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Holiday 2000 E-Commerce_______________________________________________

Avoiding $14 Billion in Silent Losses

by Aamir Rehman

October 2000

[email protected]

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AcknowledgementsThanks to all who helped create the Holiday 2000 E-Commerce report:

Nicole Rubin, Creative Goods director of research, managed the report overall.

She managed the project, directed the research and edited drafts of the report.

Mark Hurst, Creative Goods founder and president, edited the final version of the

report.

Susan Larson, Creative Good consultant, contributed to the research and

production of the report. Creative Good analysts Allison Jacoby, Jeniece Primus, Jennifer Thomson and

Lauren Greenberg contributed to the research and analyzed the customer test

results.

Boston-based interactive agency Red98 produced an HTML version of Creative

Goods prototype to test for the case study. Committed to creating great user

experiences, Red98 clients span a wide range of industries, from Fortune 100

companies to startups. You can learn more about them at www.red98.com.

About the author

Aamir Rehman ([email protected]), senior analyst at Creative Good, has

advised e-commerce clients in the grocery, automotive, gift and apparel industries.

He holds a bachelors degree from Harvard College and a masters degree from

Harvards Graduate School of Arts and Sciences. Aamir also manages

Creative Goods best practices research.

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Copyright 2000, Creative Good, Inc. More free resources: goodexperience.com 2

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ContentsExecutive Summary 5

1. Introduction 7

2. Business Case 11

3. Methodology 16

4. Checkout 19

5. Promotions and Merchandising 34

6. Case Study: BestBuy 45

All company names, brand names and product names in this report are trademarks of their

respective owners and companies. v1018.1

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About Creative Goods

E-Commerce Consulting Services

Creative Good (www.creativegood.com) is a 35-person consulting firm based in

New York, San Francisco, and Boston. Were on a mission to improve the online

customer experience on e-commerce websites, content and entertainment sites,

intranets, b2b sites, and wireless Internet services. Clients include Gateway,

Travelocity, MGM.com, kinkos.com, Rogers, and Wineshopper.com.

We have generated 40% to 150% improvements in all of our major projects. Please

contact us if Creative Good can help improve your e-business.

Phil Terry, [email protected]

P.S. You can find our other free resources at www.goodexperience.com. To get our

free customer experience newsletter, e-mail [email protected].

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Executive Summary

About this Report

The purpose of this report is to help consumer e-commerce websites prepare for the

Holiday 2000 season. To get a representative view of online holiday shopping, we

conducted more than 50 consumer tests on eight major e-commerce websites across

four key categories:

Apparel: Gap.com, LandsEnd.com

Books and music: Amazon.com, bn.com (Barnes & Noble)

Electronics: BestBuy.com, Buy.com

Toys: eToys.com, KBKids.com

To further demonstrate the impact of improving the customer experience, we chose

one of the sites we tested BestBuy.com and prototyped an improved websitebased on what we learned in tests. When we then tested the new prototype, the

results were dramatic: customers were four times more successful on our prototype

than they were on the original BestBuy.com (see Chapter 6).

The BestBuy case study suggests that many e-commerce sites can dramatically

increase their revenues with simple improvements to the customer experience.

Summary of Findings

The customer tests and the BestBuy case study produced the following key findings:

In our tests, 43% of purchase attempts failed. As we explain in the Business Case

(see Chapter 2), these failures may represent $14 billion in lost sales worldwide this

holiday season.

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Problems with checkoutwere the greatest cause of failure. Over 40% of failed

purchase attempts were due to difficulty during the checkout process. Poor

checkout experience alone may cost the worldwide e-commerce industry over

$6.5 billion in holiday sales (including over $3 billion in North America alone).

Promotions and merchandising are an area of opportunity this holiday season. Giftshoppers were open to suggestions and promotions: in 30% of tests, customers

clicked on at least one featured product.

If sites prepare for the holidays by improving the customer experience, the industry

stands to gain $14 billion in sales.

