In the world of retail, customer appeasements have become increasingly common. While keeping customers happy is vital for business success, it is crucial to strike a balance between customer satisfaction and maintaining profitability.
What are customer appeasements?
Appeasements, or Did Not Arrive (DNA) and Item Not Received (INR) claims, refers to the acts of accommodating customer requests or demands when items are not received, arrive damaged, or are otherwise unsatisfactory. The goal is to ensure satisfaction, often at the expense of profit margins.
The impact of customer appeasements on profitability
Retail appeasements can have both positive and negative consequences. On one hand, offering discounts, refunds, or exchanges to appease dissatisfied customers can foster loyalty and encourage repeat business. Satisfied customers are more likely to become brand advocates, attracting new customers and boosting sales.
However, these appeasements can also lead to financial losses when not properly managed.
One major challenge associated with retail appeasements is the potential for abuse. Some customers may take advantage of generous return policies or demand excessive discounts, causing a strain on profit margins.
The role of AI-driven authorizations in reducing losses
To mitigate the negative impact of retail appeasements, many retailers are turning to AI-driven authorizations. By leveraging artificial intelligence, retailers can implement automated systems that analyze transaction data, purchase history, and behavior patterns to make informed decisions on customer appeasements and discounts.
By flagging suspicious patterns and monitoring customer behavior, retailers can minimize losses caused by abuse and identify habitual offenders.
AI-driven authorization systems can significantly reduce losses by identifying and preventing fraudulent or excessive claims and appeasements. By flagging suspicious patterns and monitoring customer behavior, retailers can minimize losses caused by abuse and identify habitual offenders.
Furthermore, these systems can review volumes of information in milliseconds and provide real-time alerts to customer service associates, allowing them to exercise discretion and make informed decisions on appeasements while adhering to company policies.
Additionally, using AI during the authorization process can also enable retailers to personalize incentives based on individual identifiers and transaction history. By tailoring discounts or offers to specific customers, retailers can increase the likelihood of retaining customers and encouraging future purchases. This approach ensures that incentives are targeted and strategic, rather than arbitrary or excessive.
The benefits go beyond profitability
Implementing AI-driven authorizations offers several benefits beyond reducing losses and optimizing profitability.
Artificial intelligence can find hidden connections between different credit cards, addresses, loyalty IDs, and other information that provides valuable identifiers of fraudulent or abusive behavior.
These systems provide retailers with invaluable insights into shopper behavior and preferences, enabling them to make data-driven business decisions and eliminate any bias from the process. Artificial intelligence can find hidden connections between different credit cards, addresses, loyalty IDs, and other information that provides valuable identifiers of fraudulent or abusive behavior. By understanding customer needs and preferences, retailers can proactively address issues, recapture revenue, and enhance the overall customer experience.
Looking ahead, the future of AI-driven claims and appeasements authorizations holds immense potential. As AI technology advances, retailers can expect even more sophisticated systems capable of analyzing vast amounts of data in real-time. This will result in enhanced fraud detection, improved personalized appeasements, and more efficient decision-making processes.
While customer appeasements can impact profitability, leveraging AI-driven authorizations is a powerful tool for mitigating losses. By employing automated systems that analyze customer data and behavior, retailers can reduce abuse, personalize appeasements, and strike a balance between customer satisfaction and profitability.
Pete Barker, Director of Product, Appriss Retail
Pete Barker has a long history in Retail Loss Prevention, most notably as the Sr. Manager of Digital Loss Prevention at Dick's Sporting Goods where he built the Digital Loss Prevention department/team from scratch. He was the Director of Fraud and Identity for technology provider SpyCloud before joining Appriss Retail in 2023. Pete is also very active with the Merchant Risk Council (MRC), holding the position of Fraud Community Committee Member since 2019, as well as a mentor for the MRC since 2019. He was also an MRC Regional Advisory Board Member from 2/20-2/21.