Chargebacks: The Secret Of Fortune 500 Companies
For many entrepreneurs, a spot on the Fortune 500 list is an indisputable sign of success. This list, compiled annually by Fortune magazine, ranks the top corporations in the United States by total revenue. Few companies will grow large enough to earn a spot on the list, but for those who manage this feat, we have to wonder—what are the secrets to their growth and success?
One thing you can expect to be true of every company in the Fortune 500 is that they’re not making things up as they go along. Bringing in revenue at that scale requires a strong commitment to having solid processes in place, governing all aspects of business operations: marketing, sales, fulfillment, and customer service.
Another trait nearly all Fortune 500 companies are likely to share is a focus on tracking and analytics, having metrics for everything that can be measured and leveraging technology to slice and analyze that data in any ways that might help inform their plans.
With good processes and analytics in place, companies can make educated decisions about all aspects of their business, knowledgeable about all the risks and expected outcomes they’re heading toward. Improvisation and guesswork can help innovative startups get going when they don’t have a road map to follow, but Fortune 500 companies can’t afford to fly by the seat of their pants.
The following is a list of some of the key metrics Fortune 500 companies track—and why they matter.
Successful companies are constantly tracking, analyzing, and trying to optimize their conversion rate: the ratio of website visitors who turn into customers. These companies never consider a landing page “good enough” that it doesn’t need improvement—they’re constantly making adjustments, A/B testing, and finding out what works better at generating conversions.
Another vital question is just what, exactly, are your customers buying? By tracking the popularity of different products, and what conditions lead them to sell better or worse, companies can promote the right product, at the right price, and at the right time to maximize the chances of selling it.
Product fulfillment and delivery can be a very informative area to analyze, often revealing issues with customer expectations and service, shipping costs, and logistics. Merchants know there’s no such thing as free shipping, but Amazon has done a lot to make consumers forget that. Free shipping is the default assumption for many consumers, and if you want to offer that to your customers—or at least bring shipping costs as low as you possibly can—then it pays to track and analyze your fulfillment operations to see if there’s anything you can do to make it cheaper, like building a warehouse closer to your customer base.
The importance of excellent customer service cannot be overemphasized. If you can’t resolve a customer’s issues, you’re likely to lose them forever. Good customer service requires a human touch, but that doesn’t mean it’s exempt from data-driven analysis. Your customer service analytics can tell you what problems your customers are coming to you about, what complaints they have, why they’re returning products and asking for refunds.
Companies that deal in business-to-consumer sales deal with high rates of fraud, especially online merchants, or those that sell luxury goods or other products with a decent resale value. Fraud prevention tools are a necessity for these companies, but any automated anti-fraud filter is guaranteed to pick up some false positives and decline legitimate transactions from actual customers. Our findings indicate that 70% of consumers will only make a single attempt to complete a transaction with a merchant, meaning that if they get wrongly declined, they’re gone for good. Businesses must closely monitor and analyze their fraud protection efforts so they can adjust their rules and filters to eliminate as many fraudsters as possible without shutting out their customers.
One problem Fortune 500 companies sometimes have is that they’re so large, their departments don’t always communicate effectively. When various teams within an organization aren’t interlinked, it can be difficult to get them on the same page to deal with issues that affect more than one segment of the business.
Tracking and analyzing chargebacks can be one way to emphasize the connections between departments, because every chargeback tells a story about a customer journey that went wrong somewhere along the way. For example, a dispute might occur because a customer felt misled by the marketing materials they read, and analyzing the chargeback that resulted from this would bring that connection to light.
Our internal data suggests that for every customer who files a chargeback, ten other customers are having similar issues but simply won’t bother to file a dispute or contact the company about it—they’ll just take their business elsewhere.
In the above example, without drilling down into chargebacks it could take a long time to figure out that the customer’s issue was with the marketing campaign and not the product itself, your customer service, or something else entirely.
Fortune 500 companies know that as important as it is to grow your customer base, it’s cheaper to retain an existing customer than it is to make a new one. Chargeback analysis creates opportunities to fix the problems that are causing you to lose customers, giving the departments involved the complete picture they need to those problems in a collaborative way. These analytics help you know your customers better, meet their needs more effectively, and increase your bottom line.