Does this sound familiar?
You’ve put a lot of time and energy, not to mention investment, into bringing customers to your eCommerce site and it’s working. All of your stats are indicating a wealth of traffic flowing your way and, thanks to your savvy algorithms and search functions, people are finding the products they require. However, your sales are failing to live up to the forecasts and are falling well below what is expected for the level of traffic you’re receiving.
If this sounds like an issue you keep running up against, it is time to conduct an in-depth analysis of your online checkout process. A useful place to start is to understand the Average Order Value (AOV) of your site to draw out the data it holds.
The Average Order Value (AOV)
AOV, as the name suggests, measures the average total of every order placed on your site over a set period of time. Understanding your AOV can unlock key stats that can inform future marketing activity, site layout and pricing strategy.
It is important to understand that AOV is not sales per customer, neither is it to do with gross profit, or profit margins, instead it delves into the explanations behind these figures.
The easy way to calculate AOV is to take the revenue of a set period of trading and divide it by the number of orders you received over that time. This will give you a figure you can then measure your site against. For instance, if the price range of products on your site ranges from £20 - £50 and your AOV is £60 it indicates that people are buying multiple items but from the lower end of the price bracket, if your real profit lays in the higher value items it’s time to start adjusting your product placement and marketing efforts into promoting these products.
If your product range is diverse it makes sense to apply AOV to different categories, just as you would create menu options on your website. Once you understand how customers are reacting to different products you can diversify your strategy to suit.
AOV should be checked regularly and tied into other metrics such as ROI, Cost Per Conversion and Lifetime Revenue Per Customer.
Of course, AOV relies on having a certain level of sales in order to be effective. If you’re web stats are indicating that people are arriving, browsing but failing to buy it could be an issue linked to basket abandonment.
Finding an abandoned basket or trolley in a supermarket or a store is unusual, finding an abandoned basket online can be a daily occurrence. In the first quarter of 2018 alone, almost 76% of baskets globally were abandoned before purchase.
There are a variety of reasons people may abandon their intended online purchases, but it doesn’t have to be the end of their sales journey. Understanding some of the more popular reasons for abandonment can help you reconnect with the customer and wind up with completing the sale.
A rising trend is deliberate abandonment, as pushed by various money-saving sites, the idea is that customers fill a basket with purchases, register their details, then abandon the basket and wait a few hours for the email reminding them of their abandoned purchases, along with an incentive to complete the transaction – anything from free delivery to 10% off the purchase.
This can prove divisive tactic, with businesses reluctant to give up profit margin and customers prepared to head elsewhere if businesses fail to incentivise. Striking a balance can be tricky but shrewd tactics, such as emails to highlight existing offers customers may have missed, can help ensure a happy outcome for both sides.
Other reasons full baskets fail to convert to purchases is due to cost, either shipping or handling fees, high-priced items or expired discount codes failing to work. In this case there are a number of initiatives that can be implemented to make your audience reconsider, including reminder emails about products, featuring key benefits about products and complimentary items also available via your site.
A final reason for basket abandonment is due to visitors simply getting distracted, or worse, put off by long, complicated forms or clunky processes which can quickly result in a potential purchase for you becoming a guaranteed sale for your competitor. Making this process as slick and easy as possible can provide a welcome boost to your online sales.
There are a variety of options when it comes to offering payment options for customers, and with providing financial details of any kind still a concern for many when shopping online, using trusted options such as PayPal or Worldpay is a crucial step.
Another increasingly popular method for ensuring smooth online checkouts, particularly given the number of returns that can occur during online shopping, is to work with a payment company such as Klarna.
Websites such as Klarna give eCommerce retailers the opportunity to allow customers to pay for products in their own way – either at the point of purchase, so many days after delivery, or in monthly instalments. Over 90,000 merchants in 14 countries currently use the technology, offering customer choice and alleviating payment concerns for the majority of users.
Once online shoppers hold an account they are able to quickly and easily log-in and complete purchases by selecting a payment option and selecting their (pre-filled) delivery instructions.
Minimising the steps from product click to sale completion, understanding where people are dropping out of the process, and putting strategies in place to pull them back are all crucial parts of a successful eCommerce programme. If you’re looking to make your website work harder, get in touch with our team, or take a look at some of our case studies.