Why the EU’s new directive could help you nail online customer experience

28th May 2014

What does the EU’s Directive on Consumer Rights mean to you? Probably not an awful lot, at first glance. However, if your business directly or indirectly sells online, which for the purpose of this article, we’ll assume it does, and you do any kind of trade within European nations that are your own or otherwise, which again, we’ll assume you do, then you might want to take note of some pretty major changes set to become regulation as of June 13.

Deadline day looms

Many of you will probably be aware already. First published in 2011, the European Union originally outlined proposals for changes to its members’ consumer rights legislation as a catalyst for improving trust online and ecommerce trading between EU countries, with the deadline set three years later – just a few weeks away.  

The main talking point, especially in the UK press, has been the abolishment of premium rate telephone numbers outlined as part of EU regulation, meaning companies will no longer be able to make money on any phone calls, and the shady old world of telephone box businesses will officially go the way of the dodo.

However, there are also a number of significant changes to ecommerce that will likely have an effect on both your trading policies and your operations, with departments ranging from IT to marketing needing to have an involvement in implementation. Some of them may seem menial, but the good news is that if you’re not in line already, making the relevant changes could help improve your company’s trading across borders, and enhance the experience your customers have when buying with you online.

Payments and returns       

Two of the major changes are centred around having a standardised, European policy for online payments and returns. For payments, businesses will no longer be able to place card charges onto online transactions without an accurate reflection of the actual administrative cost the business incurs. James Gurd, the owner of ecommerce and digital marketing consultancy, Digital Juggler, believes this is a significant step towards a more transparent online retail experience for consumers, and that card charges should have transparent long ago:

“The changes here are really important; if you look at ecommerce payment models, some businesses used flat percentage charges even when the cost incurred wasn't linear or added inflated surcharges for processing specific card types e.g. credit cards, so what the consumer paid wasn't always in line with the cost borne by the business.

“Businesses will have to make sure their backend processes for payment are set up to not charge additional fees, otherwise they will be in breach of the new directive. Many businesses don’t need to make changes because they already understand that delivering excellent customer service and value is about charging what's fair, not using payment as a profit making tool. Some, however, will need to check their default payment charges and reengineer their payment interfaces online to comply.”

Another policy to be enforced as of 13 June is a statement of returns, which must be clear on all websites prior to transaction and will include an extension of the minimum goods return time from seven days to 14. Once again, the policy is designed to encourage consumers to trust their European neighbours more, but as Gartner’s research director and expert on EU ecommerce Dave Kohler states, it should also force businesses down the road of being more transparent about the costs attached to potential returns: 

“The returns policy has to be clearly displayed at the point of purchase, which is something that we didn’t necessarily do very broadly before. You also have to, in your returns policy, have an explanation that there will be an estimated cost of returns for reverse logistics at the point of shopping basket / sale online. If you are buying something abroad, there should be a returns cost estimate before purchase, which is a cost to be absorbed by the customer that should be specified as such.

“The cooling off period for returns is being extended from 7 days to 14 days, and that’s likely to be enforced. This is significant, because it’s not just a website thing – you’re going to have to ensure that the policy is communicated across your organisation, and you have to ensure that there’s a process in place so that your accounting back-end systems has the right returns rules changed to make sure they say 14 days.”

The hot button hot potato

One of the big concerns from retailers is the EU’s suggested regulations associated with the final purchasing terminology that features on websites. Supposedly, no longer will ‘confirm order’ buttons or words like ‘buy’, ‘continue’ or ‘go’ be acceptable as a final web click to process a transaction. Businesses have been told they will need to make it clear that the consumer is entering into a contract with a payment obligation, which means terms such as ‘finalise my purchase’ will need to be incorporated into hot buttons.

Reports from The Guardian recently claimed that most online shops thought the regulation was hokum, but the idea to safeguard consumers from entering into a subscription they didn't want in the first place means it will more than likely be enforced. James Gurd, however, believes that much of the panic in the UK attached to this particular policy has been generated by a misinterpretation of who will need to comply and where:

“Most ecommerce sites will be fine keeping with a simple "Buy now" button. The wording implications relate primarily to websites where you’re not directly transacting for a product there and then, but creating a contract that obliges you to pay for something in the future. A leading retail ecommerce site like House of Fraser, for instance, that takes you through a checkout before asking to ‘buy now’ shouldn't need to worry about this. There has been a lot of misconception about the circumstances under which the CTA button copy needs to be made more explicit in terms of payment commitment."

“If a contract is involved, new wording such as ‘Commit to purchase’ will be required. In such instances, it will be sensible to test the impact of the wording to learn what format works best, within the guidelines of the directive. This may be a pain initially but will slowly become universally understood by consumers. However, it’s not something intended for every online purchase so my advice is think carefully, check the UK guidance on the directive and act accordingly.”

Building customer experience

The changes businesses have to make are likely to be time-consuming, but Dave Kohler explains that behind the drab screen of another EU directive is a genuine opportunity to implement a new strategy online, for those who haven’t already spotted it:

“If you look at this from the customer experience lens, in complying to the EU Directive, how can you position your company and show yourself as an adequate trader to not just potential UK customers buy European ones too? That’s the really compelling part of this, I think.     

“It’s all a question of what this does to customer experience, because the whole thing about creating an ecosystem on a website – telling customers things are ok, they can return goods if they want to, take things back in a physical store as part of the multi-channel journey if they want –  this is represented in these EU changes. There’s a real opportunity for businesses to look at the other aspects as an opportunity; use the new returns process and the new refund process and make it sound like a value-add; highlight on websites the fact that they believe in these core values and are there to better service customer needs.”

James Gurd agrees that customer experience should be at the heart of businesses looking to enhance their online trading platform, but believes the biggest issue of the EU directive is company executives finding time to understand what they should and shouldn’t do in the first place:   

"It’s essential that you read both the EU Directive and the UK guidelines and understand both; if you don’t then speak to someone who does and get their advice on how this applies specifically to your business. Don't panic and make changes that aren't required, or change core policy only to have to redo it later; this will only confuse customers.

“Update your website and ensure that policy information is really clear. Make it obvious to customer where there is content on-site that defines your delivery & returns policies/procedures and promote any USPs you have to provide reassurance. Don't just rely on a static content page for people to click on but actually be proactive and highlight policies at the appropriate points during a customer's buying journey. For example, make sure delivery costs & options are visible on the product details page before they enter the checkout.

“Using your marketing channels to let people know – “did you know that the laws are changing and we've got you covered”. That’s true transparency – using touch-points to try and get these changes in front of as many people as possible and use them in a way that makes them relatively interesting. Ultimately, this is another EU Directive with great intentions that wants to protect consumer rights, increase consumer confidence online etc, it’s just written in such an uninspiring legalese way that makes it seem like a chore rather than an opportunity.”

*This article was updated on 29th May 2014

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