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October, 2006
EXECUTIVE INTELLIGENCE
Watch Your Sales Conversion Rate Soar by Making Online Shopping Easy
by Moshe Ofer
Online shopping is a frustrating experience for most people. This isn't to say that we don't still do it, but we aren't very happy most of the time when we do. There are key factors at work right now in the socio-economic mix that will have an impact on your online sales conversion rates. Ignore them at your own risk. What are these factors? They are more broadband power, high energy costs, tight consumer wallets and more people experienced in Web purchasing than ever before.
For example, online sales conversion rates are frankly dismal. The conversion rate is the figure that represents what percentage of online visitors make a purchase. Typically online conversion rates hover in the one to five percent range. What does that mean? Well, if you were a brick-and-mortar store it would mean anywhere from 95 to 99 people out of 100 store visitors would leave your premises without spending a dime. In other words, you would go out of business.
So why do so many online shoppers leave your site? The short answer is they didn't see what they wanted fast enough, and went away frustrated. Twenty percent of respondents to a survey reported by Retail Forward say they feel frustrated when they can't find what they are looking for on Web site.
Another survey reported in the news shows 55 percent of consumers said a frustrating online shopping experience negatively impacts their overall opinion of that retailer.
Meanwhile broadband connections in the U.S. have soared. Some 72 percent of homes now connect from high-speed lines, up from 57 percent one year ago, according to new data from Nielsen//NetRatings. Another study issued in May 2006 confirms this. U.S. residents with broadband connections jumped 40 percent to 84 million, from March 2005 to March 2006, says the Pew Internet & American Life Project.
Seems to be opposite forces converging here: On the one hand research shows that consumers are frustrated by what they find (or don't find) on the Internet; and on the other side they are eager to use the "high octane" now available to them via high-speed Internet access.
What else do we have in the socio-economic mix that might impact e-tail conversion rates?
Energy prices have soared 30 percent or more in the last year. The high cost of gasoline combined with the desire for pumped-up SUVs is having an impact on the consumer.
A Consumer Reports' National Research Center survey found 42 percent of consumers strongly agree with the statement that they will drive less to save gas.
Supporting this conclusion is a report out from the Consumer Conference Board stating that more than 50 percent of all consumers plan to make fewer trips to the mall, and 30 percent plan to do more shopping online. In addition, a third of consumers expect to cut back spending overall to combat higher energy costs.
What does all this mean to e-tailers?
Well if I was a betting man, and I admit I occasionally play the odds (especially when the are in my favor), I would say the above scenario - more convenient Web surfing, higher energy prices and more consumer reliance on the Web as a shopping gateway - will mean greater opportunity for online sales at e-tail sites.
But don' t take my word for it alone. Forrester Research believes that online sales in 2006 will increase 20 percent to more than $211 billion compared to 2005. This kind of sales volume represents a doubling of online sales when compared to 2003 figures.
Ever increasing online spending is the silver lining to the cloud. The cloud that hangs over e-tailers' storefronts remains the fact that consumer wallets are being squeezed by high energy prices and, at the same time, their patience for e-tail sites that make shopping difficult is low.
How do you capture the consumer spend and keep them coming back to your site?
Make sure your site gives fast, easy-to-use and easy-to-interact-with information. What do I mean by this? Think of your Web site as a shopping flyer - with a "buy" button. Wouldn't you like to be able to browse a catalog or shopping flyer, see what you like at the price that appeals to you, and then just click to buy? By employing flash catalogs to give the consumer the ability to zoom in, take notes and compare products quickly you give the customer every reason to buy.
Make sure you serve up information in the context that the consumer is asking for. What do I mean by this? If consumer asks for a "large trunk," make sure they get what they expect, not a long grey snout attached to an elephant, but a smartly hinged case to store things in. Nothing is more frustrating to consumers when they search a site and are given arm-loads of results, 99 percent of which are a waste of time and an immediate reason to exit your site.
Make sure that your purchasing function is clear and easy to use. What do I mean by this? When a customer is ready to buy, they are putting their confidence and trust in you. They are giving you money in good faith that you will deliver the goods quickly and easily. Make your pricing very clear, without extra steps for shipping, handling and taxes; have the customer fill out credit information after they have made the decision to purchase and they are satisfied with their choice. No one gives money ahead of a purchase. Do this and it may be why many consumers seem to abandon shopping carts when a site asks for credit details before a buying decision is finalized.
Talk to your customer before they make the final decision. What do I mean by this? Use an automated pop-up to give the consumer the option to say that they are happy with what they are buying, or to ask a question - such as "How long will the item take to ship?" or give them the option of saving their purchase details on your site for easier access and repeat buys in the future.
Get feedback from the customer. What do I mean by this? Give the customer the opportunity to leave feedback about their shopping experience so you can help them better next time. Also, use a reporting tool to determine what the customer was searching for, whether they went on the site, where they spent the most time so you can stock items that they wanted but didn't find, or offer them something similar while they are still on your site.
Take the above steps and I guarantee your online conversion rates will move into the double digits and you will get more mileage out of your buyers.
Moshe Ofer, is CEO of ActivePoint, www.activepoint.com, a maker on contextual e-catalogs and reporting tools for e-commerce.
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