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C H A P T E R 1

Introduction

This report shows how to improve the customer experience on any e-commerce site

as the 2000 holiday season approaches. Its a timely subject, given how hard this

year has been on the e-commerce industry. Investors now want profits, not just

clever TV ads and a dotcom name. Many sites are looking to Holiday 2000 to prove

their viability as real businesses.

The single most important factor in any e-commerce sites survival and success is its

customer experience. This report shows exactly what e-commerce sites must do to

improve the customer experience for Holiday 2000. It is worth thousands or millions

of dollars to companies that follow its suggestions.

We know these suggestions work because we tested them. In our BestBuy case study

(see Chapter 6), we tested the customer experience of the current BestBuy site, and

then created our own redesigned version according to the customer experience

suggestions in this report and tested the improved prototype. Result: The

conversion rate quadrupled. Our tests indicate that BestBuy.com could make the

simple changes we suggest and instantly double its revenues, if not triple or

quadruple them. (Indeed, its not unusual for Creative Good clients to measure a

similar rise in their own key metrics.)

The lesson here is striking:

Making simple improvements to the customer experience can easily double the sales

of many top e-commerce sites.

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Why focus on customer experience?

Its a fair question: why focus on on-site customer experience during Holiday 2000,

when last years holiday season showed so many other problems on e-commerce

sites? Fulfillment, for example: the New York Times reported just after Holiday 99

that the primary bugaboo was failing to deliver packages on time1

. And a recentBusiness 2.0 cover story remembered last years flooded customer service desks,

as angry customers called and e-mailed about undelivered packages. In fact, as a

result of fulfillment troubles, seven e-commerce sites were fined a total of

$1.5 million by the Federal Trade Commission2 .

Yet this report maintains that the on-site customer experience is the single most

important factor in e-commerce success. Regardless of the dozens of articles about

fulfillment and overloaded call centers that were written last year, and will probably

be written this year, poor customer experience is still the biggest problem in the

e-commerce industry.

Fulfillment is naturally a high-profile issue. Complaints to the customer service

department inevitably raise attention in the company, and in the press, because

complaints are loud. The customer completed the order, paid the money, and now the

package is late; only complaining loudly, the customer reasons, will get the problem

solved.

But what about the customers who didntcomplete their orders on the website? The

site never hears from them. Customers who get confused on the site, then leaveforever without ordering or paying, arent interviewed by the press. They dont

overload the call center with complaints. They just get frustrated, leave the site

quietly, and never return. The orders that customersfail to complete, because of the

poor customer experience, are what we call silent losses.

No matter how many customers complain about fulfillment problems, many more

customers leave the site without complaining, because the site is too hard to use.

1 The New York Times, A Very Big E-Commerce Christmas, Jan. 2, 2000.http://www.nytimes.com/library/tech/00/01/biztech/articles/02webb.html2 Business 2.0, Hope for the Holidays, October 10, 2000.

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Silent losses

Silent losses are hard to measure, since frustrated customers dont call or e-mail the

site to say theyre leaving. The press doesnt usually write stories about silent losses,

since its hard to measure the size of the problem, and its difficult to find people who

have quietly left a site in frustration.

But the silent losses are there. We know this because we observed, face-to-face,

average e-commerce customers attempting to place orders on e-commerce sites. Our

more than 50 tests of eight major e-commerce sites yielded a startling finding:

In our tests, 43% of purchase attempts ended in failure.

Forty-three percent! Can you imagine 43% of shoppers physically walking out of a

Wal-Mart store because they couldnt figure out how to pay for their order? What if

43% of visitors to the Starbucks on the corner left the store in frustration, grumbling

about buying coffee somewhere else? No brick-and-mortar store would ever stand for

such an insane failure rate. But here is the e-commerce industry, letting 43% of its

revenues slip away. In our Business Case (see Chapter 2) we show that this amounts

to a loss of $14 billion industry-wide this holiday season.

This report is our plea to e-commerce sites to improve their customer experience so

that they, and the industry as a whole, can survive into next year and so that

customers will no longer have thoughts like these, comments spoken by customers in

our tests: Screw it, Im just going to go to the store and buy it. I dont know what I want to

do at this point.

Id probably get off right now.

Thats it, Im out of here.

