photo courtesy of Sarah Pflug
The more things change, the more they remain the same. Or, just because everything is different, doesn’t mean that anything has really changed. Way back in the middle of the 20th century, business owners and advertising/marketing specialists learned through experience that the response rate to advertising campaigns, known today as the conversion rate, is about 3 percent. So, when you distribute a flier in a chosen geography to announce a new business, whether by door to door leafleting or a mailing, you can expect that 3 percent or so of the recipients will show up and buy at some point.
In the Internet age, social media is used to announce the business grand opening. The owner will launch a website that’s e-commerce ready, with a secure payment system and reliable shipping. According to Statista, U.S. retail B2C e-commerce sales in 2017 were approximately $409,208,000 and 2018 retail B2C e-commerce sales have been projected to reach or exceed $461,582,000.
That’s all good, but recent research indicates that despite the appeal of online advertising and shopping, there’s been no appreciable impact on the direct advertising response rate. The e-commerce sales conversion rate is about 4 percent, meaning that 96 percent of your website visitors do not buy. Your website may be able to attract customers from all over the world. Whether your customers are down the street or in Amsterdam, aided by technology or reading a flier that was left at the front door, only a handful will respond to your advertising outreach.
The offline (i.e., in person) sales conversion rate is much more favorable, estimated at 30 percent. Why such a big gap between online and offline shopping? Consumer behavior researchers note that trust is integral to making a purchase online or offline, but I’ve not seen research on why trust develops at a much greater rate in offline shopping. Seeing is believing, I suppose?
There is another factor as well, one that seems to be overlooked when the discrepancy between online and offline sales conversion rates are compared and that is, the influence of the in-store sales help. Talented sales associates can lead a customer down the garden path with a nice smile, a warm greeting, knowledge of the merchandise and the ability to answer questions and reassure. Good sales help is integral to generating revenue for every store.
Derrick Neufeld, associate professor of Information Systems at Western University’s Ivey Business School in Ontario, Canada and Mahdi Roghanizad, assistant professor at Huron University College, also at Western University in Ontario, Canada, designed an experiment to study motivating factors in 245 research subjects and learn what might influence online purchases, from facts about secure online payments to the website’s font sizes and colors. The research subjects were asked to visit the website of a bookstore in Australia that had been in business for 17 years and with whom none of them had previously known or patronized. Then, they were asked to make some buying decisions.
Surprisingly, Neufeld and Roghanizad found that objective information about privacy and secure payment systems have less influence on purchasing than do subjective factors in website design that signal trust. Online purchases from an unknown entity involve risk and potential customers apparently rely more on subjective clues that communicate trust, such as “professionalism” and pleasing aesthetics, to make themselves feel comfortable enough to put their money down.
So how might you use this information to support online shopping from your company website? Research indicates that you’d be advised to work with a talented web designer who understands both the aesthetic and technical aspects of the craft. E-commerce website must-haves include:
- attractive page layouts and fonts
- expert product photography and a video clip, if desired
- colors that psychologists have determined will appeal to customers who are known to buy your B2C product
- an intuitive flow to the website pages
I would recommend that even if it’s a second-tier priority, include a sentence that verifies the security and privacy of customer financial information. It couldn’t hurt.
Think of your e-commerce store in the way that proprietors of bricks and mortar locations do and create an experience that communicates the best that your brand has to offer. Make your website an attractive, welcoming environment that offers quality merchandise, user-friendly navigation and excellent customer service. Make shopping a satisfying experience, as it is meant to be.
Thanks for reading,
Kim
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