February 24, 2014 Leave a Comment
When it comes to seasonal cycles, most merchants acknowledge that the pivotal fourth quarter requires special focus. The latest data from the MarketLive Performance Index demonstrates that the fourth quarter is indeed a crucible. While traffic spikes and conversion rates get a boost, the ruthless mindset of the holiday shopper leaves no room for error — translating into metrics that reveal top areas for improvement in the year ahead.
Overall, the fourth-quarter and annual metrics in the Index report bring good news: merchants achieved year-over-year revenue gains of 26% for the year and 16% for the fourth quarter — beating industry standards by significant margins in both cases. Moreover, those revenue gains were achieved without resorting to race-to-the-bottom discounting, as average order size for both periods also rose year over year. The feat is especially impressive for the fourth quarter, when merchants saw average order size rise 6.2% despite consumers’ quests for holiday shopping discounts.
But there are performance discrepancies, too. For the year, a significant increase in the add-to-cart, or engagement, rate helped boost revenue gains; once shoppers had placed items in the cart, merchants held the line on “purchase fallout,” with the conversion, abandoned cart, and abandoned checkout rates holding their gain or loss to within roughly 1% compared with 2012.
By contrast, in the fourth quarter, the boost in revenue was tied more directly to the increase in traffic; conversion and add-to-cart rates increased by almost the same percentage, and those gains were undercut by increases in both the abandoned cart rate and the abandoned checkout rate. Breaking down fourth-quarter results even more to focus on the holiday period (November 1 – Jan. 5), the gap widens further, with the both the add-to-cart and conversion rate slipping year over year, in addition to the abandoned cart rate rising.
The numbers from the fourth-quarter crucible suggest one possible pivot point around which to organizing priorities: the all-important add-to-cart rate, which signals intent on the part of shoppers and whose improvement during the other quarters of the year contrasts with the holiday season, when it declined.
Prior to the add-to-cart: develop content to engage shoppers. When it comes to connecting shoppers with relevant products and content and convincing them to add items to the cart, the annual Index data shows that merchants are making marked improvement. But the holiday numbers suggest that they must redouble their efforts if they’re to compete in the battle for holiday shoppers’ engagement. Among the strategies to consider:
Service-centric content. As we discussed in our recent post regarding Google’s “Hummingbird” algorithm update, content that focuses on proactively addressing shoppers’ questions about products, service and pricing is more crucial than ever — and needn’t be relegated to the “about us” section. During the holiday season, when shoppers relentlessly research products and hunt for service extras, this content is even more likely to help drive sales.
Videos focusing on utility. Product demonstrations, installation tips, and video buying guides add significant value for shoppers, as we discussed previously in our post covering key video content. During the holidays, videos can give shoppers the reassurance they need to commit to purchasing gifts without first touching or trying them.
After the add-to-cart: eliminate roadblocks to purchase — across touchpoints. While merchants maintained a relatively steady state when it came to conversion, cart abandonment and checkout abandonment the rest of the year, the holiday season saw slippage across all three metrics — suggesting that merchants can do more to compel shoppers who’ve already added items to the cart to complete purchases, whether via the touchpoint where they started their shopping journey or not. Merchants should:
Use the cart for more than estimated shipping and tax. More than just a cost calculator, the shopping cart should give consumers comprehensive information to support their order, from product upsells to information about product guarantees, returns and exchanges. Free shipping promotions and loyalty club benefits should also be prominent, giving shoppers a bevy of options to successfully complete their transactions. And the ability to print and save cart items for later smooth the path to purchase from online browsing to offline buying.
Consider single-page checkout. While we’ve written before about how no single checkout format dominates among the largest of merchants, prior Performance Index data suggests single-page checkout is becoming more prevalent among specialty and boutique sellers, with 75% of Index transactions taking place via one-page checkout. Furthermore, a streamlined single-page checkout can provide a viable starting point for mobile implementations, which need to be even more frictionless. Whatever the format, merchants should dive deep into their analytics to ferret out checkout problems across touchpoints and devices, and deploy A/B tests to put potential solutions through their paces.
Implement alternative payments. We’ve repeatedly addressed the importance of adopting alternative payments, to enable both desktop and mobile purchasing. Of course merchants should take into consideration their target audience and the prevailing standards for their category — for example, BillMeLater is more of a priority to implement for sellers of big-ticket items such as furniture or jewelry than merchants offering fast-fashion T-shirts — but in all likelihood, offering at least one alternative payment option should be a top priority for 2014.
Download the latest Performance Index report for in-depth metrics, including mobile data and KPIs by vertical, and further strategic recommendations. How do your 2013 metrics compare with the MarketLive Index benchmarks, and how are the numbers influencing your 2014 plans?