Simple solutions

Fortunately, there are simple improvements that e-commerce sites can make tosubstantially raise holiday sales. If an e-commerce site can improve just two things

before the holidays, wed suggest the following:

Make it easy for holiday shoppers to find gifts. In Chapter 5 we show how

promotions and featured items were especially effective in tests.

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Make it easy to check out. More customers had trouble with checkout than any

other feature on the sites we tested. In Chapter 4 we show some easy ways to raise

revenues by improving the checkout process.

We should also note that these are not the only improvements e-commerce sites

should make. Successful e-businesses make customer experience a constant focus,

continually monitoring and improving it month after month. And that means more

than simply prototyping and redesigning the tactics of the website interface. Instead,

our client projects have shown that to improve the e-business, we have to change the

organization behindthe interface. Weve found the Web interface to operate like a

roadmap of the organization, describing its strategy and culture.

So as you read the report, do note the tactical changes we suggest to help prepare for

Holiday 2000. But more importantly, consider making a strategic commitment to

customer experience in your e-business. And let us know if we can help.

Mark Hurst

Founder and President, Creative Good

[email protected]

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C H A P T E R 2

Business Case

$14 Billion in Silent Losses

The year 2000 has been tough for online retailers. Changes in the market have driven

many sites out of business, and many others are only barely surviving. The holidays,

promising greatly increased sales, offer hope for many e-commerce sites.

The good news for retailers is that the holiday market will grow; this years holiday

sales are predicted to be 66% higher than last years.3 In a year when over half the

U.S. population has access to the Internet,4 e-commerce sites can expect dramatic

increases in site traffic before the holidays. Forrester Research predicts $10 billion in

holiday revenues, and Jupiter forecasts the U.S. holiday market as $12 billion.

Gartner Group predicts $10.7 billion in North American holiday sales and worldwide

sales of $19.5 billion.5 While revenue estimates vary, its clear that Holiday 2000 will

be big for e-commerce.

Customers will shop online this holiday season for convenience; by shopping online,

customers avoid crowds, transportation hassles, and inconvenient store hours. One

customer commented in our tests that she will shop online to avoid the hassle of

going to different stores. Another shopper said that buying gifts online is a loteasier because of the lines [in the stores].

3 Cyberatlas - Jupiter, September 18, 20004 Nielsen/NetRatings, August 17, 20005 eMarketer - Gartner Group, September 6, 2000

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Despite the eager shoppers and the predictions of a big holiday season, there is bad

news for online retailers: the e-commerce industry is losing billions of dollars in

potential sales. Shoppers want to purchase online, but many sites make it too hard to

buy.

In our tests, we observed that 43% of purchase attempts ended in failure. Frustrated

customers made comments like if it took this long, I would just go to the [off-line]

store. As one shopper put it, [I might] buy something this holiday season online,

but not on these sites, because they are so slow and annoying. Sites actual revenues

this season will represent only a fraction of what they could be if sites made it easier

to shop and buy.

To gain the most from the holiday season, sites must pursue a simple strategy:

improve the customer experience. Improving the customer experience can yield an

additional $8 billion in North American sales, and $14 billion in worldwide onlinesales this holiday season.

Poor customer experience may cost the worldwide e-commerce industry

$14 billion this holiday season.

$14 Billion in Lost Sales

According to Gartner Group projections, worldwide online revenues for the holiday

season will be $19.5 billion.6 In our consumer tests of major sites across key holiday

categories, we found that 43% of buying attempts failed. These findings suggest that

the $19.5 billion represent only 57% of potential sales this holiday season:

100% (potential market) - 43% (due to buying failures) = 57% (of sales realized).

If $19.5 billion represents only 57% of potential sales, total worldwide potential sales

for Holiday 2000 are over $34 billion:

$19.5 billion / 0.57 = $34.2 billion.

Lost sales due to poor customer experience thus total more than $14 billion:

$34.2 billion - $19.5 billion = $14.7 billion

Of course, these figures are based on several assumptions about how the market will6 eMarketer - Gartner Group, September 6, 2000

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perform. They are not meant to be scientifically accurate but rather to give a sense of

the possible loss of revenue this holiday season. If our calculations are anywhere near

correct, sites will leave a massive amount of money unrealized unless they

improve the customer experience.

