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Understanding Customer Logic: How one company took two design approaches and saw a 167% difference in conversion

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Home arrow Site Optimization arrow Shopping Cart Recovery Tested
Shopping Cart Recovery Tested
Tuesday, 12 July 2005

Synopsis

Topic: Shopping Cart Recovery — How we refined our email messaging to achieve a 263% increase in the recovery of abandoned carts

This research brief will answer the following questions:

Findings

1. What is the most effective way to handle shopping cart abandonment?

In a previously published experiment, we tested a series of carefully crafted email messages in an attempt to recover abandoned orders for a large online service provider, which we will refer to as Company A.

The details of the test were as follows:

  • Company A used a recurring monthly subscription model.
  • They offered a free 30-day trial to encourage sign-ups. They were confident that once someone had tried their service, he or she would continue to subscribe after the trial period.
  • Step 1 of the company's order form included an email sign-up. This was implemented because many potential customers would "back out" when they realized a credit card number was required for the free trial.
  • We implemented a carefully crafted email campaign to re-capture lost sales.
  • For six months, we tested a sequence of three automated emails sent to these prospects over a period of 4-7 days.

Here were the results of the test campaign:

Company A – Order Recovery Campaign
Metrics First Email Second Email Third Email
Email Messages Sent 1,226,841 1,188,011 1, 145,661
Click-Throughs 38,044 20,516 23,338
Click-Through Rate 3.101% 1.7 27% 2.037%
Sales 14 28 1066 1583
Conversion (Click-to-Sale) 3.754% 5.196% 6.783%
Conversion (Email-to-Sale) 0.116% 0.090% 0.138%

Check box What You Need to Understand: Over a six-month period, Company A was able to recover more than 4,000 lost sales.

Beyond the nominal cost of sending the email, these 4000 orders were obtained without any additional marketing costs, which dramatically increases yield-per-visit and return-on-investment. It also lowers cost-per-acquisition.

KEY POINT: The most important metric in the chart above is the email-to-sale conversion rate. While click-through data can help you refine your messaging, the real indicator of success is actual recovered sales.

Much of what we learned from this test can be applied to subsequent testing (see below). Notably, we determined that email was the medium of choice for cart-recovery efforts. While outbound telephone customer service may be worthwhile for some companies, it is simply not practical for a great many others.

Perhaps most importantly, we realized that the problem of abandoned shopping carts is ultimately one of customer service. And some of the most productive email marketing opportunities are in customer service communication. However, it is important not to regard your customer service emails as just another opportunity to bombard people with a hype-laden sales message.

2. How effective are current cart recovery efforts?

Recently, we refined our basket recovery approach through subsequent testing with additional research partners. We set up a series of micro-tests with Company B, another online service provider.

Our initial micro-test used the following parameters:

  • Step 1 of Company B's order form asked for the email address.
  • We implemented a two-email sequence for abandoned orders. The first email was sent one hour after an incomplete order; the second email was sent 24 hours later.

Here were our initial test results:

Company B – Order Recovery Micro-Test 1
Metrics First Email Second Email
Messages Sent 54,723 50,124
Click-Throughs 2102 883
Click-Through Rate 3.84% 1.76%
Sales 181 96
Conversion (Click to Sale) 8.61% 10.87%
Conversion (Email to Sale) 0.33% 0.19%
Price Point $29.00 $29.00
Total Revenue $5,249.00 $2,784.00
Revenue Per Click $0.40 $0.32
Revenue Per Email $0.10 $0.06

Check box What You Need to Understand: This micro-test generated an additional 277 sales resulting in $8,000 recovered revenue. The conversion rate (email to sale) of this test was a marked improvement over our six-month test above. The first email was a 184% improvement and the second was a 111% improvement in conversion.

In our second test we wanted to try and optimize our yield by offering an incentive in the second email. We reduced the purchase price from $29.00 to $19.95 (approximately 33%). Here are the results of the revised (incentivized) second email side-by-side with the original second email:

Company B – Order Recovery Micro-Test 2
Metrics Second Email (Original) Second Email (Revised)
Time 24 hours after 24 hours after
Messages Sent 50,124 5911
Click-Throughs 883 107
Click-Through Rate 1.76% 1.81%
Sales 96 41
Conversion (Click to Sale) 10.87% 38.32%
Conversion (Email to Sale) 0.19% 0.69%
Price Point $29.00 $19.95
Total Revenue $2,784.00 $817.95
Revenue Per Click $0.32 $0.13
Revenue Per Email $0.06 $0.14

Check box What You Need to Understand: The addition of an incentive to the second email improved the overall conversion (email to sale) of that email by 263%. Even at the lower price point, the revised email still produced 133% more revenue than the original email.

