February 2010 – Channel Crossing: Online

Abandonment Marketing: Maximize Onsite Revenue

Website abandonment is a recurrent thorn in the sides of all e-commerce teams. Optimizing conversion is rarely a simple quick fix, and often turns into a seemingly infinite journey with no end in sight.

The industry abandonment rate normally hovers around 65 percent. But in the weeks leading up to Black Friday and Cyber Monday, shopping cart abandonment rates swung wildly as customers postponed purchases in anticipation of deep discounts. What happened over the Christmas period gives a rare insight into the changes in customer behavior that directly affect conversion rate. This holds important lessons for e-commerce teams trying to optimize their conversion rates: It’s hard–in part because you don’t control all the moving parts.

Conversion–A Closer Look
Conversion is a measure of the effectiveness in getting website visitors to do what you want them to do on your site. It doesn’t have to be transactional, but in this case, we’re focusing on gaining revenue through an e-commerce shopping cart. Measurement of this type of conversion usually translates into dollars.

In the early days of the web, we focused first on page views. Then conversion become a core method of measuring site success, as the dotcom bubble burst and eyeballs became secondary to revenue.

Approaches to optimizing conversion are varied, but mainly focused on reducing the complexity of the conversion process itself (for example, with fewer steps), adapting the process (so that, for example, shipping rates are shown early on) or making it more intuitive.

When thinking about your process, you also need to consider the emotional state of your visitors as they progress through your conversion funnel. Buying from a particular website for the first time carries with it an inherent risk. Your visitors will feel insecure during the checkout process, with this heightening at the point of payment. It is therefore important that you view your entire checkout process from the point of view of a risk-adverse customer.

A recent PayPal/ComScore survey reported that 21 percent of customers buying online had abandoned one or more checkout processes due to security concerns. So check your process end-to-end for testimonials, security seals and customer reviews, and have very clear warranties and return policies.

But We’ve Done That and Our Abandonment Rate is Still High
The harsh reality is that process optimization can take you only so far. Conversion is complex and, unfortunately, e-commerce teams do not control all of the moving parts which affect conversion. Brand reputation, reviews and social commentaries, competitors’ promotions, promotional activity, price-comparison websites and affiliates all have a direct impact on conversion.

The impact of customers anticipating Black Friday promotions is just one such example. Before November 23, the average industry abandonment rate on Sundays peaked at 83 percent. But once the promotions had been rolled out, the rate dropped dramatically to “only” 64 percent, a massive swing in such a short period of time. This was not within the control of an e-commerce exec, but rather reflected a mass change in customer behavior. The lesson learned is simple: conversion optimization will only take you so far, and customers will still abandon your site in numbers much higher than you’d like.

It’s also useful to segment your abandoners into the five main groups:

• Window shoppers–those unlikely to buy;
• The undecided–they may buy from you, but the items abandoned in the shopping cart are acting as a shopping list while they decide;
• Deal seekers–they will only buy with a deep discount;
• Research online and buy in-store–customers likely to buy from you via a different channel (e.g., in store or by phone); and
• Brand-loyal customers–likely to buy from you, but the timing is not quite right.

Because of all these different types of customers who abandon, it’s important to consider not only how to optimize your onsite conversion process, but also your re-engagement process once they have abandoned your site.

Re-Marketing Completes the Process
Re-marketing is used today by only a small minority of sites, but the results speak for themselves: conversion rates of website abandoners of up to 50 percent are both compelling and offer very high ROI. This applies across all of the different types of abandoners: For example, re-marketing, done well, will nurture your brand-loyal customers and encourage them to make a purchase from you, feeling in the process that you care and want to deliver exemplary customer service, thereby reinforcing your brand values and making a purchase from a competitor less likely. Likewise, the undecided and deal seekers are also very effective re-marketing targets, provided they are shown appropriate content.

Follow-up re-marketing often gets forgotten, in part because e-mail marketing may be the responsibility of a different marketing group. If you are responsible for your website only, then have a chat with your colleagues in e-mail to figure out a joint approach to the problem.

A recent survey of U.S. e-retailers by E-tailing Group, found that 76 percent of e-tailers ranked “targeted e-mail” as the top initiative to improve website conversion. Following up on an abandoned session is also the fastest-growing technique to increase website conversion across the industry.

It’s easy to see why. If you have an industry average 63-percent checkout abandonment rate and 1,000 visitors enter your process each day, then while you convert 370 visitors to customers, 630 abandon your site without purchasing. Using abandonment re-marketing, you can reasonably expect to get back up to 50 percent of these visitors, making a dramatic impact to both your conversion rate and your bottom line.

Charles Nicholls is founder and chief strategy officer at SeeWhy, an Andover-Mass.-based agency specializing in the optimization of website conversion by leveraging real-time analytics. He can be reached at charles.nicholls@seewhy.com.