Christian Steiner
Blog 2: Credit agency benchmark in online commerce
When it comes to data quality, you deserve the best!
Honestly, when it comes to the quality of your data, is there anything else you need besides the best? After all, data is the basis for your business decisions.
The checkout process in online retailing
A very important decision, which operators of online shops in particular have to make on a daily basis in enormous numbers, lies directly in the checkout process. You basically want to make all your customers happy. In addition to a user-friendly interface, the right offer and error-free delivery of the ordered goods, a very important aspect is to show the client the payment method he or she wishes to use. In order to avoid shopping basket cancellations during the checkout process, show your customers these same payment options. You want to make all your customers happy. The only problem is that there are some payment methods that are unsafe from the point of view of online shops. These lead to payment defaults, which can be attributed to poor creditworthiness or deliberate action by the client. Not to be forgotten are also the payment costs that some payment methods entail to a greater or lesser extent. Do you still want to make all customers happy? At this point the saying “Everybody’s friend is everybody’s fool” is absolutely true.
Weighing up risks
Of course, it is in your interest to conduct transactions only with those interested parties who are able and willing to meet their payment obligations. Accordingly, this is a very important decision within the framework of your customer relationship. Who do I trust so much that they can handle transactions with their desired payment methods, even if they involve a risk for me? Who do I want to give the chance to purchase my goods, but initially only on my terms? And who would I like to dump – because of obviously too negative bad characteristics or because of my own bad experiences? The whole thing, however, is a double-edged sword, as indicated above. After all, your customers also have interests, among other things they want their preferred method of payment. Otherwise they will go to the competition. And they are only a few clicks away.
How do you make the right decision?
The topic of the optimal mix of payment methods is not quite so simple. But this is exactly where you have to make decisions on a daily basis, and in such large numbers, which can only be managed by automated processes.
What do you need to make the right decisions? Knowledge! What is knowledge made up of? Information! And into which components can information be broken down? Data! At this point another subform could be defined: sign. But that would not be appropriate for this article. Let us stay with the data. They have an enormous value for your decisions in the checkout process. They contain the essential information about the creditworthiness, history, origin, motivation and many other characteristics of your customers.
Many of these data you surely already have internally. And especially for the evaluation of your existing customers you use them every day: Open items, order history, special shopping basket compositions and negative payment behaviour, to name just a few of this information. Some of this data is also suitable for the evaluation of new customers, but only part of it. For example, creditworthiness is a factor that is basically still completely unknown to first-time buyers. It is possible that address data would help here. If the customer comes from the Starnberg area, it won’t necessarily be assumed that he is a poor swallow. But no, honestly, that is not enough. Additional data is needed here.
The world of credit agencies
Among other things, credit agencies are available for this purpose. These provide score values and any negative characteristics and thus allow your customers to conclude that they are able to buy. They are also very important for checking the address and identity. With the large number of providers of this information available, it is up to you to choose the right one for your shop and to integrate it into your shop. Especially for your business you need at least the best data. At the right time, with sufficient granularity, up-to-date and easy to handle. Oh yes, and they should also be as inexpensive as possible. In the DACH region alone there are more than a dozen alternatives. And that’s only when we talk about the B2C market. Every year, we experience how difficult selection decisions can be when the new dream couple separates again a few weeks after the final of the Bachelor.
In order to determine which data provider is the best, the credit agencies in question must be compared. The whole thing is difficult, if only because of the different scoring systems. Some providers use completely different calculation bases and evaluation criteria. You may already have made your own experiences with this. But you cannot make a direct comparison based on these alone.
The solution – proofitBOX
Now imagine the following: A platform where they can quickly and easily compare data and their providers. And it would also make automated decisions in a multi-stage process based on both internal and external data. Of course, this option only makes sense if all available service providers can be connected. And it must also be possible to run them in parallel, otherwise how would a comparison be possible? Potential differences in the decision would then be immediately visible. And you can then decide which information provides the best basis for your business activities. This would also mean using the best of several providers. How beautiful would the world be if there were such a thing? Find out more about the solution here!