One marketer's attempt to lure back spurned online shoppers.
Your feet are killing you. You've been shopping for hours, cruising up and down the aisles, weaving in and out of clothing racks, book stacks, flipping through piles of CDs. You're standing in the check out line, but when you get to the register, it's broken. And it's the only register in the store. There's nothing to do but walk away. As you slump dejectedly towards the exit, a clerk smiles and invites you to come back again later. Yeah, right. Feeling totally cheated, you walk out the door. Your shopping cart is left behind, filled to the brim with goodies you'll never take home.
In a brick and mortar world, this shopping nightmare would be unusual. Move the whole scenario online, though, and it's all too typical. Forty-four percent of online shoppers experience a technical failure at check out, according to a study by the Boston Consulting Group (BCG). It's why cyberspace is littered with abandoned shopping carts - customers make their selections, but click away from a site in total frustration before closing the deal. And it's happening a lot: An amazing 65 percent of shopping carts are eventually abandoned. Potential revenue loss to e-tailers: Billions.
The most common glitches that cause failed purchases will probably make e-tailers' blood run cold. "Pages on the site take too long to load, the product isn't in stock, the computer crashes, they can't get the site to accept their credit card," says Eric Yolles, analyst at BCG. Last year, this happened to four out of every five online shoppers. And these unfulfilled purchases create a negative spiral. Twenty-eight percent of shoppers who have experienced a failure will not buy from that site again. A smaller but still significant 10 percent say they've stopped shopping online altogether.
It's a problem that keeps Richard Hoffmann up at night. He's the president and COO of Hanover Brands Inc., a subsidiary of Hanover Direct Inc., in Weehawken, New Jersey. Hanover Brands oversees the direct marketing activities for 12 catalogs and their accompanying Web sites. The company services more than 4 million customers each year. Its catalogs (which include The Company Store and International Male) have been online since 1996, and 10 percent of its sales are via the Web.
In its catalog sales, Hanover boasts a near 99 percent conversion rate (the ratio between buyers and browsers). Imagine the company's shock when it learned that conversion rates for catalog-based e-tailers hover in the 2 percent range. Says Hoffmann: "I have very few abandoned shopping carts when people call me to place an order out of the catalog. When you're talking to someone on the telephone, they tend not to abandon the phone call."
But the black hole of cyberspace is another story - strewn with forsaken goods. To solve the problem, Hanover fell back on a direct marketer's best friend, its database. Six months ago, company execs began to track customers who were abandoning their carts. They surveyed shoppers by e-mail and even invited a few to join focus groups. They also hired BizRate.com to have all their customers rate the shopping experience when they logged off the site. Using this data as a starting point, Hanover began to cook up some solutions. The goal: To increase the company's conversion rates by at least 50 percent.
Today, their ambitious task has begun to yield some results. Hoffmann says that some catalogs have seen conversion rates increase by one-third. This month, he expects to expand the anti-abandonment program across all of Hanover's catalogs.
Still, Hanover faces a stiff challenge, because consumers abandon shopping carts online for many reasons, says Yolles. Some are just typical consumer vacillation. "Consumers sometimes get cold feet with a purchase. They change their minds. Or, they get a desire, at the last minute, to actually touch and see the product," he says. And then there are typical newbie concerns, such as the fear of sending credit card information into cyberspace. Or the haunting feeling that there really isn't anyone on the other side of the modem to ship your items. Although many e-tailers attribute low conversion rates to these reasons, it's actually technical difficulties that disrupt most online sales, according to Yolles.
That's just what Hanover is trying to avoid in their anti-abandonment campaign. The company's database revealed that customers were in fact indecisive, and that they wanted the same level of service that they receive when they place a phone order. To accommodate their clients, Hanover installed some wetware - human beings - into the online shopping process. Now, when a customer is on the verge of abandoning merchandise, a message pops up on the screen offering help. A message will also pop up if a customer comes back to the same order screen several times and is clearly trying to make a decision. Hanover is currently testing three different ways of making that human interaction happen: It could be a chat box, a phone conversation on the Web site, or a representative may call the person at their home.
Why not just put a link to a live person on the order page? "We've learned that the simplest way, may not always be the most cost effective way," says Hoffmann. "If we just put a button on the order page, everyone wants to talk about their kids and the weather. It may help our conversion rates, but it could be very costly to get into undirected chat," he says. "It's the same thing you see in stores and everywhere else. We need to politely service our customers and move on to the next customer."
Havover has also tried to improve its shopping carts. First step: Axe the jargon. For instance, the company used to ask customers whether they wanted to "modify" or "update" their cart. Now it asks shoppers whether they want to "change" what's in their cart instead. They have also added cool graphics: Pictures of the products that the customer is about to buy appear in the cart. "If I've clicked on a blouse that's blue, I should see a picture of a blue blouse in the cart," says Hoffmann. "If I see red pants, I know I've put the wrong thing in the shopping cart."
The company has turned the entire concept of "abandoning" a shopping cart, wheels side up. Hanover realized that clicking away from the shopping cart doesn't mean that the customer will never want to buy that product. More likely, the person just may need more time. In the real world, it would be ridiculous for retailers to allow patrons to leave full carts strewn about their stores. But in cyberspace, what's a few extra bytes of memory? "We're encouraging people to use the shopping cart as an area where they can, in fact, put things that they want to purchase - it's a wish list," Hoffmann explains.
With initiatives like Hanover's, Yolles expects that the percentage of abandoned carts will continue to go down. But he doesn't see a dramatic decline over the next few years. And there will always be reasonably high rates of abandonment, he points out. "There will always be a percentage of browsers and a percentage of buyers," he asserts. "If the quality of the purchasing process improves, however, more browsers will be encouraged to buy."
But first, e-tailers will have to unravel the mystery of what people are looking for online. Break-through technology won't make the problem of abandoned shopping carts disappear, Yolles says. Common sense solutions - such as faster loading pages that aren't weighed down with superfluous graphics, and ensuring that products are in stock - would go a long way to make certain that the merchandise finds its way home. "But the number of retailers that don't even do the obvious is shocking," he says.
More e-tailers are going to have to figure it out. As the cost of acquiring online consumers continues to rise, inability to close the deal will become increasingly expensive. And dangerous. Because when customers experience shoppus interruptus, they have good reason to avoid your home page altogether.