Conversion, Carts and Coupons

Apr 01, 2006 10:30 PM  By

The struggle to boost conversion rates is just one of the challenges online merchants continue to face, judging by the nearly 200 responses we at the E-tailing Group received to our Fifth Annual Merchant Survey. But thanks to improved analytics and the use of tools such as rich media, more than half of the respondents were able to report that conversion rates were higher than they’d been last year.

Our research indicates that the average conversion rate has risen to the 3%-4% range, slightly more than what we had seen in last year’s survey. And the percentage of merchants achieving rates of at least 5% has grown to 26% from 19% last year, confirming that online marketers as a whole are getting the hang of this conversion business.

In fact, 39% of respondents said that their conversion rates were “somewhat higher” this year than last year, with another 12% boasting of “significantly higher” rates. For 24% of respondents, however, conversion rates were all but flat. Of some concern are the 10% of merchants who report not knowing their year-over-year conversion rates! But that number is trending down now that the cost of incorporating analytics into one’s business has generally become more affordable.

STREAMLINING THE CHECKOUT PROCESS

One area where merchants are leveraging analytics is throughout the checkout process. Through shopping-cart funnel analysis they are gaining a greater understanding of when shopping-cart abandonment occurs. Among the survey participants cart abandonment rates averaged around 35%, though it’s important to note that nearly one-third of merchants (30%) still were unsure of their cart abandonment rates.

A successful checkout typically involves an intuitive, easy-to-follow flow in which the steps are broken out and enumerated (“step one of four,” “step two of four”). This allows the shoppers to always understand where they are in the overall process. Ideally shipping and handling fees are spelled out earlier in the process rather than later so as not to anger shoppers with total order costs that are much higher than expected.

If gifting is core to the merchant’s business, clear messaging regarding the ability to order for and ship to multiple recipients within one shopping cart will attract shoppers, boost order sizes, and help reduce abandonment rates. And customer service information that highlights any holiday deadlines, guarantees, and general service issues goes a long way to giving visitors the confidence they need to complete the transaction.

Outdoor gear, apparel, and home goods merchant L.L. Bean has done an excellent job of addressing many of these issues, Its shopping cart — or, in Bean parlance, “shopping bag” — includes a gift-tag icon accompanying the question “Does this order include a gift?” and quick “action” links that easily allow shoppers to “purchase now,” “save for later,” or “remove.” The bag includes the stock status as well as a note reminding the customer that “in-stock items are delivered to most addresses in 3-5 business days.” Estimated shipping charges are provided in the beginning of the order process, and links to the marketer’s famous 100% guarantee and all-important privacy policies can be found at the top of the cart. Each one of these elements supports a strong cart initiative and contributes to the success of Bean’s overall e-commerce business.

SEARCH The ever-growing focus on search engine marketing has also led online merchants to improve their on-site search capabilities. Survey respondents in fact ranked on-site keyword search as the most effective site feature, with 94% rating it very valuable, valuable, or somewhat valuable. And the merchants that offered some sort of advanced search (such as the ability to narrow down initial search results by additional criteria) showed strong results for that feature as well.

General merchant QVC incorporates an especially advanced search function into its Website. Its parametric “power” search allows shoppers to search by keyword description, brand, price, and item number together or as stand-alone elements.

Merchants are also putting a great deal of effort in ensuring that visitors who come to their site via Google, Yahoo!, or other search sites land on appropriate product and category pages. Survey participants have identified such landing pages as ways to successfully convert prospects to customers, by showing popular product, new merchandise, or sale items at this juncture.

PROMOTIONS Free shipping and handling remains a popular promotion, with 76% of respondents ranking it very to somewhat valuable as a tactic to tease shoppers. Some merchants, such as online superstore Amazon.com, have made free S&H a staple of their business. (Amazon offers free shipping of products in certain categories, such as consumer electronics, and with minimum purchase amounts in other categories.)

