Checkout abandonment rate – an introduction
Checkout abandonment rate is an important metric as it tells you the percentage of your customers who liked your product but didn’t complete the purchase. Understanding the rate and why it moves can help reduce lost revenue, allowing you to grow faster.
What is checkout abandonment rate?
Checkout abandonment rate is the percentage of customers that are leaving the checkout after initiating the checkout process i.e. customers who add items to their shopping cart, enter the checkout process but don’t actually make the purchase. Checkout abandonment rate is normally expressed as a %.
Why is checkout abandonment rate important?
Checkout abandonment rate helps online retailers understand behaviours of their website visitors. This metric is often an indicator of how intuitive and trustworthy your checkout process is. Interestingly, checkout abandonment rate is a component of overall website conversion rate –a high checkout abandonment rate leads to a lower website conversion rate.
Your checkout abandonment rate can highlight potential friction points in the customer journey, such as:
Checkout abandonment rate and customers
- Customer perception of trustworthiness of your site and checkout process i.e. risk of fraud.
- Multiple and frictionless payment options e.g.Apple Pay, Klarna etc.
- Rejected fraudulent card usage.
Checkout abandonment rate and pricing
- Applying additional charges at the checkout i.e. import costs.
- Cost of shipping
- Interest free/low interest payment options e.g. Klarna, Clearpay, Afterpay etc.
Checkout abandonment rate and supply chain and logistics
- Estimated delivery timeframes i.e. if they are longer than expected.
- Lack of visibility of delivery times.
Checkout abandonment rate and user experience
- Logging in as a user or guest and volume of information needed.
- Navigating to and through the checkout process itself.
What does checkout abandonment rate look like?
How do you calculate checkout abandonment rate?
You will often have the number of completed orders and so to calculate the incomplete orders, simply subtract completed orders from the total number of initiated shopping carts.
The formula to calculate trial to paid conversion rate is:
Checkout abandonment rate = no. of incomplete orders/ no. of shopping carts initiated x 100%
Checkout abandonment rate worked example
If a company has 2,000 carts initiated and 1,500 completed orders, its checkout abandonment rate would be calculated like this:
Checkout abandonment rate = (2,000 – 1,500) / 2,000 x 100% = 25.0%
What’s a good checkout abandonment rate benchmark?
General statistics show that average checkout abandonment rate is approximately 70%,with almost 50% of abandoned carts because of additional costs e.g. shipping, taxes and other fees. So, if your abandonment rate is below this then your better than average. However, a better benchmark is your own industry or even your own history and future targets.
When calculating your checkout abandonment rate, it’s important to consider other factors too. For example, if your website has low number of visitors then checkout abandonment rate on its own could be misleading as the sample isn’t large enough.
However, even though on its own the rate doesn’t tell the root cause of why customers are abandoning the checkout, it is a useful indicator of how customer react to changes in checkout process, delivery timeframes, payment options and overall user experience.
Conclusion
Checkout abandonment rate is a powerful way to segment your overall website conversion rate and understand specific points along the customer journey, specifically focusing on the checkout experience. It’s a strong indicator of how customers react to changes on your website which can help improve checkout issues or limitations and ultimately increase revenue.
