Wednesday, December 3, 2008

Losing Loyal Online Customers Carries a High Price

Online retailers must provide a shopping experience more akin to a physical store's if they want customers to increase their spending. These are the findings in a new report by retail industry experts Verdict Consulting for WebLoyalty. With online sales predicted to grow by 129% over the next five years, online retailers have a large commercial incentive if they can apply the techniques used by physical stores to tempt customers to increase their discretionary spend when they shop online.

But - says Verdict - it's not just about boosting unplanned customer spending. Getting the basics right such as easy navigation at the point of purchase and offering more choice and better value for money are equally important for generating loyal customers.

Even so, until sites improve, Verdict calculates that levels of online loyalty are still some 10% lower than in physical shops as we stand today.

According to the Verdict Consulting report, online customers abandon almost a quarter (24.8%) of their shopping carts before sales are completed. This equates to around 95m transactions a year so businesses that employ strategies to prevent shopping cart abandonment have the opportunity to claw back significant potential lost revenue.

The reasons customers abandon their carts range from well-established concerns over giving out their personal financial details, to high delivery charges and illogical or poorly designed navigation of some sites.

But if online retailers can get it right, almost a fifth of respondents (19%) sampled by Verdict said they would be loyal customers if a website was easy to navigate and offered good service and competitive prices.

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