From Passerby to Customer (phase 4: buying)

Stages of customer journey and partial conversions

In previous articles within this series, we talked frequently about the importance of partial conversions. Partial conversions trace back to the course of the sales process within the E-commerce Performance Model. This model uses 5 phases for the customer journey:

• Phase 1 - Coming
• Phase 2 - Looking
• Phase 3 - Choosing
• Phase 4 - Buying
• Phase 5 - Returning

A transition from one stage to another is called a (partial) conversion. These partial conversions are: from coming to look, from looking to choosing, from choosing to buying and from buying to coming back. We call them partial conversions because they contribute to the total conversion from visitor to buyer.

Cart abandonment as a crucial abandonment moment

In this article, we highlight the actual purchase from looking to choosing. In this last step towards an eventual conversion something extraordinary happens. While a large portion of visitors fill their shopping carts, they also drop out en masse just before checkout. The percentage of filled shopping carts that are not paid for is on average 65.49% for online shops in the Netherlands.

Compared to other countries, we still have the lowest shopping cart abandonment rate followed by the United States. Assume an average between 65% and 70% for your own webshop (how high is it really for you?). Of course, this is an average and your score also depends on the market in which you operate. The Shopping Index of Salesforce shows statistics of the online buying behavior in the Netherlands. For example, the abandonment rate on mobile devices is significantly higher than the abandonment rate on desktop.

Fortunately, many of these leavers do come back because they are comparing prices. It is very likely that visitors visit your webshop on their mobile device and then make the final purchase on the desktop. Often the cost of the purchase only becomes clear shortly before the checkout. This phenomenon has a negative influence on the abandonment rate and should be limited.

Transparency and trust as the driving force

The driver that has the most impact on a purchase is trust. A lot of the drivers we mention in this article are founded on the principle of trust.

Transparency as a driving force

Now we know that visitors drop out of the ordering process if it is not clear what the purchase will cost. Communicating in detail what the terms and conditions and any additional costs are before the visitors reach the checkout prevents the premature abandonment of the ordering process. When all costs are transparent, visitors who start the ordering process are much more likely to complete it.

The downside is that the number of visitors who start the ordering process may now also be lower. On balance, you get a clearer picture of the number of dropouts. In any case, it makes your shop very transparent and users will notice after a while that there are no hidden costs. This in turn contributes to the trust in your shop, another driving force we will now discuss.

Trust as a driving force

A mistake many online shops make is to require an account before you can order at all. There are certainly advantages for your shop to let visitors register, but do not link it to the possibility to order. You can make it attractive for your visitors to register. Think of sharing detailed shipping information or making it easier to place repeat orders. As long as it is not a condition for being able to order in the webshop. Preferably you should be able to order without creating an account(Check-Out-Without Account or order as guest).

Payment options as a driver

Checkout online is still an activity that people are a little wary of. Webshops now offer numerous payment options including credit card, iDeal, acceptgiro (until June 2023) and PayPal. Also the option of paying afterwards (for example with Klarna) has taken off in recent years. Webshops offer a wide range of payment methods to potential buyers. This gives the visitor the opportunity to choose the payment method he or she feels most confident about.

Order fulfillment as a driver (delivery options)

Another driver that increases conversion is order fulfillment. This is also a matter of trust for the potential buyer. Offering free delivery, financing, ten days at sight or within two days at home are typical things within your order fulfillment that create trust.

One particular tool within order fulfillment is buying online and then picking up and returning in-store. When buyers can pick up or return their product purchased online in a store, they immediately feel like they know where to turn if something is wrong. It gives the buyer a sense of control. In any case, it exudes confidence that it can be done.

Conversion rates and order value as indicators

Shop conversion rate

Conversion rate is one of the most widely used indicators that allow you to track the performance of your website. It is the number of visitors on your website divided by the number of visitors who perform the desired action. For the partial conversion from looking to buying, the percentage of visitors who actually pay for the chosen products is important. This gives you a figure that you can only compare with previous performance of your webshop. It is difficult to give meaningful averages that any webshop can work with. In general, a conversion of 0.5 percent to 2 percent is a good performance for a consumer-oriented webshop.

Two interesting ratios for conversion are the "Order Conversion Rate" (OCR) and the "Buyer Conversion Rate" (BCR).

• The performance indicator OCR divides the number of settled shopping carts by the number of visits.
• The performance indicator BCR divides the number of customers by the number of unique visitors.

It is interesting to look at the differences between these two indicators. If the ratios are almost equal, then visitors to your shop apparently only need one visit to make a purchase. The shopping cart abandoners are then real dropouts in this situation. If the BCR is higher than the OCR, then your visitors need several visits to come to a purchase.

Average order amount

The conversion rate doesn't say anything about the success of your webshop. You want to know what the value of these conversions is. We recommend using the average order value as an indicator in addition to the conversion percentage. The turnover of your webshop is the number of visitors x the average order value. An increase in the conversion rate has no influence if the order value decreases in the same proportion and vice versa. Likewise, an increase in the number of visitors has no meaning if the conversion rate decreases. For the success of your webshop, these two indicators are important and dependent on each other.

Both the conversion ratio and the average order amount can be retrieved fairly easily from Google Analytics (provided you have set this up properly in your webshop).

Improve conversion

Although we are not doing so badly in the Netherlands, we can always improve the efficiency of our ordering process. Here are some tips that have a direct impact on the conversion ratio of your shop.

No account before order (Check-out-without-account)

One mistake many companies still make is requiring an account before ordering is possible at all. Creating such an account often requires exactly the same information needed to get the product to the buyer at all. There is often no hard need to do it and it creates a very large number of dropouts.

Use of additional media in the ordering process

It is also smart to use other media within the shopping cart. During the decision moment, visitors can then ask their questions via telephone or live-chat. That can take away their last doubts to proceed to the sale. It often pays to use the relatively expensive channels where the return is highest. If answering a few questions secures a sale, it is profitable.

Avoid distractions in buying process (no cross- or upselling)

As tempting as it can be, it is out of the question to use cross-selling or up-selling tactics in the shopping cart. It's distracting. These are things that people really need to think about and that takes them out of the mood to actually buy. The conversion rate immediately drops significantly when you do it anyway.

Summary

In this article, we discussed the fourth stage of a customer journey of the E-commerce Performance Model for:

• Indicating the performance indicators "average order amount" and "conversion rate";
• early abandonment of the shopping cart as an important abandonment moment;
• Recognizing drivers in dropout moments related to transparency and trust;
• Improving conversions.

Below is an overview of articles by phase in the E-commerce Performance Model:

• From passerby to customer : coming
• From passer-by to customer : watch
• From passer-by to customer : choosing
• From passer-by to customer : buy
• From passer-by to customer : coming back

Also interested in the critical performance indicators for web shops and where you use them within your customer journey? Perhaps you already use performance indicators, but do they measure the right things for your webshop? Feel free to contact us to discuss this.