When user management gets in the way of spending

Joonatan Henriksson

Joonatan Henriksson

Head of Digital Business

November 9, 2016 at 10:30

Cart abandonment has been exhaustively studied. Several studies conducted over the last ten years shows that the average cart abandonment rate is as high as 69 percent. To see how many euros never leave your customers' pocket, multiply this number with the average value of your cart.

Why do customers abandon their carts?

According to Baymard Institute's consumer survey on online shopping, the main reason for abandoning a cart is excessive extra costs (see the complete results here). A total of 61 percent of those abandoning their carts cancel their purchase decision because they are surprised by the shipping and handling costs.

This problem, at the very least, cannot be blamed on user management. But the second and third most common reason can:

  • 35 percent of consumers cancel their purchase decision because they need to create a user account to place an order.
  • 27 percent of consumers, in turn, are frustrated with needlessly long or complicated checkout processes.

The obvious solution would be to simply remove user registration and logging in functionalities from your service. This, however, is not the right path to take. After all, the most effective and reliable way of improving customer knowledge and experience is collecting customer data directly from the customer.

Luckily, the two problems most directly tied to user management can be solved, resulting in improved conversion rates.

Forget the user

Like usual, the customer is right. Creating a user account using traditional methods involves many inconveniences: finding an available username requires guesswork, your e-mail address has to be entered twice, and your password must meet the specified criteria. Nor does creating a user account generate any substantial added value for the customer.

The solution lies in considering cart owners as customers. In other words, their role as an online service user and customer should be considered together.

At its simplest, customer experience can be improved by separating customer ID generation from the checkout process. One way of achieving this is to approach the customer after they have placed an order. In this approach, customers are sent an e-mail suggesting them to create a password for an easier experience in the future. And why not offer a discount from the next order as a thanks for taking the time to complete their account activation?

The best approach, however, would be to get rid of passwords altogether. This can be achieved by allowing the customer to bring their own identity with them. Most customers use Facebook or some other social media service. Using social media identities for access management largely eliminates the user account creation stage from the checkout process.

Minimum viable identity (MVI)

An effective way of simplifying the checkout process is to prune down the order form. A good order form contains 7–8 fields for the customer to complete, but it is not unusual to see twice as many.

Digital retail is hungry for customer data, but nagging the customer for information with a long form at the checkout is less than optimal. Let us introduce a new concept and use as the golden rule of checkout design: minimum viable identity (MVI).

To achieve conversion in delicate situations, you should request only the barest minimum of information you need for providing a sufficient level of service. The acquired information will be sufficient for identifying a returning customer, providing a basis for a customer relationship. Minimum viable identity means the smallest usable customer data set.

Naturally, this is a long way off quenching the thirst for customer information. Additional information is required, but it will accumulate gradually over time as the customer relationship deepens. Customer identity management solutions provide ways of collecting customer information in increments. With the customer's approval, they can also be used effectively for collecting data from social media profiles.

Let us save online carts

All in all, online carts can be saved from abandonment. Customer identity management provides ways of removing friction from customer journeys and the purchase process while substantially boosting the growth of customer knowledge. In many cases, the best results can be achieved by substituting the user management of your e-commerce platform with a separate customer identity management solution.

If helping customers move euros from their wallets to the company account sounds like a worthy pursue, be in touch!

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