Four Steps to Boosting Online Sales

This guest article is by James Glassman, Senior Fellow, of the American Enterprise Institute
All businesses thrive by finding loyal customers. In a shopping environment with so many choices, retailers must distinguish themselves. But how? One of the best approaches is to probe the behaviors of online shoppers, to discover their preferences, and then to tailor the experience both to find new customers and develop stronger relationships with current ones.
The real trick is to acquire and hold customers while constraining operating costs. A recent study that I helped Harris Interactive develop on behalf of PayPal, combined with work by other researchers, points to four answers: 1) aggressively promote the items you are selling, 2) package items together, 3) create a secure environment for consumer purchases, and 4) offer payment options to help decrease shopping cart abandonment.
It is a fact that Web-exclusive deals spur consumers to buy, so retailers should offer seasonal sales and special promotions. Don’t expect simply to post prices and expect sales to pour in. To the contrary, a study by found that 86 percent of shoppers said promotional discounts were “extremely helpful” or “very helpful” in influencing them to make purchases. In addition, promotions also tend to drive referrals. Shoppers themselves can serve as your marketing department. They see deals and immediately email their friends to take advantage of the promotions.
When retailers package complementary products together, additional purchases can result. Typically, a shopper will go to a website to make a specific purchase – but she may not browse the site the way that someone in a bricks-and-mortar store would. The answer is to offer the sorts of items that go well with originally targeted purchase: socks with shoes, baby clothes with toys, a history video with a history book. Research shows that more and more online shoppers are making spontaneous purchases, and, according to the Harris survey, offering companion items increases the chances for those extra sales, thus increasing the revenue per buyer.
Another method of increasing revenue is to provide a secure and seamless online payment environment for online customers. Many Internet buyers are still worried about security, and with good reason. Online shoppers are willing to pay extra to buy items from retailers when they can easily determine how retailers’ policies will protect their privacy, according to a study by Carnegie Mellon University.
Participants in the Carnegie Mellon study used a shopping search engine that automatically evaluates a Web site’s privacy policies and displays the results on the search results page. The study found that people were more likely to buy from online merchants with good privacy policies and were willing to pay about 60 cents extra on a $15 purchase (that’s a significant 4 percent) when buying from a site with a privacy policy they liked.
Offering several payment methods can increase shopper satisfaction and decrease shopping cart abandonment rates. For example, a recent report from Jupiter Research found that consumers younger than 35 use debit cards and online payment services like PayPal for online purchases more than those over 35. If you want younger buyers – and who doesn’t? – it’s a mistake to offer only credit cards as the payment method.
The Jupiter report said that nearly half of 25-to-34-year-old consumers preferred debit cards for Internet transactions, compared with only 39 percent of all online consumers. Just over one-third of online consumers ages 18 to 24 preferred PayPal or similar services, compared with about one-fourth of all online consumers. These figures would be more dramatic if we compared the younger cohort with the OLDER cohort, rather than with all online consumers.
By gaining an understanding these preferences and behaviors, online retailers can tailor their shopping experience and create a safe and secure environment that drives customer loyalty.

One thought on “Four Steps to Boosting Online Sales

  1. Brian Lawe

    Thanks for your posting and analysis. One of our MyStoreRewards clients pointed this to me and I agree 100%.Granted, we have a vested interest in driving loyalty — especially using the PayPal platform.

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