Today’s consumers are more informed, discerning, and connected than they have ever been historical. As a result, they’re less patient with businesses that don’t meet their standards online. If your eCommerce site isn’t delivering the kind of experiences customers demand, it’s time to take action right away. After all, if you can’t retain customers on your website, you won’t have them for long in other channels as well. Both the abandonment rate for your shopping cart and the churn rate for subscriptions provide valuable, if not discerning, metrics.
In 2018, the average cart abandonment rate for eCommerce sites was 68.5% and that was an increase from 63.2% in 2017. That’s a lot of potential sales “walking out of an eCommerce store!”
Combating cart abandonment is complicated and there is no magic solution for tackling it. But there are several factors you can consider to prevent it from happening.
To do this, you have to remember that a shopper wants a personalized experience. That means they want a business to understand their shopping needs. It is also why a brand must focus on making online shopping pleasant and easy.
To make this happen, you need to streamline the checkout process while making the entire user experience frictionless. If you’ve noticed a decline in your eCommerce conversion rate then, you need to team up with a digital agency to oversee the problem.
Defining eCommerce churn and abandonment rates
In basic terms, the eCommerce abandonment rate is the percentage of customers who leave without making a purchase. Again, it’s a useful metric for understanding how effectively your website is driving conversions.
In fact, churn and abandonment rates provide the single best indicator of whether or not a business is meeting customer expectations.
In one study, researchers calculated the data from 41 studies and found that an astounding number of customers were abandoning their shopping carts. That figure fell to just under 70%. Therefore, 7 out of every 10 shoppers did not finish their purchases, something that should concern you as an e-commerce business owner.
A high abandonment rate shows that your customers are leaving because your site isn’t basically meeting their needs. A low rate indicates you need to focus on one or two issues that currently need some adjustments.
Figuring the churn rate or recharge rate for subscriptions
To get the churn rate, you take the number of lost customers for a time period and divide them by the total number of customers at the beginning of the period x 100.
Let’s look at an example of what this means:
Let’s pretend your base of customers was 250 at the start of March but you lost 10 customers by the end of the period. In this scenario you would divide 10 by 250, giving you an answer of 0.04 x 100, or 4% for the month.
Calculating the cart abandonment rate
To figure out the abandoned cart rate, divide the total number of completed transactions by the number of beginning sales (or adds to the basket). Subtract your result from one before multiplying by 100 to obtain the rate.
Here is an example of how the rate is determined: 1 – (5,000 divided by 25,000) x 100 equals 80%.
Ecommerce businesses need to track the rates at which customers are abandoning their shopping carts or giving up a subscription.
For example, is the problem that you’re encountering a widespread issue or one that only impacts certain types of customers?
If so, what can you do to fix things?
What can you do to improve your business so that it performs better for everyone?
By measuring and analyzing your churn and abandonment rates, you can gain some valuable revelations that will help you improve your website and poise your business for growth.
Why is measuring the churn rate so important for subscriptions?
Chances are, you already know that reducing your churn rate or cart abandonment online leads to growth. What you might not realize is that measuring either rate will also help you understand how well your website is performing.
Assessing your churn rate is especially important if you have a subscription-run business, as subscribers may “jump ship” or find it easier not to renew a service or product if they’re already a subscriber. This rate also applies to app churn or the number of people who abandon apps that feature products or services.
Common factors used to calculate cart abandonment
Factors that impact shopping cart abandonment include:
- Time to purchase: How long does it take customers to complete a purchase?
- Visit duration: How long do customers spend on your site?
- A number of items not purchased: How many customers add items to their carts but never check out?
- Revenue per visitor: How much are customers spending on your site?
Research reveals that it costs five to seven times more to attract new customers to a site than it does to retain them. Current customers are therefore more likely to buy new products. As a result, the odds of retaining an old customer versus trying to attract a new customer is 60% versus 10%.
By keeping track of your churn and shopping cart abandonment rates each month, you can develop and follow a strategy to retain customers and lower the costs you pay for onboarding new recruits.
Which factors influence conversions the most?
As we discussed above, there are several factors you need to understand to effectively ensure your website is driving conversions.
However, there are two in particular that have a significant impact on how customers view your site. We’ve already discussed one of these factors, or how to purchase time impacts revenue. But, you should also consider how much time visitors are spending on your site overall.
This doesn’t mean you should try to rush them through their purchases. In fact, it’s likely that you’ll see better results if you give customers the time they need to make an informed buying decision. However, if your site is too slow for your visitors, they’ll abandon their shopping cart or leave the site altogether.
How do you stop customer abandonment?
Here are a few ways to reduce cart abandonment:
1. Make sure your website is easy to navigate
Customers should be able to easily find what they’re looking for and complete their purchases with minimal effort. Make the buying process simple by providing clearly marked menu options, easy-to-read descriptions, and useful product details.
2. Reduce the number of steps it takes to make a purchase
You can make the function easier by offering customers a “one-click” checkout.
3. Provide excellent customer service
Customers want to know that they can reach out to your business with their questions, concerns, and complaints. Make it easy for them to get in touch with you by offering multiple contact options, including live chat.
4. Offer convenient shipping options
Customers don’t want to wait. If you’re shipping from one location and your customers are located in another, they’re going to feel frustrated. Make it easier for customers to get their hands on your products by offering expedited shipping options.
Final words: Don’t let customers “abandon the ship”
Customers are more discerning than ever before. They’ve grown accustomed to shopping at businesses online that meet their expectations.
When they’re forced to settle for less, they “walk away” or abandon their shopping cart. If you want to avoid losing these valuable visitors to your competitors then, you need to address the root causes of your customers’ frustrations.
Start by measuring your churn and abandonment rates and analyzing the data to identify areas that need improvement. Once you’ve addressed these issues, you can work to retain your customers by providing excellent service, convenient shipping options, and a streamlined checkout process.
Talk to Website Depot and Grow Your Business Online
You can overcome shopping cart abandonment by aligning yourself with a digital marketing agency that can assess the issue and make the required improvements. Contact Website Depot at (888) 477-9540 for all the details today.