At the end of 2011 we observed some significant new buying behaviours that are set to continue in 2012, and will impact online and offline commerce. It’s a blend of online, mobile, social, multichannel, discount seeking and connected customer behavior. Sounds complicated.
To simplify things, we’ve developed three customer behaviour types (personas) which describe these new behaviours:
The Connected Customer
The Discount Seeker
The Social Butterfly
Each of these behavior types don’t describe a unique segment of customers, but more a behavioral trend. The point here is that many customers will exhibit one or more of these three behavioral characteristics. For example, Connected Customers and inherently social, and Discount Seekers often use multiple devices to research purchases, just as Connected Customers will.
These three behaviour types are useful because it allows us to think about the types of marketing tactics we should be deploying in 2012 to address the new buyer behavior.
To make things simple, I’ve made a short Prezi (as sort of dynamic infographic) which highlights each of the personas, their characteristics, and what ecommerce teams should be thinking about in relation to each group.
If you’d like to understand more about online buyer behaviour in 2012, then we recently recorded a Conversion Academy webcast which you may enjoy:
Let us know what you think about these three different types, and what you are seeing in your ecommerce world! Are there any other new behaviour types that you’ve spotted? (…)
In 2011, the shopping cart abandonment rate continued its rise, reaching a new all-time high of 72% by the end of the year. In this blog, I’ll try to answer why the shopping cart abandonment rate has risen, despite a focus on conversion optimization by many ecommerce sites. I’ll also explain why I predict that the shopping cart abandonment rate will continue to rise in 2012.
Everything is more exaggerated over the holiday period: Retailers offer a dazzling array of new products, coupled with equally dazzling promotions, while trying to manage the constant problem of out-of-stocks. And customers make an abnormal number of purchases in a very short period and abandon their shopping carts in droves as they search for the best deals.
The 2011 holiday season was no exception. It was a bumper year again for ecommerce, with more than $37 billion in online spending in November-December, up 15% from 2010, according to comScore. And more than half of all online orders over the period had free shipping. While the volume was up, the average order value was down, reflecting widespread promotional offers.
Studying the shopping cart abandonment rate reveals interesting patterns in the run up to the holiday season.
As in previous years, many customers anticipated promotional offers and deferred purchases, causing the abandonment rate to shoot up, averaging 85% in the weeks running up to Cyber Monday.
Compare this with the average for 2011 of 72%, up slightly over 2010. The highest abandonment day of 2011 was at 89.2% on November 23, the Wednesday before Black Friday.
Discount Seeking Behavior
An e-tailing group study conducted at the end of 2011 found that 47% of online buyers would only buy discounted products, except under exceptional circumstances. The same study shows that 73% of consumers rate unconditional free shipping as a critical feature when making an online purchase. (…)
The theory goes that if you make it easy for visitors to follow a simple path to conversion, you’ll generate traffic and revenue.
And yes, this is correct.
But this “single track” view of conversion is overly simplistic.
In this column, let’s explore why, and how it’s important to consider all of your available conversion paths.
Why Customers Don’t Buy
Only 3 percent of visitors buy within one session on an e-commerce site. And once they get as far as the shopping cart, 71 percent will abandon. To understand why, Forrester Research asked 3,000 people why they abandon.
Source: Forrester Research, May 2010; “Understanding Shopping Cart Abandonment” Note: Respondents were able to give multiple answers
As it has been for years, the cost of shipping is still the number one reason why people abandon their online shopping carts. What’s interesting to note is that none of the top reasons have anything to do with the actual checkout process. They’re all behavioral and related to lack of readiness or willingness to pay the final purchase price.
So, making the checkout process easier for the first-time buyer is only part of the answer when addressing cart abandonment. In fact, many have learned that once changes are made, abandonment rates are still high.
Multiple Paths to Conversion
Visitors will make multiple visits to your site before finishing a sale. And on their journey, there are many different purchase paths they may follow.
After analyzing the online buying behavior of over 600,000 consumers across numerous e-commerce sites, I learned that surprisingly 75 percent of shopping cart abandoners would actually return to the site they abandoned within a 28-day period. This defies conventional wisdom: we polled online marketers and 81 percent believed that the majority of abandoners never return.
Additionally, these returning visitors are more likely to finish their purchase, as well as make future purchases. (…)
In 2006, a Wharton professor first noticed that online buyers were more likely to respond to a free shipping offer that resulted in a savings of $6.99 over an outright savings offer of $10. The explanation was that it made the online price more comparable with the offline equivalent.
This fascinating insight into buyer motivations has contributed to on a major new piece of research into online buyer behaviour, which I’ve been working on over the last few months. It will be published on December 13th as an ebook titled ‘The Science of Shopping Cart Abandonment.’
To mark Black Friday, I’ve drawn from some of this research to look at the effects of holiday promotions, and how different price points impact buyer behavior. In particular, I’ll look at the relationship between the cart value and the shopping cart abandonment rate.
What are key price points that trigger abandonment? And can different pricing tactics lead to more conversions without eroding margin? I began my research analyzing a random sample of 264,631 abandoned shopping carts in August 2011, from a cross section of B2C e-commerce sites.
What we already know is that the value of the shopping cart has a disproportionate impact on whether an e-commerce purchaser will buy or abandon. What we have discovered is that it’s not a linear relationship and too simplistic to assume this as a general rule. This leads us to conclude that there are three promotional tactics that merchants should test this holiday season to improve conversions:
Offer discounted shipping for low cost shopping carts.
Set a $99 minimum order for free shipping.
Consider specific promotions for individual products with varying abandonment rates.
1. Offer discounted shipping for low cost shopping carts. As might be expected, higher value shopping carts are abandoned more frequently, and as a broad rule, this holds true. (…)
It’s official: Free shipping is the shoppers’ top retail promotion of choice, driving the majority of customers to buy and to spend more than with any other promotion. This holiday season, customers will be even more price-sensitive, looking not only for the best prices, but free shipping and returns as well.
As we have written about before, customers have become trained to wait for holiday offers prior to making purchases. A tighter economy suggests that this holiday season should see good growth for ecommerce sites as consumers look online for the best prices. However, there is evidence that the 2012 consumer is also moving online to save money across a spectrum of goods, including luxury items.
New research by the e-tailing group shows that 73% of consumers rate unconditional free shipping as a
critical feature when making an online purchase.
The October 2011 study, “The Connected Consumer,” also shows that free returns are a critical feature for 70% of consumers, followed by discounts, coupons and rebates.
We shouldn’t be surprised that free shipping is so important. After all, the number one reason why consumers say they abandon shopping carts is the cost of shipping and handling.
Many customers don’t understand why they should pay shipping charges at all. They don’t see the hidden costs for distribution built into the product in-store, and they consider an online purchase to be an alternative to going to the mall when they can afford to wait for delivery. The inconvenience of waiting is offset against the inconvenience of driving to the mall.
The e-tailing group’s research also shows that price is the most critical factor when considering a purchase, whether online or in-store (79%). The convenience of having a home delivery is number two (63%), but this is offset by impatience to get the product quickly (55%) or the ability to purchase from a local store (45%). (…)