Why Do Online Shoppers Abandon Purchases? High Shipping Costs Top the List

A new PayPal survey reveals that nearly half (45 percent) of online shoppers have abandoned their carts multiple times in the past three weeks due to high shipping costs, security concerns, and lack of convenience. The average cost of abandoned goods in US shopping carts is $109.

Through the survey, PayPal found the main reasons why shoppers did not follow through on their purchases were:

1. High shipping charges – This tops the list of reasons for cart abandonment with 46 percent citing this as their reason for not making their purchase. Today we are announcing PayPal’s new Express Checkout feature (the PayPal Instant Update API) which allows order details to be shown earlier in the process including shipping options, insurance choices and tax totals. This new feature can help online retailers give shoppers the information they are looking for in order to complete a purchase.
2. Wanted to comparison shop – Shoppers are savvy and want to know all their options before they commit to the purchase. Thirty seven percent said this was their reason for abandoning, making comparison shopping second on our list.

The survey also found that people who have abandoned their carts once are likely to abandon them again. Some additional information depicted by the survey results include:

• Nearly half of respondents have abandoned their carts in the last three weeks.
• More than 25 percent left the site to search for a coupon.
• One third of shoppers later returned to the same site to buy.
• An additional 20 percent purchased the items at a brick and mortar store or competitor’s Web site.

Building Loyalty in Business Markets (B-to-B)

There’s an interesting article in the Harvard Business Review that’s worth reading. It questions current theories regarding customer retention and the link between company profits & customer loyalty.

Retailers Now Top Loyalty Marketers

U.S. retailers now constitute the largest collective market for loyalty reward program memberships, outstripping travel-hospitality and financial services aggregate memberships, according to Colloquy.

According to its latest research, across-the-board retail loyalty program memberships now number 701 million, representing 39% of the U.S. loyalty market. That compares to 556 million in travel-hospitality, which includes airline, hotel, gambling, car rental and cruise programs, representing 31% of the market, and financial services credit card programs at 422 million for 23% of the market.

“With the travel category in maturity and the financial services category likely to contract, we expect retailers to be at the forefront of innovative loyalty marketing for years to come,” said Colloquy partner Kelly Hlavinka, in a statement.

Source : Colloquy

Loyalty Leading Indicators

• Nearly 90% of Americans participate in some type of rewards program, and most are enrolled in more than one. (BusinessWeek)

• From 2006 to 2008, U/S. loyalty program memberships increased from 1.341 billion to 1.807 billion – an adjusted growth rate of nearly 25 percent. (Colloquy)

• 96% of people are currently a member of a reward scheme and 64% of people belong to three or more loyalty schemes. (The Wise Marketer)

• Reward program members are 70 percent more likely to be word-of-mouth champions (defined as customers who are "actively recommending" a product, service or brand) than the general population. (Colloquy)

• The percentage of overall active memberships in the U.S. – those memberships that demonstrate some type of engagement within a 12-month period – remains at 43.8 percent, with a blended average of 6.2 active memberships per household. (Colloquy)

• Consumer expectations regarding brand value went up 20 percent this year versus last. (Brand Keys)

• Just under two-thirds of consumers (65 percent) say price is becoming more important than convenience in brand purchases. (Information Resources Inc.)

• Seventy-three percent of customers who are enrolled in rewards programs say that they hope that data generated as a result of their participation in rewards programs are used to develop a better program for them. (Market Platform Dynamics)

Overstock.com Taps Online Community as a Supplement to Loyalty Program

Capitalizing on the power of word of mouth and new media, Overstock.com is emphasizing its loyalty program, The District O Private Lounge as a new channel for customer intelligence. Known for offering brand-name merchandise at discount prices, Overstock.com recently revitalized its Club O loyalty program by utilizing rich customer feedback. Featuring 300+ active members, the Private Lounge is designed to enable Overstock.com customers to play significant roles in keeping the online retailer fresh and its customers loyal. In its first year, the community has helped the retailer refine its popular television advertising, reinstate some of its customers’ most-missed Web features and reinvigorate Overstock.com’s holiday shopping sales.

The District O Private Lounge, which initially kicked-off with the goal of enhancing Overstock.com’s loyalty program, has since blossomed into a primary source for customer insight that extends well beyond Club O. Communispace, which creates online customer insight communities, recruited members for the community and now engages them in activities ranging from open discussions around the best and worst loyalty programs, to generating feedback on the retailer’s television commercials. Energized by the community experience, members also initiate their own activities in the community, generating unexpected insights that keep Overstock.com in step with its customers’ changing needs.

"Although we’ve long relied on quantitative research to understand our customers, we’ve never had a way to engage in active dialogue with them, something that’s incredibly valuable for an online business," said Patrick Byrne, Overstock.com Chairman and CEO. "We’ve already established a meaningful connection to our customers through The District O Private Lounge, and we’re looking forward to learning more from these members. Their distinctive voices will clearly resonate in our strategy and communications in the future, specifically within our enhanced Club O program.”

"Businesses are facing new challenges as consumers adjust spending and change habits to cope with the recession," said Diane Hessan, CEO of Communispace. "Overstock.com is committed to understanding its customers’ challenges by listening and engaging with them directly. The best way to build and sustain customer loyalty, especially now, is by making your customers active stakeholders in achieving mutual success."

Source : Retail TouchPoints