It is worth noting that our $14 billion does not include future losses due to poor

experience this holiday season. Millions of consumers will shop online for the first

time this holiday season. If they have a good experience, they are likely to continue

shopping on their favorite sites in the future. If they have a bad experience, they will

likely never return to the sites where they were unable to buy (if indeed they return to

shop online at all). The actual losses due to poor customer experience may thus be

significantly higher than our $14 billion estimate.

Problems with Checkout

In our tests, problems with the checkout process were the greatest cause of failed

purchase attempts. More than 40% of failures were due to difficulty with checkout.

Customers had found a product they wanted, added it to their cart and decided to

place an order. They were ready to buy and wanted to pay. Unfortunately, the

checkout process was too difficult and made it impossible for them to buy.

Customers want to buy, but many sites wont let them pay.

As we discuss in Chapter 4, there were several different types of problems that arose

in the checkout process. The most important lesson is that poor checkout experience

will cost the industry billions in holiday sales. Causing over 40% of all failures,

checkout problems amount to over $6.5 billion.

Improving checkout alone could add over $6.5 billion to worldwide holiday sales.

The Impact of Improved Conversion

The best measure of a sites effectiveness is the sites conversion rate. This metric

refers to a sites ability to convert visitors to buyers. A sites overall (blended)conversion rate is the percentage of visits that result in a purchase. For example, a site

with three purchases for every hundred visits will have a blended conversion rate of

3%. Other metrics like hits and unique visitors might, at best, measure a sites

popularity but the conversion rate measures the overall effectiveness of a sites

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business. The conversion rate is the most important metric to observe, because it

measures a sites ability to produce revenues and operate profitably.

According to Shop.org and the Boston Consulting Group, the average conversion

rate for e-commerce sites is 1.8%.7 This means that for every hundred visits, roughly

two result in a sale. 98% of visits do not end in a purchase. E-commerce leaders,

however, enjoy much higher conversion rates. For example, Amazon.coms

conversion rate is reported to be above 9%, over five times the industry average. 8

The best e-commerce sites constantly monitor and improve their conversion rate by

continually working to improve the customer experience. They recognize that even

slight increases in the conversion rate result in significant incremental revenue for the

business.

Small increases in the conversion rate lead to large increases in revenue.

Consider, for example, a hypothetical site with a 1.8% conversion rate and annual

revenues of $100 million. Assume that the sites customer base is growing 25%

annually as more customers come online. Even small increases in the conversion rate

yield huge gains in revenue:

With a constant conversion rate of 1.8%, revenues will be $100 million this year,

$125 million next year, and $156 million in two years.

With a (modest) 10% increase in conversion (raising the conversion rate to 2%) ,

revenues will be $110 million this year, $137.5 million next year, and $172 million

in two years.

With a 30% increase in conversion (raising the conversion rate to 2.3%), revenues

will be $130 million this year, $162.5 million next year, and $203 million in two

years.

With a 50% increase in conversion (raising the conversion rate to 2.7%), revenues

will be $150 million this year, $187.5 million next year, and $234 million in two

years.

Raising the conversion rate to 2.7% is a modest goal, far below the conversion rates

of industry leaders. The impact, however, is tremendous: a difference of $50 million

this year, $62.5 million next year, and $78 million in two years. Over a three-year7 Shop.org and BCG, The State of Online Retailing, April 2000.8 PC Data Online, 2000

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period, the cumulative incremental revenue is $190.5 million.

Online retailers have a choice where to invest this holiday season. They can spend

more money on advertisements and marketing campaigns while continuing to convert

only 1.8% of shoppers. They can also devote months of development time and

millions of dollars to create advanced recommendation engines and gift-wrap features

that only a few of their customers will use. Or, they can invest in raising the

conversion rate by improving the customer experience.

Focusing on conversion has the greatest revenue impact for any e-commerce site.

