3 June 2014 - It’s a great time to be an online merchant. Consumers are showing greater confidence and a growing preference for buying online. Globally online spending is experiencing double digit growth in major categories like retail and travel. But increasing competition, rapid market changes, and finicky consumers create challenges for online merchants.
If you’re an online merchant, you need to continuously look for ways to grow your revenue. Here are 7 indicators that can help you determine how well you are optimizing your sales opportunities.
1. High cart abandonment rates
Cart abandonment rates average approximately 67%. This means that for every 3 consumers that start a cart, only 1 typical will follow-through with a purchase. There are a multitude of reasons for cart abandonment, most relating to price, payment and security.
To reduce cart abandonment, make sure that your pricing is competitive and notify consumers or any additional costs (shipping, taxes, etc.) early in the process. Make sure that consumers have a wide variety of payment options available. There is a clear correlation between the number of payment methods and conversation rates.
2. Limited geographic reach
The beauty of an online store is that you are not limited by geography. If your customers are primarily coming from a single or a small number of regions, you may be missing the opportunity to grow your business.
International or cross border expansion has many benefits but the challenges need to be addressed. Before expanding your geographic region, be sure that you have the right information and resources. Take a look at our resource center for more information on key global markets.
3. Low volume of new customer acquisition
It’s natural – and important – to focus on the needs of your current customers but it’s dangerous for almost any business not to have a marketing engine in place that consistently brings in new customers. If you wait until you see a dip in sales before increasing promotional activity, you’ve waited too long.
For many online merchants, the top 5% of customers generate as much as 40% of revenue. But don’t assume that who those top 5% are will not change overtime. By understanding your top customers and how you’ve acquired them, you can determine which promotional channels are providing you with the highest ROI.
4. High rate of 1—off purchases
Repeat business can never be overvalued. Given the high cost of acquiring new customers, each 1-off purchase represents a lost opportunity and diminishes the ROI of your acquisition programs.
Web site personalization and email nurturing campaigns are great tools for promoting repeat purchases. You can target 1-off buyers with surveys and incentives to help you understand and meet their needs. It’s always important to provide consistency and excellence in customer experience and service to ensure a high level of customer satisfaction.
5. Low referral rate
Are your customers your talking billboards? If not, you’re missing a great opportunity. Referral programs are a great way to maximize customer acquisition ROI and increase sales. Each of your customers on average can influence as many of 300 people.
HubSpot offers great advice on how to use automation tools to build referral programs.
6. Growth rate lower than industry benchmarks
Does 10% growth sounds good? But what if your competitors are growing at 25%? That may mean you’re missing out on opportunities. Identify sources for industry information. The GlobalCollect web site continuously offers new and relevant industry and market reports, infographics and benchmarks to help online merchants.
7. High chargeback rates
What could be more frustrating and less productive than putting time and effort into customer acquisition, then having the transaction reversed because of fraud, improper processing, etc?
Work with your PSP to minimize chargebacks and their negative impact on your online revenue. GlobalCollect offers BI and Managed Fraud Services services to help our customers mitigate risk. You can also read the blog article from ContactMe on the 5 Simple Way to Discourage & Reduce Chargeback Fraud.
Please share with us your own tips for optimizing online revenue. You can also learn more by downloading our resource kit for online merchants.
Shelby Torrence is Senior Global Demand Generation Manager for GlobalCollect.