optimized one. Today we’ll outline the four main ways you can get to know and serve your customers in the name of increasing both their satisfaction and your bottom line:
Analyzing payments data to learn what existing customers want
Studying market trends to learn how to attract new customers
Delighting and retaining customers with a seamless checkout
Identifying and blocking fraudulent or abusive customers
Using Your Payments Data to Study Existing Customers
If you’ve read the preceding posts in this series, you know we’re going to start off by talking about payments data. When it comes to identifying who your customers are and how they make purchases, your historical payments data is the holy grail. Using Peacock by Pagos, you can visualize all that useful data from each of your processors side-by-side in a single place and easily dig into any defining characteristic of your customer base. Here are a selection of the customer attributes you can segment out in Peacock and the actionable insights they can provide your business:
Tracking Payment Method Mix
Knowing the mix of payment methods your customers use provides valuable insights into their preferences and behaviors. Peacock includes a dashboard of visualizations dedicated specifically to payment methods, demonstrating not only the count of transactions attempted, but the approval rate, average order value (AOV), and decline code breakdown for each payment method you accept. At a glance, you can identify which of your offered payment methods customers gravitate towards and those that contribute the most to your incoming revenue. Peacock’s Cards dashboard drills down further by breaking down your card transaction volume by card brand, card type, and even BIN. Learn what cards customers prefer and where in the world they’re located, and even pinpoint why certain cards might not be worth the cost of acceptance.
Armed with all this information, you may:
Promote one of your accepted payment methods more in advertisements or at checkout because it’s associated with customers who purchase larger orders (high AOV)
Stop accepting a payment method, card brand, or card type because it’s unpopular among your customer base (low transaction count)
Test out accepting a new payment method or card to visualize how it impacts customer behavior over time (i.e. do you attract new customers? Did old customers buy more at a higher approval rate? Did you just invite more fraud?)
Identify the income associated with a specific payment method to compare against the cost of accepting it (i.e. do you bring in enough revenue from non-reloadable prepaid cards to make it worth the cost of higher fraud or chargeback rates?)
Utilizing Stored Credential Data
When you accept a transaction, your processor passes a stored credential field containing a wealth of information about the transaction and the customer who made it. Did the customer initiate the transaction or did you? Was the transaction for a repeat customer using vaulted payment credentials? Are you processing a one time transaction, a subscription payment, or an installment? Was the transaction conducted in person via point of sale (POS), online, or even over the phone? It may be hard to believe you can answer so many questions using a single data field, but it’s true. (Learn more in our Stored Credential Field guide.)
Segmenting your payments data by stored credential—as you can in Peacock’s Stored Credentials dashboard—is incredibly valuable in any payments performance analysis. When it comes to understanding your customers, you can use this single field to quickly identify purchase patterns across sales channels and product types. For example, if your business model caters to both one-time and subscription purchases, you can identify which may be more popular with certain customer segments and identify opportunities for expansion. Should you notice first time and repeat customers have different preferences, you may even tailor your offerings to match. This data can also help you gauge customer loyalty and retention rates, allowing you to optimize your marketing strategies accordingly.
Analyzing Presentment Currencies
If you’re running a global business, you by definition sell in multiple countries and accept a variety of currencies. Currency then becomes an extremely valuable parameter by which to explore your payments data, especially for identifying the ways your customer base wants to transact with you. In simply tracking currency mix per country, you can identify opportunities to expand your business and make adjustments to better serve your customers' needs; for example, if your business is seeing more transactions coming in from a particular country, you may consider offering your products and services in a local currency for higher conversion. You may even find it profitable to establish local processing where your customers are to offer even more localized payment options and pricing, and optimize currency conversion processes. As you make these changes, you can track how customers respond in Peacock’s Currencies dashboard.
Digging in at the BIN Level
When you process card transactions, you ingest the bank identification number (BIN) for each card. This number provides you with detailed bank and market data for the card used and subsequently, the customer it belongs to. Many of these BIN data points then make perfect parameters for segmenting your transaction volume into distinct groups—something you can easily do in Peacock using our BIN data filter. For example, you can look for patterns in purchasing behavior among customers with cards issued in a particular country or from a specific issuing bank. You can even go so granular as to break out all transactions made with a specific card product (e.g. Mastercard Corporate Card or Amex Prepaid card).
Once you know more about the cards your customers use, you can adapt your marketing and checkout strategy accordingly. This can be as simple as featuring the cards you know customers want to use on your checkout page with card art, or as formal as building targeted marketing campaigns to specific cardholders.
Monitoring Market Trends to Attract New Customers
Looking at your historical payments data teaches you a lot about your current customer base and how you can better cater to their needs. To achieve full payments optimization, however, you need to go one step further and learn more about the buyers out there you haven’t yet transacted with. In other words, you need to better understand what potential customers want so you can grow your brand.
