How False Positive Rates Impact E-Commerce Conversion Rates: Balancing Security & UX

By Benjamin Fabre, CEO & Co-founder, DataDome

In the world of e-commerce, ensuring the security of online transactions is crucial. While bot management systems play a significant role in safeguarding e-commerce platforms from fraudulent activities, there can be a tradeoff: Bot management tools with a high false positive rate can negatively impact conversion rates, revenue, and customer satisfaction.

Let’s explore the relationship between the false positive rate of bot management and the conversion rate for e-commerce companies, including the impact on revenue and customer experience.

The Challenge of False Positives

False positives occur when legitimate (human) users are incorrectly flagged as bots or suspicious entities by a bot management tool. Different bot protection tools have different responses to false positives. Some programs hard-block any request suspected to be a bot request. Others serve a traditional CAPTCHA challenge to all users. Those who pass are identified as legitimate requests and those who fail are identified as bots, which happens more than it should in some cases.

But in the ever-evolving threat landscape, discerning humans from advanced bots grows more difficult every day. Advanced bots can now mimic human behavior, including human-like mouse movements, clicks, and browsing speed. Unfortunately, your customer journey and user experience also suffer if your bot protection is too permissive and advanced bots are able to bypass your security to cause performance issues, data breaches, account takeovers, and other damaging problems.

While occasional false positives are an inevitable part of online security, an excessive number can obstruct the buying journey for legitimate customers, who are proven to have little patience for such delays.

In fact, a study conducted by Stanford revealed that a CAPTCHA challenge can reduce form conversions by up to 40%.

Primary consequences of false positives for real users include:

• Blocked access.
• Additional security challenges (such as CAPTCHAs).
• Increased friction during the checkout process.

Impacts on Your Conversion Rates & Revenue

Legitimate customers who encounter unnecessary challenges or restrictions due to false positives often abandon their purchase altogether. Thus, a high false positive rate can significantly impact an e-commerce company’s revenue.

As a benchmark, the average landing page across all industries has a low conversion rate of 2.35%. The top-converting 25% of pages have a conversion rate of 5.31% or higher, and only the top-performing 10% boast conversion rates of 11.45% or higher.

You can imagine how losing up to 40% of an already low conversion rate could have a significant impact on your bottom line.

Customer Satisfaction

Customer satisfaction is critical in establishing brand loyalty and ensuring repeat business. Genuine users become frustrated and dissatisfied when faced with repeated challenges due to false positives. Excessive CAPTCHAs and security challenges disrupt the natural flow of the buying journey, causing a suboptimal user experience.

Not only can this alienate what might have been loyal customers, but the negative experience can trigger would-be advocates to rant publicly about the shortcomings of your business.

Unhappy customers tend to voice their frustration, both online and offline, which can be very damaging to your company’s reputation and your brand trust.

Security Meets UX: Finding the Right Balance

Striking the right balance between security and user experience is crucial for e-commerce companies. Bot and online fraud protection should be continuously monitored and optimized to minimize false positives without compromising security.

Employing advanced technology, such as machine learning algorithms, can improve the accuracy of bot detection and reduce false positives, preserving your conversion rates and bottom line revenue.

Conclusion

Maintaining an optimal false positive rate for a bot management solution is crucial for e-commerce companies aiming to maximize revenue and customer satisfaction. A high number of false positives can lead to lost sales, decreased conversion rates, and dissatisfied customers.

To avoid sacrificing revenue for security, it is essential that enterprises implement robust strategies that leverage advanced technologies to strike the right balance between security measures and a seamless user experience. An effective bot and online fraud prevention strategy is one that empowers e-commerce companies to safeguard their platforms while ensuring a frictionless buying journey for legitimate customers.

About the Author

Benjamin Fabre, CEO & Co-Founder, DataDome.

Benjamin is the CEO of DataDome, a company he co-founded in 2015.  A cybersecurity visionary, Benjamin foresaw the rise of bot-driven fraud. He understood early on that the race to block automated online threats would require an instantaneous response at the edge; static rules, no matter how quickly updated, would always be a step behind. Leveraging his deep expertise as a technologist – and as an entrepreneur attuned to the need for preserving UX – Benjamin set out to build a transparent and easy-to-deploy anti-bot solution that is a true force multiplier for IT security teams. Enter DataDome.

Benjamin can be reached online at https://twitter.com/bfabre and at our company website, https://datadome.co/