As the Internet phenomenon matures, there is a greater demand on e-businesses to satisfy customer needs. Online businesses, whether large or small, who fail to satisfy customer needs are finding that customers are leaving their sites, never to return. Getting eyeballs to the site is of lesser import compared to getting these visitors to buy something from the site. This problem is not only endemic to the bigger dot-coms, but also affect online small businesses as well.
Abandoned Shopping Carts
Online retailers are being plagued by what is called “abandoned shopping cart” problem. Majority of online consumers starts the purchasing process, but fail to hit the "buy" button before they leave a Web site. In fact, an April report by Boston Consulting Group (BCG) estimates that some 65 percent of online consumers bail out of a transaction and abandon the shopping carts before the final purchase transaction took place. This, of course, represents significant lost sales for the online retailer.
Another study, this time by market analysis firm Datamonitor, estimates that e-businesses lost 3.2 billion dollars in 1999 due to poor customer service. Of the 237 million online transactions attempted in 1998, only 80 million or 20 percent were completed. The study also shows that for every complete online transaction, nearly four times as many are abandoned. If this trend continues, Datamonitor forecasts a cumulative loss of more than $173 billion in potentially salvageable sales over the next five years.
Several reasons have been put forward to explain why shoppers leave their carts in the online aisle. Some suggest that security fears prevent buyers from completing the purchasing process. Others contend that sticker shock after shipping charges get tallied makes them flee. Still others point to the fact that like offline shoppers some people just like to browse. But with the number of online retailers grasping for air to survive, e-companies are concentrating as never before on getting customers to buy.
By all accounts, the foregone sales represent a big chunk of online retail. In 1999, a study conducted jointly by Shop.org and BCG showed that total online business-to-consumer revenues across all categories grew by 120 percent to $33.1 billion, representing 1.4% of all retail sales. In 2000, the market is expected to grow 85% and surpass $61 billion in revenues. To ensure a slice of this increasingly large pie, online retailers should be running on their heels to solve this problem. With the pressure on for dot-coms to produce revenues and profits, every e-tailer should strive to minimize the rate of abandoned shopping carts.
Improve Customer Experience
The problem of incomplete online transactions is not isolated to big money dot-coms alone. Even small businesses have their share of this difficulty, perhaps more so given the lack of robust and sophisticated purchasing systems as well as inadequate technical and customer support personnel that the well-financed dot-coms enjoy.
Abandoned shopping carts highlight the need to improve the total consumer experience, including the shopping and checkout processes. For a small business to succeed online, customer relationships should be a top priority and carefully managed despite the company’s resource constraints. Focus should be given on the best possible (and flawless) customer experience and converting first-time shoppers to valuable repeat customers. While small businesses do not enjoy the same kind of technology that the big dot-coms have, like Amazon’s one-click ordering process, there are several ways small businesses can still improve their services.
To improve the sales conversion rate, and thus enhance revenues and customer retention, small business needs to start with the basics.
1. Quick page download. Customers should be able to download your site on a 28.8 modem in less than 10 seconds. Minimize the use of graphics only to those that are essential to enhance the look of your site, and make sure that you compress the file size. Check your HTML to avoid bloated coding.
2. Keep your site easy to navigate. The site structure should be what your customer wants, not how your organization is organized. To the extent possible, use simple page design focused on moving customers toward completion of their goal. Don’t clutter the page with dozens of features and links that most customers don’t want.
3. Keep the distance between customers and cash register short. In the traditional brick-and-mortar world, service businesses know that the longer you make a customer wait, the more likely it is that the customer will get frustrated and go elsewhere. Not so in the Internet.
4. Communicate product offers clearly. Use clear, concise wording. More importantly, explain clearly the prices and sales terms upfront, and not at the very end of the buying process. You do not want your customers to experience what is called “sticker shock” the customer’s reaction when the price, shipping, taxes and other charges are more than their original expectations. By putting the total costs including shipping and other charges at the start of the ordering process, the potential customer can decide whether he or she is willing to pay the price for the product. Doing so will minimize the rate of shoppers abandoning your site’s shopping cart.
5. Inform customers if the product is available or not. If the specially made costume jewelry in gold is not available, it is best to tell the shopper when he is still shopping so he might pick a silver one instead. Don’t wait until the customer reaches the checkout before telling him that the product he wants is not available, as this pisses people off. There are a number of shopping cart software products that gives you the capability to add, edit and delete products from your inventory, some of which are even free.
6. Implement methods to improve your conversion rate. Send email follow-ups to customers who submit partially submit
7. Keep ‘em coming back. Even the most established web sites are struggling with increasing their goal of building a large pool of repeat customers. On average, it is estimated that 98.7 percent of those who visit sites do not return, even if they make a purchase.
Small businesses aiming to succeed online must rise above their resource constraints and strive to provide quality e-service. Otherwise, they will join the leagues of dot-coms that are slowly fading away to oblivion.
Nach Maravilla is the CEO and Publisher of PowerHomeBiz.com, one of the leading online resources for small and home business information.
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