Sites that, like Amazon, sell commodities are more likely to use promises of free shipping as a tool to differentiate themselves. Merchants that specialize in proprietary or niche product are more likely to use this promotion only sporadically. In the E-tailing Group’s most recent Mystery Shopping Survey we found that out of 100 merchants only 6% had unconditional free shipping, while 56% tied it to either products or order size. We don’t foresee much change in the deployment of this tactic given its favor among frequent shoppers.

Coupons were another frequently cited promotion; 73% of survey respondents rates coupons and rebates as very or somewhat valuable. Bookseller Borders regularly uses coupons, which it sends to opt-in customers via e-mail to drive store traffic. If my behavior is any indication, these e-mails are highly effective; it’s rare that I don’t take advantage of one of these coupons. Borders does an especially nice job of tying the coupons into a seasonal promotion or theme. An “Oscar buzz begins” e-mail, for instance, included links to “our picks for Best Picture” as well as coupons for books and CDs.

Other promotions working for merchants include standbys such as Payless Shoes’ “buy one get one free.” A holiday offer of “buy 3 and save” from food gifts merchant Harry and David encouraged customers to use its store for all of their holiday purchases while providing an excellent means for increasing average order size. “Buy more, save more” offers are often used by merchants in replenishment categories such as office supplies and pets.

E-MAIL E-mail still shines, ranking as one of the top five most valuable tools among merchants; 91% rated e-mail as a very or somewhat valuable merchandising tool. Sophisticated merchants are looking to better target and segment shoppers to achieve even stronger results, with personalization starting to come into its own.

Merchants use e-mail for myriad functions, ranging from promoting their brand to promoting specials to sending holiday greetings — with any one message often surveying several functions simultaneously. A pre-Thanksgiving message from pet supplies cataloger Doctors Foster & Smith was a case in point: “As we gather to celebrate this season of family, friendship, and gratitude, everyone from Drs. Foster & Smith thanks you for inviting us into your home and for trusting us with the well-being of your companion animals. May you and your pets enjoy a happy, healthy season and a wonderful New Year. This holiday season, consider giving to animals in need by donating a Drs. Foster & Smith Gift Certificate to your local animal shelter or rescue service. Adoption agencies will use your gift for much-needed vaccines, bedding, and other pet care essentials.” The e-mail included a link to the gift certificate page on the Doctors Foster & Smith Website.

PRODUCT INFORMATION Many merchants cited product information and rich-media tactics as helping to improve conversion rates. Beginning with strong images ensures that customers click through to a product and are at least initially tempted. In some cases they will be able to make an immediate decision, while in other instances they will want additional information.

Nearly two-thirds (65%) of survey respondents rated general product enhancement tools as very to somewhat valuable. Fifty-nine percent rated alternative view equally highly, while 57% gave the same ranking to zoom.

Examples of rich media can be found across the Web. If you’re looking for a site that uses multiple rich media tools, you can’t go wrong with Pottery Barn. Product pages on the home decor merchant’s site enable shoppers to view larger images, alternative product shots, and swatches of all available colors and fabrics. The home furnishings merchant also does a wonderful job of cross-selling related products, with the goal of giving the customer all the information they might need to make complete a purchase.

MONITORING CONVERSION WILL DELIVER RESULTS Conversion will continue to be top of mind for merchants, as the ability to tweak one’s site can strongly influence revenue generation and profitability. An understanding of features and functionality that work for your category and your brand are essential. This knowledge allows you to prioritize your technology investments, as resources are always a finite asset among the merchant community.


Lauren Freedman is president of the E-tailing Group, a Chicago-based consultancy specializing in multichannel shopping. She can be reached at lf@e-tailing.com.

Lauren Feedman will be leading Online Merchandising Labs at this year’s Annual Conference for Catalog and Multichannel Merchants (ACCM), as well as moderating an Executive Forum on online conversion.

Other speakers at the ACCM, which will take place May 8-10 in Chicago, include Bill Crutchfield, founder of Crutchfield Corp.; Barry Schwartz, author of The Paradox of Choice; and AmeriMark Direct president/CEO Gary Geisler.

For details about ACCM (“the largest conference for catalog, Internet, and multichannel merchants”) or to register, visit www.accmshow.com.