Are You Closing the Online Deal?

According to the New York Times, one of the dirty little secrets of e-commerce is how many customers proceed to an online checkout and then walk away from the transaction without purchasing anything.  Low closing rates (the ratio of potential sales at final confirmation to completed sales) represents a serious customer service issue and missed revenue opportunity for retailers, particularly given the growing importance of e-commerce, the cost of building and maintaining e-commerce sites and the need to deliver a compelling brand experience.

While there is no industry wide data, some e-commerce companies estimate that only about 3 percent of shoppers who visit an e-commerce site buy something.  When these consumers actually do load their shopping carts, as many as two-thirds of them end up abandoning the transaction.

Worryingly, closing rates may be getting worse.  According to comScore, the number of 2009 Q2 visitors to e-commerce sites who eventually bought something shrank for many sites versus the year before.  For example, there were 26 percent fewer buyers at and 30 percent fewer buyers at  There are many reasons for customers to walk away from their purchases:

  • The online customer experience is poor. For example, the navigation, messaging or ease of use could be ineffective or even broken;
  • Many customers prefer to use online visits for research purposes only, with no intention to buy;
  • In the internet, comparison shopping is a click away and many opt to shop around;
  • Many customers become reticent about making payments online at unfamiliar sites;
  • Online buyers are more susceptible to a fear of regret before they decide to purchase a product.  With competing products a click away and no social stigma or store-induced urgency to buy, consumers often give in to this fear and become complacent thereby postponing or avoiding purchase.

Improving low closing rates even marginally could yield significant revenues gains in a 2008 online market that transacted over $130B in purchases and is growing substantially year over year. 

How can companies determine if they have a closing problem and what are the causes?

  1. Stress test their site to ensure proper functionality and easy navigation;
  2. Compare the site metrics at each stage in the online buying process to understand where customers drop out.
  3. Understand where customers go after they leave your site and why.  Good old fashioned qualitative research can help.  As well, some software tools enable companies to track customer behavior once they leave their site.
  4. Benchmark your site against your key competitors to ensure you are competitive on the fundamentals such as selection, merchandising and pricing.  As well, compare your site with other best-in-class online retailers like Amazon, Home Depot and L.L. Bean to make certain you have the right functionality. 

If you build it, consumers will come but they may not buy.  Savvy marketers know that they have to exert as much effort on driving closing rates as they do designing functional sites and building traffic. 

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2 comments so far

  1. Kyle McGuffin on

    Thank you for reminding us how important the human touch plays in a money transaction. People buy when they see or feel value. Human interaction is imperative. This is the power of social media. A soft touch throughout the process so when the customer wants to buy they know exactly what you do and why they want to make a purchase. Great job!

  2. […] the challenges around satisfying fickle consumer needs and achieving technological integration, it is difficult for online firms to design and maintain a […]

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