KEY POINT: Utilizing an incentive to recapture abandoned carts has proven to be one of the simplest and most cost-effective email marketing techniques that we have tested. This is especially true for service-based or subscription-based companies where extra sales do not incur additional support or product costs.

3. Which cart-recovery email templates are most effective?

To aid in your cart recovery efforts, we have included a two-email sequence below that can be used as a template.

It is important to note that you should customize these to fit your own business. Ideally, you will refine and test a number of customized approaches.

First Email:

Hello:

Thank you for visiting ________.

We noticed that you did not complete your order, and we wanted to do everything we can to help.

To complete your order in two minutes or less, just visit our one-page, simple order form:

LINK

Product or service benefits should go here.

If you have any questions about our products/services, please contact us using one of the following methods:

PHONE NUMBER
EMAIL ADDRESS
WEBSITE ADDRESS

Please let us know if there is any other way we can help.

Thanks,

Personal Signature

P.S. Use the postscript to provide an additional incentive or notice of a money-back guarantee.

If you want your name removed from our records, please click here:

SIMPLE UNSUBSCRIBE INSTRUCTIONS

Second Email:

Hello:

We are not sure if you received our previous email, but this is our last attempt to contact you.

____ days ago, you started to place an order at __________. Somehow, you were unable to complete the form.

Was the problem on our end or on yours? Is there any way we can help?

INCENTIVE

(Example: We apologize for any difficulty you may have had with our ordering system. Our customer service manager has approved a special price of $19.95 if you would like to give us one more chance.)

There are two ways to complete your order in two minutes or less:

  1. Use this link to visit our one-page, simple order form:

    LINK

  2. Call (toll-free) 800-555-5555. We are standing by to answer your questions.

If you are not satisfied with your purchase, we will give you a complete refund, no questions asked.

Please let us know if there is any other way we can help.

Thanks,

Personal Signature

P.S. If you do not respond to this email, we will remove your information from our servers. There is no need to unsubscribe.

If you want your name removed from our records immediately, please click here:

SIMPLE UNSUBSCRIBE INSTRUCTIONS

4. What are the best practices for recovering abandoned shopping carts? (10 proven techniques)

  1. Collect email address (and possibly also the phone number) in the first step of your order process so you are able to contact customers if they do not complete their orders. This may seem obvious, but many site owners overlook this simple step that enables the whole cart-recovery process.
  2. Focus on service. Many abandoned carts are caused by problems or frustrations with the order process. Your potential customers will be much more likely to respond if they sense that you are genuinely interested in helping them. Let them feel your authentic concern.

    To do this, consider using text similar to: "We noticed that you did not complete your order and we wanted to do everything we can to help. We are concerned that you may have encountered an error while completing your order. How can we assist you?"

  3. For some businesses, telephone-based cart recovery will be ideal. However, for most businesses, a well-crafted email sequence will recover many of your lost orders without alienating privacy-concerned users with a bothersome phone call.
  4. KEY POINT: Respond immediately. It is important that you respond as soon as possible after the carts are abandoned. The more time that passes, the more likely customers will forget about your offer. If possible, automate your first message so that it will be sent out within minutes of the abandoned order.
  5. Automate the entire email sequence to control labor costs and optimize the precision of your testing.
  6. Track click-through rate, conversion rate, and other key metrics in your email messages. This will allow you to test and optimize your messaging over time.
  7. Test the ideal number of cart-recovery messages for your unique business. We have found that two or three messages are usually best. While three messages will sometimes recover slightly more orders overall, you do run the risk of alienating potential customers and generating spam complaints.
  8. Test a variety of sending schedules. Pay attention not only to elapsed time since the cart abandonment, but also to day of the week, time of day, and so on. A variety of time factors can affect the performance of your recovery efforts.
  9. If possible, design your email messages so that a link will take the customer back to the abandoned cart with the item or items already added and as much information as possible pre-populated in the order form.
  10. Utilize incentives to encourage potential customers to come back to your site and complete their orders.

By designing a well-crafted email sequence based on these templates and techniques, you could significantly improve your bottom line with a minimum investment. Offering an incentive has proven to be one of the most effective ways of increasing conversion rate of emails designed to recover abandoned orders.

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RELATED MEC REPORTS:

Literature Review

As part of our research on this topic, we have prepared a review of the best Internet resources on this topic.

Rating System

These sites were rated for usefulness and clarity, but alas, the rating is purely subjective.

* = Decent | ** = Good | *** = Excellent | **** = Indispensable

About This Brief

         Credits:

Editor — Flint McGlaughlin

Writer — Brian Alt

Contributors — Jimmy Ellis

HTML Designer — Cliff Rainer

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