Get Customers to Race Through Your Payments Funnel


Thursday, August 29, 2019
Posted by Andrew Marshman to Secure eCommerce, Payments and Industry Trends, Omni Commerce
Share this:
No matter how good the products, how nice the website and how slick the flow, there are so many reasons why an eager prospective customer does not convert into a paying customer even after they have filled their basket. The buying decision has been made, but so often customers don’t complete the transaction.
Wikipedia defines the purchase funnel as “a consumer-focused marketing model, which illustrates the theoretical customer journey toward the purchase of a product or service.” Once at the purchase stage, the merchant needs to convert that customer. Wikipedia defines the conversion funnel as “a technical term used in e-commerce operations to describe the track a consumer takes through an internet ad or search system, navigating an e-commerce website and finally converting to a sale.” However, Wikipedia doesn’t say much more beyond loosely defining those terms.
Getting that conversion funnel right and understanding its performance is invaluable to eCommerce merchants. Competing with others is more than just a factor of product and price.
According to IMRG, as an industry average, 57 percent of customers placing a product in their eCommerce basket move to the checkout process. Of those, 58 percent complete the payment successfully. So, of those customers who have seemingly made a decision to buy rather than just browse, only about a third become paying customers. Just imagine a physical store, where two thirds of customers drop their basket and walk out of the store. Retailers wouldn’t accept it, but they do in the eCommerce world.
The checkout process and the stages in it are largely a design choice for merchants to make. Simplicity is often best.
- Should the delivery charge be clearly stated up front or added to the total somehow through the checkout process? Keep in mind customers will look for other merchants that don’t add delivery charges.
- Should a voucher code box appear on the page? It’s sure to drive customers away in search of money-saving vouchers and they may not come back particularly if disappointed in that search. Wouldn’t it be better to just reduce the advertised price rather than send customers on a wild goose chase?
- Should customers be forced to register or can they just check out as “guests”? For one-off shoppers, the registration process adds more clicks and more time to the process.
- Should retailers offer something else to add to what the customer has already decided to buy? It’s a great opportunity for additional sales, but not if it makes the customer think twice about the purchase.
Merchants frequently talk about the utopia of a frictionless payments process – but then they introduce many of these friction-generating side tracks to what otherwise might be a quick checkout process. There’s a cost-benefit analysis to be considered. Many of these side tracks may have some benefits, but at what cost of lost sales?
Merchants need to have their shoppers focused on purchase conversion; getting them through the neck of that funnel as quickly as possible.
Even after these potential distractions from customer conversion, there’s the payment itself to fulfill. One benefit of the registration side track is that returning customers may be able to confirm their payment from card-on-file quickly. For others, the payment method needs to be selected, the details entered and, in some cases, the authentication process needs to be performed, which means remembering a password or reaching for the mobile. It’s easy to assume that this process is all about card authorization, but alternate payment methods (PayPal, Klarna, Skrill, Pay-by-Bank…) are now well entrenched in eCommerce and growing.
It’s essential that merchants use payment service providers that can offer the payment methods demanded by their customers. The more geographies and demographics that a merchant covers, the more challenging that can become. Failure to offer a customer’s preferred payment method and even failure to make it immediately apparent that the payment method is available will again lead to customers going elsewhere. And, don’t let the payments page redirect to another differently-branded site or jump out for issuer authentication – that’s more lost customers.
With secure customer authentication (SCA) on the horizon, that conversion funnel is likely to be subject to further disruption and increased basket abandonment. It makes the need for careful page design and flow all the more important for eCommerce checkout.
All of these opportunities to drop out of that conversion funnel add up. That’s why only one-third of committed buyers become converted customers.
Achieving high success rates of conversion once the customer has made a buy decision is not luck and it is predictable. Merchants can analyze the point at which customers drop out, how long each step takes, which side tracks lead to a dead end and which payment methods provide the best approval rates and the fastest response times. It’s essential that this analysis be performed to streamline that funnel.
Sir Dave Brailsford, the former performance director of British Cycling, adopted the doctrine of marginal gains to great success. The same doctrine has since been applied to other areas of business and lifestyle in pursuit of improved achievement. The same can also be applied to the eCommerce checkout process. Reducing basket abandonment rates at every stage will ultimately result in more customers getting through that conversion funnel. Each stage may only need to be improved by a small margin to collectively have a large impact on the merchant’s bottom line.
Visit our Strong Customer Authentication center for dedicated, industry-specific resources.
Related Blog Posts
Merchants Don’t Need a Payments Gateway, They Need a Payments Hub
The term “payments gateway” over-simplifies what it takes to process a payment. The terminology comes from the early days of online payment processing, but has now entered the vernacular for all aspects of merchant payments, including online, mobile and in-store.
How to Recession-Proof Your Retail Business in 2021
2020 has been a challenging year for retailers, many of which who were — understandably — unprepared to deal with the pandemic. With millions of people in the U.K. in lockdown, consumers and businesses have had to change the way they work and live, and the way they shop and pay.
Adding Fuel to the Fraud Fire
Payments fraud is a widespread and difficult issue in the fuel segment. Fuel dispensers are a common target for certain types of fraud – and fuel merchants often lack visibility into the level and impact of that fraud.
A Robust Fraud Strategy Is Crucial for Airline Industry Take-Off Post-Pandemic
With national lockdowns and bans on international travel significantly curtailing passenger numbers, the airline industry has been one of the worst hit by the global COVID-19 pandemic. It’s been estimated that the global airline industry will lose up to $252 billion in 2020.
The Rise of “Invisible Payments” in Latin America
For retailers throughout LATAM (and the world), driving sales and loyalty depends on keeping up with top payment trends, which are invariably driven by consumer demands. “Invisible payments” is an emerging trend that is already paying benefits for a host of retailers — and it could be a game-changer for Latin America.
Agnosticity: Giving Fuel Merchants the Freedom and Flexibility to Innovate
The absolute minimum that customers demand from their transaction at the fuel stop is a fast, convenient and secure payments experience. But there is also room for fuel merchants to build loyalty and boost upselling by delivering more than just a good price on fuel and a fast payments process.
Pivoting to the Digital Future: Secure eCommerce in Africa
With digital payment volumes growing throughout the world, payment players in Africa must modernize their platforms to increase revenues, deliver innovative offerings and secure customers. But how can this be done in a continent as large — and as diverse — as Africa?
Learn How the Payments Gateway Drives eCommerce and Mobile Commerce
Merchant Payment Fundamentals: The Payments Gateway
Payments is a complex area for merchants with technology and consumer trends constantly changing. eCommerce and mobile commerce are booming and the lines between physical and digital shopping experiences are increasingly blurred as consumers shop across channels.
Could COVID-19 Be India’s Cashless Catalyst?
India’s push towards a digital economy has accelerated over the years, with a supportive regulatory environment, home-grown technologies and innovation around digital infrastructure improving “last mile” connectivity to the remote towns and rural areas of the country. While the “Digital India” drive has been consistent, the COVID-19 pandemic has brought out the true value of digitization for businesses and consumers alike. It is a watershed moment and has fast-tracked the pace of digital adoption, particularly for payments, which now plays a critical role in economic recovery.
Platform Driven Payments Can Drive Improved Profitability for Fuel and Convenience Store Merchants
Those of us who drive often don’t think too much about refueling our cars unless or until our tanks are nearing empty. And as long as the price is acceptable and the transaction efficient, a quick, convenient fill up is all we need.