There are many excellent business lessons one can take from Michael Taylor’s “Moneyball”.
Moneyball is a terrific book (later made into a movie starring Brad Pitt), about the Oakland Athletics (The A’s) – the cash poor Major League Baseball team that, between 2000 and 2006, revolutionized the game with the way they evaluated players, finding value where other teams did not, and consistently fielding a team that could compete with large market teams, such as the New York Yankees.
For perspective, at the time the story takes place, the Yankees had a budget of well over $220 million to spend on player salaries. The A’s? Around $40 million.
Every year, many of the A’s best players would either leave through free agency, or be traded away because the team knew they could not afford to re-sign the player for the upcoming season. Each season, however, a new crop of players were brought in – seemingly from nowhere – and the team consistently competed at the highest level.
The trick was identifying statistics by which a player could be evaluated, which were undervalued by the other Major League teams. Thus, a really solid player that served a great purpose for the team could be signed for a relatively small contract since their value was imperceptible to the rest of the league.
The result was a team that seemed to over-perform each year, until the rest of the league began to figure out exactly why the formula was working.
“It’s difficult to not get romantic about baseball.” – Billy Beane, General Manager of the Oakland Athletics
Well, Mr. Beane, for us Lifestyle Entrepreneurs, it’s difficult not to get romantic about ecommerce. Here at Ecommerce Rules, the internet is our playing field, our products are our players, and we are our own general managers – seeking value to to fill out a winning team.
What can we learn from Moneyball and Billy Beane, that might be applicable to the world of ecommerce? Quite a bit.
But, in this post, let’s focus on one central principle. For every valuable commodity – be it a Major League baseball player, or a hot new ecommerce store – there are quantifiable measures of value and it is up to us to identify those which are important, those which are undervalued, and those which we know we can improve upon – creating value and margin in our businesses.
Finding numbers that are undervalued will wait for another post. For now, let’s think about obvious numbers that are important to every ecommerce site, which, if improved upon, could create tremendous value.
Without a doubt, the first number that comes to mind is the conversion of items placed into shopping carts into actual sales. Have you seen the industry averages? They are paltry. If we can beat industry averages, we can build a better business. A more profitable business.
Abandoned Shopping Cart Phenomenon
According to KISSmetrics, about 42% of shopping carts are abandoned at the very first phase of the checkout process, when the shopper is asked to either login or create an account. And, according to Enterprise Apps Today, “more than 60 percent of online shoppers abscond before completing an online transaction.”
We call this Abandoned Cart Syndrome (ACS) or Abandoned Cart Phenomenon (ACP).
So, in other words, ACS (or ACP) is an epidemic in the ecommerce industry. Only 58% of online consumers put items in their cart and find there way past that initial checkout phase. Only 40% complete a transaction.
How much could your site benefit from absolutely crushing the login/registration phase of the user experience, keeping those shoppers reaching for their debit cards? Even if you could get 50% of your shoppers to complete the checkout process, you would realize a 25% increase in sales over the average site.
If only 40% of customers are converting throughout the industry, but your store is converting 50% of shoppers into customers, then YES you are converting at a 10% greater clip than the industry. However, this 10% improvement actually represents 25% of the industry average conversion percentage (10/40). So, a store that converts 50% of it’s shoppers into customers has the potential to realize 25% greater sales than if the store merely met the industry standard, 40% conversion rate.
I venture to say, that is value! We have found a number that, once improved upon, helps create that margin we seek.
Regardless, we now understand that improving upon the poor ecommerce industry standard numbers for shopper conversions will greatly effect the bottom line for your store.
To understand how we can improve upon the number, we must first understand some of the reasons that shoppers are abandoning their carts.
Reasons for Abandoning Shopping Carts
There are a wide variety of reasons for which one might abandon a shopping cart on your ecommerce site, most of which can be traced back to the major principles covered in our Top 5 Reasons Your Ecommerce Store Will Fail. ACS and ACP can be traced to factors in and out of the shop owner’s control. Let’s keep our focus on those ACP factors which are in our control. Here are a handful of the most common for ACP:
- Confusing Login or Registration
- Shopping cart is not “HTTPS” or otherwise clearly secure (SSL, etc.)
- Seemingly endless number of pages or tabs to be filled out for site registration
- Login which takes more than one step
- Lack of product information available while in shopping cart view
- No clearly identified way of reaching a customer service representative while in shopping cart view
- Lack of continuity from site branding to shopping cart branding
- Information about returning items is not readily available
- Shopper feels the deal will be there if they want to come back later – i.e. no sense of urgency
8 Tips to Minimize Abandoned Shopping Cart Phenomenon at Your Store
With the above reasons for ACP in mind, and with a bit of extrapolation from my many years of experience shopping and selling online, I present to you this list of six tips to help minimize ACP on your site.
- Eliminate the Login and/or Registration Requirement.
Yes, it’s generally good for businesses to have consumers login and keep a profile on your site. This is an easy way to maintain records of customer information, and to study how certain profiles interact with your website. However, remember that only 58% of shoppers actually complete the login and/or registration phase, once they have items in their shopping cart. These are items that someone intends to buy – representing revenue for your business. It may be helpful to your bottom line to eliminate the login and registration requirement – sacrifice that excellent information that could be provided – and streamline the checkout process by allowing users to simply enter their payment information and be on their way.
