Abandonment rate

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In marketing, abandonment rate is a term associated with the use of virtual shopping carts. Also known as "shopping cart abandonment". Although shoppers in brick and mortar stores rarely abandon their carts, abandonment of virtual shopping carts is quite common. Marketers can count how many of the shopping carts used in a specified period result in completed sales versus how many are abandoned. The abandonment rate is the ratio of the number of abandoned shopping carts to the number of initiated transactions[1] or to the number of completed transactions.[2] The typical shopping cart abandonment rate for online retailers varies between 60% and 80%, with an average of 67.91%.[3]

Causes[edit]

There are various reasons behind the high cart abandonment rate.

  • Complicated checkout process.
  • Hidden prices that come out at the time of checkout like taxes or high shipping charge.
  • Tough or lengthy registration process. No option to check out without signing up.
  • Limited payment options.

Another problem is that people have too many passwords. A MasterCard and University of Oxford study in 2017 showed about a third of purchases were not made because the person could not remember a password.[4]

Purpose[edit]

Abandonment rate as a marketing metric which helps marketers to understand website user behavior. Specifically, abandonment rate is defined as "the percentage of shopping carts that are abandoned" prior to the completion of the purchase.[1] This information is generally not used on a facility reservation report.

Construction[edit]

As an example, an online comics retailer found that of the 25,000 customers who loaded items into their electronic baskets, only 5,000 actually purchased:

  • Purchases not completed = purchases initiated less purchases completed = 25,000 − 5,000 = 20,000.
  • Abandonment rate = Not completed / Customer Initiation = 20,000 / 25,000 = 80% abandonment rate.[1]

References[edit]

  1. ^ a b c Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0-13-705829-2. The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language in Marketing Project.
  2. ^ American Marketing Association Dictionary. "Archived copy". Archived from the original on 2012-11-21. Retrieved 2012-11-29. . Retrieved 2012-11-29. The Marketing Accountability Standards Board (MASB) endorses this definition as part of its ongoing Common Language in Marketing Project.
  3. ^ Baymard Institute. http://baymard.com/lists/cart-abandonment-rate Retrieved 2014-03-11.
  4. ^ Johnson, Tim (June 16, 2017). "Forgot your password? You have too many and stores are losing business over it". Kansas City Star. Retrieved July 13, 2017.