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Why online retailers will miss out on $18 billion this year

Ross Kramer
Why online retailers will miss out on $18 billion this year Ross Kramer

Call it a double whammy of epic proportions. Shoppers abandon 71 percent of all online transactions before they complete the purchase. The reasons for abandonment vary -- high or unexpected shipping rates, slow delivery schedules, distractions, unavailability of customer service, insecurity, limited payment options, or a simple change of heart are the main causes; but what causes the shoppers to abandon the sale isn't the main issue.


Of bigger concern is why so few internet retailers haven't implemented a shopping cart abandonment solution to recapture these lost sales -- estimated at $18 billion each year. By failing to do so, retailers are abandoning customers on the brink of a purchase. In a longitudinal study of the Internet Retailer 500's shopping cart abandonment habits, Listrak found that just 13 percent had a remarketing campaign in place. That number is up only slightly from 2009.


Why are retailers abandoning shoppers after they abandon a sale? Have they stopped pursuing profits, or are they that attached to their inventories that they hate to see anything go?


Shopping cart abandonment remarketing campaigns, even simple ones, have been shown to convert an average of 20-35 percent of these lost sales. And the campaigns aren't hard to implement or expensive. Many eCommerce platforms such as Magento, 3DCart, and Volusion now offer integrated cart abandonment solutions and most retailers recoup the cost within the first month.


While there are some tactics you can use to help minimize cart abandonment, it will always be a big problem for your online store. So it's up to you to find a way to win back those lost sales.


Here are five tips that will help you implement successful remarketing campaigns:


Create a series of reach backs, don't rely on a single email
A series of three messages greatly increases conversions and revenue, and maximizes profitability because you don't have to offer a discount in the first message. In fact, it's a good idea to wait until the second message. The first message, which will generate the highest results, can be a simple reminder of the items in the cart, the second can include an offer, and the third can state that the cart will expire soon. Give shoppers several opportunities to complete the sale and you'll sell more.


Get the timing right
You should always test different aspects of your email campaigns, but the timing of your remarketing series is one of the most important tests you can run. Don't rely on industry stats or best practices to determine the timing of your campaigns there are too many individual factors -- length of sales cycle, customers' shopping habits, etc. -- that come into play. In our study of the IR500's trends, 62 percent sent messages within 24 hours, up from only 26 percent in 2009. But we've seen clients increase their conversions by sending the first message between 1 and 6 hours after the abandonment. The key is to test to find what works best for you.


Use social proof
Let your customers sell for you! Adding product reviews and customer testimonials to your shopping cart abandonment messages will generate higher sales. Shoppers trust other customers' opinions and the fact that someone else bought the product and experienced good results validates their purchase decisions. It also helps turn your customers into a community of brand advocates. Social proof is one of the most powerful tools you can use in your email campaigns.


Implement a discount ladder for offers
The RFM-based (recency, frequency, monetary value) discount ladder methodology allows you to provide a discount only to shoppers who need it, while the customers who are most likely to purchase do not receive a discount, maximizing profitability. The theory states that customers that have purchased recently, typically within 60 days, are likely to repurchase so they don't require an incentive to do so. Customers who haven't purchased within 61 and 365 days do require an incentive, but not as much as customers who haven't purchased in over a year. By offering the second group a nominal amount, such as 10 percent off or free shipping, and the third group a larger amount, such as 20 percent off or a free gift with purchase, you'll make more money. Not only are you re-engaging past purchasers and prompting them into action, you're making more money on each sale through selective discounts. The profit margins gained through discount ladders are much higher than blanketed 10 percent discounts offered across the board.


Include the right elements
The "right" elements will differ for each organization. What works best for someone else might not be what works best for you, so it's important to test the different aspects. However, there are a few items that all e-retailers should consider including, such as images of the items left in the cart, prominent links to customer service, security icons, alternative payment options, and even recommended products to upsell the customers.


Following these guidelines will help you build successful shopping cart abandonment remarketing campaigns.


Ross Kramer is the CEO and Co-Founder of Listrak.

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