How do false declines impact businesses?

False declines are costly and can negatively impact business of all sizes.

For mid-size and enterprise businesses, false declines are a real issue. They happen when good customers who expect to be approved aren’t allowed to make purchases. The embarrassment and inconvenience can result in negative consequences and even angry customers.

In our original research, we found that customers have very distinct reactions to false declines:

41% of customers said they would never again shop with an online retailer after being declined.
32% will take their frustrations a step further, sharing their displeasure on social media.

That spells big trouble for a company’s brand reputation.

False declines are costly

When you consider the sheer number of competitors in today’s online marketplace, losing the lifetime value of a customer over a preventable mistake is costly. Not only do businesses lose the revenue associated with the one order, but they also lose every subsequent order.

Let’s say the declined transaction was valued at $100, and the customer spends about $500 per month in your online store. If that customer decides to never shop with you again, you don’t just lose a $100 sale. Instead, you lose $500 per month for as long as that customer would have been loyal. Now we’re talking about tens of thousands of dollars lost.

And if that customer also tells their friends and/or posts on social media, you risk losing the lifetime value of those customers as well.

This is why it’s important to strike a balance between preventing fraud and maintaining a high approval rate.