Published:
March 18, 2025
Reading time:
5 minute read
Written by:
Doriel Abrahams
When you think about customers, think about the cycle of engagement with your brand, not one specific purchase. To maximize the CLTV of that cycle, retailers need to be able to answer the question — what kind of customer is this? Failing to ask the question or answer it accurately can be enormously costly.
In this article, we’ll examine one particular kind of customer — the reseller category — and explain why treating resellers like regular customers is an expensive mistake you simply don’t need to make.
Gaining Clarity on Categories of Customers
Retailers put a lot of effort into drawing a customer over the finish line of checkout — marketing, branding, offers, smooth user experience, etc. — but in an ideal world, the first checkout is just the start. A focus on customer lifetime value (CLTV) safeguards not only revenue today but also the success of the business tomorrow.
Where many merchants stumble is on understanding what kind of customer really has which kind of value. A loyal regular customer can be enormously valuable to the company. A customer who frequently abuses the system? More complicated. Resellers? More complex still.
This equation is even trickier for brands that operate globally but have different rules or prices regarding purchases made in different geographical regions. Customers attempt arbitrage or sneak their way around blocks to region-exclusive items.
It’s vital for merchants to have confidence in their customers’ identities, intent, and, most crucially, categories. In other words, what kind of customer is this? You can’t afford to be too conservative about this because treating customers in a way that doesn’t meet their expectations lowers their trust in your brand — and customers are willing to spend an average of 51% more with a retailer they trust.
Equally, you can’t afford to let resellers run riot with programs designed to encourage customer loyalty.
Resellers: There Are More of Them Than You Think
Resellers are users who don’t buy your products to use but to resell to others. For that reason, their margins are crucial to them. They’ll try every trick they can think of to drive down the cost of goods, from abusing coupons to loyalty programs and points, often hiding behind multiple identities to do so.
When they’ve found a way to get a good deal or to get their hands on desirable items, they’ll try to make as many purchases as possible in a short period of time. And the chances are that your site has more resellers than you think.
Forter’s data indicates that within retail, resellers generally represent 8% to 10% of traffic in terms of dollar value, which is a huge amount. For gift cards, it’s about 10%. Luxury goods are even more dominated by resellers, with about 15% of dollar value coming from resellers.
If you’re investing in campaigns and policies to encourage customers to develop loyalty to your brand, with your eye on CLTV, but what you’re getting instead is a lot of resellers taking advantage of these structures, you’re not advancing your CLTV — you’re harming your numbers now and in the future.
Resellers aren’t loyal to brands and won’t spend more with you because they enjoy your site or trust your brand. They’re buying from you because they’ve found a way to get a good deal. That might be fine, depending on your business policy towards resellers — but it’s not something you want to invest company resources in attracting.
If you don’t treat resellers as a category in their own right, for which CLTV isn’t a relevant factor, you could lose out substantially. Consider the case of free gifts.
“Free” Gifts Can Come at Too High a Cost
Forter’s research indicates that when merchants offer free gifts or samples to encourage customer engagement with and enthusiasm for the brand, 10% to 18% of those are typically distributed to resellers. The resellers intentionally place multiple orders to get as many of the free items as possible.
It can be tempting to dismiss this as a minor cost of doing business, but this isn’t the same level as real customers who occasionally cheat to get more than their fair share. This is a problem that can really scale.
In one particularly crazy case, we were brought in by a retailer who suspected they had a problem with this. We discovered a single reseller who had received over $4,000 of gifts by triggering buyer benefits from multiple accounts! Needless to say, we shut that down right away.
Tailor Checkout Options to Maximize CLTV
As a fraud fighter, I really want to emphasize this: You can shut this down right away, and it will improve your ability to maximize CLTV, not restrict it.
All it takes is reframing your approach to CLTV to be more directed. You want to maximize customer value, not the number of orders, taking advantage of measures intended to encourage customers.
The aim: Limit, not eliminate, resellers and abusers.
When you can be confident that you know the customer’s category, you can tailor their shopping experience to whatever is appropriate for them.
In the case of resellers, that means letting them check out but limiting the number of orders they can place, even if they try to hide their identity. It may mean restricting or blocking their ability to claim free gifts or discounts. It’s up to you and won’t hurt your business, either. Forter has found that when you remove a free gift from the cart, a reseller is 3X less likely to abandon their cart than a normal buyer. You’ll still get their business. You just won’t pay for the privilege.
Once your approach is tailored to the customer’s identity, you can push further in offering attractive deals and experiences to the customers whose CLTV is valuable to you. You’ll be able to give them more once you know you’re not having to hedge because of the risk of abuse.
That’s just as important as avoiding the loss associated with resellers or abusive customers because, according to the Trust Premium report, over 78% of U.S. and U.K. consumers will likely abandon their online shopping carts if the process is too difficult or time-consuming. When you know someone is a good customer, you can invest effort into streamlining their experience.
With identity as the heart of abuse prevention, you can unlock maximal CLTV while minimizing loss to resellers and abusers.
Doriel Abrahams is the Principal Technologist at Forter and host of ‘What the Fraud?,’ where he monitors emerging trends in the fight against fraudsters, including new fraud rings, attacker MOs, rising technologies, etc. His mission is to provide digital commerce leaders with the latest risk intel so they can adapt and get ahead of what’s to come.
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