Nordstrom is known for its fine apparel, accessories, and best-in-class customer service. While free shipping and return policies, promotions, and mobile shopping experiences continue to retain and gain new happy customers, these offerings are also becoming a bigger target for fraud and abuse.
Jim Gallagher, Nordstrom’s Vice President of Customer CARE & Fraud, and Scott Buchanan, Forter’s CMO, teamed up for a recent webinar on how Nordstrom approaches striking the proper balance between delighting customers and fighting fraud — including how collaboration with Forter helps Nordstrom drive more revenue, improve customer experiences, and reduce losses to fraud.
“With Forter, we’ve seen year-over-year improvements with our chargeback performance to the tune of about 10%. Every single year, our chargeback performance positively is improving by about 10%. And that’s with significant volume growth in the eCommerce space.” — Jim Gallagher, Nordstrom’s Vice President of Customer CARE & Fraud
The discussion was hosted by Chad McDaniel, chief community leader of the executive customer advocacy group Execs In The Know.
Forter helps Nordstrom make accurate, instant decisions about every interaction along the digital commerce funnel — such that Nordstrom has enjoyed 10 consecutive quarters of success as it pertains to their yearly objectives and priorities.
Buchanan kicked off the conversation by citing a recent study that found that 69% of business leaders believe their organizations overemphasized fraud prevention at the expense of customer experience. In 2021, global fraud losses totaled about $27 billion, while the cost of falsely declining legitimate customer transactions was $443 billion, more than 16 times the magnitude.
So, how is Nordstrom approaching this current climate, and what tools has Forter provided to augment their expertise?
Making identity-based decisions
Policies are typically created to catch bad actors and prevent abuse. Still, merchants rarely think about creating policies that enable more loyalty, spending, and engagement with a brand for good customers.
Key to this engagement are:
- Distinguishing between good customers and fraudsters
- Understanding the persona: from the devices the customers are using and their patterns of behavior to the complexity and makeup of their cart to the language of their OS and device fingerprinting
- Looking at the end-to-end customer journey holistically: from account creation, to log in, to log out, and to all the different touchpoints the customer has in between
- Automating the process of making decisions on the persona, not just on the transaction
Gallagher observes how with retail if you can’t close the sale quickly, a customer will go someplace else. Introducing friction for good customers through misguided fraud prevention is something all merchants want to avoid.
Nordstrom partnered with Forter early on to help improve in making real-time, identity-based decisions on whether or not an incident is a fraudulent transaction and would result in a chargeback. This ability to automate identity-based decisions helped Nordstrom to usher in significant differentiated results, including:
- Improved chargeback rate
- Increased approval rate
- Reduced Insult rate
Leveraging a global network
A network of real-time learning makes it possible to work together to reduce fraud on a global basis. Forter shepherds a community that fights fraud as a coalition: a fraudster recognizable to one retailer is known to all merchants.
Gallagher observes how fraud is not a one-person game: “We’re never going to win as individuals in this space,” he says, “It has to be an area that we come together and share best practices, learn from one another, test, and try to stay ahead of the bad guys.”
Buchanan explains how automation is fundamental to Forter’s foundations: “The company was created years ago on the basis that 100% automation was the way to make decisions with respect to the digital commerce funnel. 99% of the decisions that we issue arrive in fractions of a second, and that’s critical to brands like Nordstrom being able to deliver for customers on a consistent basis.”
Through its automation, Forter helped Nordstrom to remove dependency on reactive rules and manual reviews, resulting in a 10% improvement in chargeback performance each year.
Automation also enables the introduction of more value-add services. With automation, merchants can offer their customers:
- Buy online, pickup in-store
- Buy online, return in-store
- Mobile app orders
- Phone orders
- Omni-channel experiences
Simplifying management and insight
The more a retailer can move away from labor-intensive manual reviews and into an automated system, the more easily they can flip their organization to think proactively about potential chargeback or fraud vectors and trends. By approaching fraud within the framework of customer experience, Forter’s global network supports merchants such as Nordstrom with:
- Sharing the dialogue and ownership of the problem
- Unifying accounts and bringing businesses together
- Stopping fraud from getting siloed and elevating the conversation across the organization
- Representing fraud and chargebacks in one holistic picture: aligning physical in-store fraud with eCommerce fraud
“Forter knows more online identities than Amazon and PayPal and Shopify,” says Buchanan, “and we can use that to help strike that balance between giving customers a great experience, approving more transactions, and growing revenue, but then making fraudsters miserable and making their lives difficult. And ultimately, those are the kinds of business outcomes that we care about driving for our retailer customers.”
» Watch the complete 60-minute webinar
Forter is the Trust Platform for digital commerce. We make accurate, instant assessments of trustworthiness across every step of the buying journey. Our ability to isolate fraud and protect consumers is why Nordstrom, Sephora, Instacart, Adobe, Priceline, and other leaders across industries have trusted us to process more than $500 billion in transactions. Click here to learn more.