The Three Most Important Improvements

The best investment a site can make to prepare for Holiday 2000 is to improve the

customer experience. Based on our tests, here are the three most importantimprovements e-commerce sites should make before the holiday season arrives:

Improve the checkout process to keep sales from slipping away.

Develop a promotion and merchandising strategy to help holiday shoppers find

gifts. This will raise the order size and conversion rate.

Commit to a long-term strategy for continually raising the conversion rate.

The following chapters will elaborate on these improvements. We hope that this

report will help the industry earn some of the $14 billion it now stands to lose due topoor customer experience.

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C H A P T E R 3

Testing Methodology

Creative Good conducted more than 50 consumer tests to generate the data for this

report. The tests were conducted at an independent testing facility in a suburb outside

New York City. We conducted the first round of tests in August 2000 and the

BestBuy prototype tests in early September.

We tested eight major e-commerce sites in four categories important to holiday

shoppers:

Apparel: Gap.com, LandsEnd.com

Books and Music: Amazon.com, bn.com (Barnes & Noble)

Electronics: BestBuy.com, Buy.com

Toys: eToys.com, KBKids.com

The consumers recruited for testing were representative of customers who will shop

online this holiday season. The consumers we tested met the following criteria:

All had used the Internet for at least 6 months.

All had successfully made an online purchase in the past.

All had either bought gifts online last holiday season or were seriously considering

buying gifts online for this years holidays.

None were Web developers, Web designers or Internet professionals.

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None worked for any of the companies whose sites we tested.

To simulate the actual shopping experience, we conducted three-quarters of the tests

on dial-up connections and one-quarter of the tests on an ISDN line. We tested on

PCs running Microsoft Windows and the Internet Explorer Web browser.

About Listening Labs

The Holiday 2000 tests employed Creative Goods listening lab methodology.

Though based primarily on traditional usability tests, listening labs are less task-

oriented and more open-ended than usability tests. In particular, listening labs are

one-on-one sessions in which the customer not the moderator sets the context.

The labs are non-directed in an attempt to recreate the environment at home or work,

where customers actually use the site and where there are no pre-defined tasks or

scripted moderators sitting beside them.

Listening labs overcome some key shortcomings of usability and focus groups:

Listening labs are non-task-oriented, since pre-defined tasks tend to neglect what

each individual customer wants to do on the site, and often miss larger strategic

findings. In our Holiday 2000 listening labs, we merely asked customers to use the

site to shop for a holiday gift for someone on their gift-buying list.

Listening labs rely less on quantitative measurement than some usability tests. For

example, we did not use eye-tracking or any other detailed measurement during

the tests. We did, however, quantify the most important metrics: how often, and

where, customers succeeded and failed on the sites.

Focus groups, in which a scripted moderator asks questions to a group of

customers sitting in the testing room, measure what customers say they like.

Listening labs observe what customers do, not what they say they do.

Traditional usability and focus groups are controlled by a moderator, following a

script and specifying the users task. Listening labs are controlled by the customer,

following whatever path he or she wants through the site.

For more information on the listening lab methodology, refer to Creative Goods

Dotcom Survival Guide (http://www.creativegood.com/survival).

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Timing of Screenshots

The screenshots featured in this report were taken in August and September 2000.

Because sites are constantly changing, some of the sites may have redesigned since

we took the screenshots. In fact, in most cases we hope that the site has redesigned

by the time you read the report, so that the site improves the experience for itscustomers. The screenshots in the report depict what customers saw in our tests.

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C H A P T E R 4

Checkout

In our tests, checkoutwas the most common cause for failure. To be exact, in all the

tests in which a customer failed to complete an order online, checkout was

responsible for the failure over 40% of the time. This is a huge failure rate for one

feature consistently poor performance across multiple sites in multiple categories.

As discussed in the Business Case (see Chapter 2), the worldwide e-commerce

industry could gain over $6.5 billion, including $3 billion in North America alone, if

every site made simple improvements only to the checkout process.

While checkout was by far the most common problem, customers in our tests did

encounter other problems on the sites:

Some customers were unable to find what they were looking for (even though the

site carried it) because ofpoor categorization and search.

Others failed to buy because they could not order the quantity of products they

wanted.