- Streamline the Registration and Login Processes.
I can certainly understand your reluctance to eliminate the need for shoppers to maintain a profile on your site, and for them to login to the profile when they intend to purchase items in a shopping cart. If you simply must collect that customer information, then there are excellent methods of streamlining the registration and login process. For instance, allowing registration with Google+ or Facebook accounts provide a swift registration and login process, while also providing all kinds of information about your customer that may be useful. Note that Twitter and LinkedIn also offer registration and login functions, which you could use, but the very best customer information would be contained within the user’s Facebook profile, followed by the user’s Google profile. If you go this route, I suggest you also allow the shopper to simply purchase without registering or logging in. Provide some incentive for them to register and login, but always give the consumer that opportunity to skip registration all together and you will have a leg up on the competition.
- Get yourself a progress bar or some other means of showing your consumer how far along they are in the registration process.
I won’t spend a whole lot of your time on this. The concept is simple. How many times have you given up on registration and/or a purchase because you had to get going and you just weren’t sure how many more pages of information were required? There are many plugins and apps available that can be added to your site, which enable the shopper to know exactly how much progress they’ve made and how much further they have to go to finish the registration or login process! As a side note, you can also set up a system that allows a user to save the progress they’ve made and come back to finish later. Emergencies do happen and you don’t want to make your consumer do any of the work over again once they return to your site.
- Studies show that an FAQ and customer service phone numbers help retain consumers.
Think about it. You’re shopping for something that’s fairly expensive and, when it comes time to checkout, you think to yourself, “I wonder if this will fit in my living room.” or, “I really love this feature. I sure would like to make sure it’s available.” When you’re getting ready to make a major purchase, you often have questions. Make sure you have that opportunity prominently displayed throughout your checkout process and you will retain more shoppers.
- Make sure your refund policy is clear, and available during each step of your checkout process.
This one is somewhat self-explanatory. People get excited about shopping. It’s a rush. Sometimes they load up a cart and then get cold feet towards “decision time”. “Hmm, I wonder if I can return this if I don’t like it?” or “Will I need to pay for the return shipping if I am not happy with this product?” These are items that can be covered on your FAQ, and your customer service representatives. But, to be safe, it’s a smart idea to keep a link to this policy handy at all stages of checkout.
- Show scarcity and demand.
Nothing gets a credit card out of a wallet faster than telling the consumer, “Hurry, this product, at this price, is going to disappear quickly!” Again, most ecommerce platforms have terrific plugins that you can use which will show the shopper how many others are currently shopping on the site, how many are currently browsing or viewing the item which they are viewing, and you can also display how many of the item remain at the quoted price. Alternatively, if you’re having a sale, you can show a timer that displays for how much longer the sales price will be available. Either way, find yourself a nice piece of software that helps create scarcity in the mind of your shoppers. This isn’t manipulation, and it’s not dishonest. Just let the facts be known and your shoppers will react appropriately. Select your facts carefully, however. This software is best for shops that either have limited quantities of items, have frequent 24 or 48 hour sales on certain popular products, or are already somewhat popular. Remember that it’s difficult to show scarcity if there’s nobody else shopping the site or you have 100’s of the item in stock.
- Show your major competitor’s price.
Here at Ecommerce Rules, we call this the Progressive Insurance Model (PIM). Honestly displaying the current prices offered by your competitors will keep more shoppers on your site. Even if they’re inside a brick-and-mortar, seeing the price on your site as compared to the major on, and offline competitors, pays off. Even if someone is selling the product a couple bucks cheaper, your customer will be more likely to stay with you – the honest shop that did the comparison shopping for them,
- Display your safety and security measures prominently.
Nothing will lead to ACS or ACP more quickly than a shopping cart or checkout process that seems unsafe. Ensure you’re using an “HTTPS” URL, and that SSL security is prominently displayed. Also, customer testimonials about the safety of shopping on your site always go a long ways.
We have now successfully identified one major statistic in which, across Ecommerce, most sites do not perform particularly well. We’ve identified some of the major reasons for lackluster performance in this area, and now 8 great tips for crushing the industry average, and creating value and margin for your business.
If you have tips other than the 8 above, we always love to hear what is working for the hard working folks out there, getting it done, and crushing ecommerce! While we’re at it, do you have any additional ecommerce-specific statistics that, if vastly improved upon, could propel an ecommerce site to an elite level?
Lifestyle Entrepreneurs, this is what we do. We find areas to focus our effort, we exert that effort, and we sleep comfortably knowing that even if the rest of the business performs at an average level, we are performing exceptionally well in an area that can add so significantly to our profits. Minimize your personal labor while maximizing profit – this is a central pillar to a Lifestyle Business, covered in great detail in our 10 part series, The Beginner’s Guide to a Lifestyle Business.
Remember, we all start out as those early 2000’s Oakland A’s. Shorter on resources than some of our competition, we are the underdog, facing the 3,000 pound guerrillas of the Ecommerce World (like the New York Yankees or Amazon). It is imperative that we identify areas of weakness, where measurable value can be gained, in order to put a winner out on that field every day.