Dig into Payment Data and Grow Your Business with Payment Analytics

Jul 15, 2022
6 minutes Read
Utilize payment analytics to enhance customer lifetime value and strategically grow your business through insightful data-driven decisions.
Dig into Payment Data and Grow Your Business with Payment Analytics

Merchants and retailers work hard to connect with customers and make sales. Every credit card swipe, every tap of the “Purchase now” button in an online shopping cart, and every gift card redemption is proof that your marketing strategies are having an impact. But the business opportunities aren’t over when those sales figures are met.

In fact, there’s a treasure trove of data swirling around those payment transactions. You already use it to calculate profit, margins, and sales volume. But did you know those payment metrics can be leveraged even more to reduce costs in key areas, increase future sales and grow your business? Organizations that know how to use payment analytics effectively and insightfully are poised for repeated success and long-term growth.

Make smarter decisions with payment analytics

Payment analytics is the process of gathering, reviewing and analyzing transaction data. It doesn’t matter what payment channel a customer is accessing or where the transaction happens, every transaction is an important touchpoint that tells you something about the customer relationship. Digging into payment data can therefore provide important insights that feed into business planning. Data-informed decisions are smarter decisions that help improve customer service and streamline services to nurture customer loyalty and grow your business.

Think you know your customer? Payment data yields valuable insights

Payment related metrics answer all kinds of important questions about how your customers behave and what they like. What payment methods do your customers prefer? Do they make online purchases using credit cards or other forms of payment? Do they shop at night or during the day? Do customers purchase more items in-store or online? Do you have defined customer segments with altogether different behaviours?

Payment metrics run the gamut from the number of items purchased, transaction amounts, rate of purchase, plus other payment details, such as time, location and payment method. A closer look at the data can suggest ways to save costs by balancing resources to fit your customer purchase patterns. You can also learn from failed transactions, including return and chargeback types, amounts, and frequency.

Five ways to use payment analytics

Most businesses are already gathering transaction data passively, but could be leveraging it more with a targeted approach. Here are five areas where payment analytics can be put to work to enhance the customer experience and grow your business.

  1. Identify payment methods and keep pace with trends

The clearest use of payment analytics is in identifying payment types and trends. If a business sees a change in the rate of credit versus debit payments being made, or a rapid decline in cash payments, they may want to look into better processing rates or make a switch in their card network agreement.

Businesses need to keep pace as the payment landscape evolves and adapts new techniques and devices. A steep rise in mobile could mean you need to purchase more terminals, or tailor your payment app for your clientele. A look ahead into e-commerce payment trends alongside customer segments can help optimize resources, streamline purchasing and anticipate customer preferences.

  1. Calculate and leverage Customer Lifetime Value (CLV)

The best customers are the ones that come back again and again and again. They spend more and they bring more customers your way – often through free word of mouth advertising. Payment data can help you calculate Customer Lifetime Value (CLV) so you can identify key customer segments, forecast future earnings from repeat customers, and evaluate what’s working best in targeted marketing campaigns.

To calculate CLV, simply multiply a customer’s average purchase value by their average purchasing frequency by their average lifespan with your business. The resulting number will give you actionable insights to help you bring in similar customers and earn more revenue.

  1. Evaluate marketing and merchandising strategies

Merchants spend so much time on details that drive traffic to websites and stores that they risk thinking the show’s over when sales are made. However, payment data is crucial to assess and fine-tune efforts that lead to those all-important conversions.

Similar to A/B testing, payment analytics can give businesses the tools to understand the impact of one or another targeted campaign. It can help measure the effect when you launch a new product, or when a competing product enters the market. Comparing sales before and after a particular product was available can let you know who’s finding your products and assess whether tailored marketing campaigns are working as expected.

You might also test sales of certain products relative to other factors, from broad economic or social circumstances to smaller shifts, like the weather. As an example, you might be shocked to learn that your products sell faster on rainy days. Instead of treating the correlation as an odd coincidence, it pays to experiment. Lean into the insight and test a campaign the next time those rainclouds start rolling in.

  1. Minimize transaction failures & prevent fraud

No one wants a transaction to fall through, but it happens. An order might go missing, a manufacturing problem might require a refund, or a fraudster might take advantage of your flexible return policy. Chargeback requests by credit card companies can be especially tough since businesses are required to issue refunds despite losing the product itself, plus shipping and related costs.

Payment analytics can help mitigate these losses by identifying what kinds of transactions or customer interactions lead to more disputes and chargebacks. Armed with new insights, merchants might decide to tighten online security. They could amp up customer service offerings to improve the post-purchase experience and prevent friendly fraud before it happens. Or they could introduce new delivery controls to make sure products get where they’re supposed to go.

Another kind of online transaction failure is one of the most common: cart abandonment. Studies show that customers abandon their online shopping carts nearly 70% of the time. In other instances, payments are initiated, but not completed due to some problem during checkout. Having more data around uncompleted transactions gives businesses a way to identify and measure problems – with the payment options provided, with messaging, or with shipping costs. With payment analytics, businesses can calculate finalized purchases against the total number of shopping carts created, and measure improvement as changes are made to the checkout process.

  1. Enhance sales forecasting

Payment metrics aren’t the same as sales totals. In fact, they’re bellwethers as to what you might expect down the line. Analysing year-to-date payment data gives insights into current performance and examining year-over-year returns provides predictive power for the months and years to come.

For even more accuracy, run payment analytics on a monthly basis and forecast accordingly. Knowing when sales are highest and where they lag can help you plan ahead to maximize sales and minimize costs. Quiet times are great for business planning, and for preparing your shop for peak seasons and bursts of sales activity. Once you embrace payment analytics, it won’t take long to figure out which metrics are most relevant for your business and adjust your resources, staffing and marketing to maximize business in month and years ahead.

Drive your business with payment analytics

These days, making data-driven decisions is important for business success. Payments transactions are a critical source of data for better forecasts and smarter decisions. Harnessing payment analytics tools and techniques evolves your business into the future. Use it to manage expenditure, increase revenue and, most importantly, optimize and enhance the customer experience across all available touchpoints.