Monitoring Trends in Popular Payment Methods
Keeping up with trends in popular payment methods is essential for staying competitive. Start by determining the demographic you want to find traction in; for example, are you looking to break into a specific region or do you want to pull in more customers from the younger generation of buyers? Researching payment method preferences among your desired customer base (while also taking into account compliance and resource considerations), you can make informed decisions about which payment methods to offer and adapt your checkout processes accordingly.
Adapting your payment method offerings to meet customer demand is essential to any payments optimization strategy, especially in today’s rapidly evolving ecommerce landscape. According to the Merchant Risk Council’s 2024 Global eCommerce Payments & Fraud Report, 82% of merchants added at least one new payment method to their checkout in 2023. Among those new offerings, we see real-time payments (RTP), buy now, pay later (BNPL), digital wallets, debit, and mobile payments growing at the fastest rates. If customers are adopting new payments technologies, your business (and your revenue) can only benefit from keeping pace.
As you add new payment methods, monitor your incoming transaction, decline, refund, and chargeback data to determine which ones to keep offering in the long run. Regularly reassessing your payment method options ensures you're meeting customer expectations and maximizing profitability. You may also want to solicit feedback from customers directly about their preferred payment methods, and evaluate the performance of new payment options to determine their impact on conversion rates and customer satisfaction.
Mobile Payments
While we’re talking about keeping up with market trends to maximize customer outreach and satisfaction, it feels important to recognize the increasing demand for mobile payment solutions. By ensuring your payment processes are optimized for mobile devices and offering convenient mobile payment options, you can meet the evolving needs of your customers and stay ahead of the competition. This includes supporting popular mobile wallets and integrating with mobile payment platforms to provide a seamless checkout experience across all devices. And don’t worry, the Payment Methods dashboard in Peacock can help you stay informed of which mobile wallets (e.g. Apple Pay, Google Pay, etc.) your customer base uses the most.
Delivering a Seamless Checkout Experience
Creating a seamless checkout experience is essential for customer satisfaction. Analyze both your transaction data and your website traffic to identify any friction points in the checkout process that might cause customers to abandon their purchases. Are you offering the right mix of payment methods? Do you see a significant number of CVV declines indicating poorly calibrated security checks like 3D Secure? Is your checkout process excessively lengthy?
In the second installment of this series on unlocking revenue potential, we discussed how a safe and secure checkout can help increase revenue by better serving your customers. Check out the Delight Customers by Storing (and Protecting) Payment Credentials section of that post to learn more about how Loon and Toucan—our global account updater and network tokenization tools—can help you better serve your customers at checkout.
Identifying Which Customers Are Actually Friendly Fraudsters
Thus far, we’ve outlined methods for better understanding who your customers are so you can provide them with the best experience possible. While you’re getting to know who your good customers are, however, you may also want to familiarize yourself with your fraudulent customers. Specifically the friendly fraudsters.
Friendly fraud or first-party misuse is often used to describe situations where a cardholder purchases a product or service with their own card, but later issues a fraud chargeback against the charge. In the 2024 Global Payments and Fraud Report, the Merchant Risk Council identified a form of friendly fraud that has become a trending issue for commerce businesses worldwide: refund abuse. This occurs when a customer abuses your refund policies, for example:
Ordering enough products or services to satisfy your free shipping minimum with the intent to immediately return any unwanted items
Disputing and requesting a refund on the same item, or requesting multiple refunds on the same item with the intent to make a profit
Returning empty boxes or boxes of random items
Fraudulently claiming they didn’t receive the full order and requesting replacements or refunds
Using the Refunds dashboard in Peacock by Pagos, you can monitor for potential refund abuse or fraudulent activity. If you ask your customers to provide a reason for their returns, you can even compare your Peacock refund data to these anecdotal return reasons to identify trends in shady behavior. In analyzing unusual patterns or discrepancies in the data, you may even be able to identify the customers abusing your return policies or engaging in fraudulent refund practices, and implement measures to prevent future abuse.
Payments are Almost Optimized…
Understanding and serving your customers is central to optimizing your payment processes effectively. By leveraging Pagos products to gain insights into customer behaviors and preferences, you can tailor your payment methods, presentment currencies, and checkout processes to better meet their needs, ultimately enhancing the overall shopping experience and driving business growth. With a customer-centric approach to payment optimization, you can stay ahead of the competition and build long-lasting relationships with your customers.
In the final installment of our series, we show you how to optimize payments by continuously iterating with A/B tests. If you’re new to this series, be sure to catch up on all previous installments:
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