Some were frustrated by slow-loading pages and decided to leave the site.

Still, problems with checkout were the greatest cause of failure in the buying attempts

we saw. Many times during the tests, we saw customers successfully find a product,decide to buy it and successfully add it to their cart all in vain. Checkout was too

difficult to complete. Frustrated, many customers gave up and left the site. To use an

off-line metaphor, it was as if these customers made it to the cash register but the

store would not let them pay.

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Failures during checkout were due to three main causes:

Confusion over Return and New customer paths

Difficulty creating an account

Ineffective error messages

In all these cases, sites failed to make it clear what customers needed to do and how

they could advance in the checkout process. Shoppers failed to buy because the

customer experience was too difficult. We show examples below and propose

solutions to the problems we saw.

Return vs. New Customer Paths

Several of the sites we tested offered separate checkout paths for new and return

customers. Sites offer separate paths to make checkout easier for return shoppers (so

that on the second visit, for example, return shoppers dont have to type in all of their

information again).

The problem is that separate checkout paths tend to confuse customers. In our tests,

many new customers mistakenly selected the checkout path for return customers.

Below is the first checkout screen on BestBuy.com:

New customers

immediately began theRegistered Customercheckout.

Most customers ignored all the text instructions and immediately entered their email

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address in the field under the Registered Customers header, possibly because

(scanning the page from left to right) it was the first field customers noticed. Some

were then confused as to what password BestBuy wanted, and several entered the

password they use to check email. The BestBuy site then displayed an error message

that only added to their confusion.

Gap.com also offers two options at the start of checkout:

First-time shoppers

mistakenly filled in

these fields.

New customers were drawn to the empty email and password fields and filled them

out, even though the text directly above reads I am a registered user. Customers

then got an error message because, of course, there was no Gap.com account with

that email and password. (Some readers might notice that the new user radio button

is selected; on Gap.com, the filled-out fields overrode that setting and the server

considered the customer a registered user.)

Online shoppers rarely read instructional text; instead, they look for an action to take

that will bring them closer to their goal. In this case, shoppers saw the empty fields

and acted on them. In general, we found that two checkout paths were problematic

when both paths were prominently displayed to the customer.

Shoppers are confused by sites that offer two equally prominent checkout paths.

Solutions from B&N and Amazon

Some sites, however, were able to offer separate checkout paths without confusing

shoppers. The websites of both Barnes & Noble and Amazon effectively served both

new and return customers by making only the new customer path prominent.

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Every new shoppersuccessfully begancheckout.

On Barnes & Noble, no new shopper clicked on the sign in link for returncustomers. Notice that the Checkout Now button, which is the beginning of the

new customer checkout path, is much more prominent. Barnes & Noble made the

right decision by making the new customer checkout path more prominent than that of

return customers. (This particularly makes sense for return customers, since by

definition they are more familiar with the site and more likely to see a less prominent

link.)

Amazons email fieldapplies to both new

and return customers.

In our tests, every shopper successfully checked out at Amazon. As with other sites

we tested, customers filled in their email address right away. But in this case, filling

in the empty field was the correctway to begin checkout. The Amazon form is

successful for several reasons:

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The email address field is first, motivating customers to (correctly) begin filling out

the form.

The radio buttons, to choose between new and returning customers, appear

between the email and password forms, distracting customers to read the radio

button text before immediately filling out the next field.

The radio buttons text is well-worded. They mention new customer and

returning customer, much clearer than Gaps new or unregistered user and

registered user fields.

The new customer option states clearly that Youll create a password later,

helping new customers avoid mistakenly typing their email password into the

password field.

The password field is clearly described as being only for the returning customer.

The checkout form changes slightly for a return customer (see below).

Amazon uses cookies to recognize its return customers9 and present them with a

slightly modified checkout page. Heres how the first page of checkout looks to a

return customer:

The email field isfilled in for returncustomers.

The page defaults to

the return customeroption if the cookie is

set.

For return customers, Amazon has already filled in the first field with the email

address, and the radio button defaults to the returning customer option. All the

return customer has to do is complete the only empty field the password and

click Sign in to continue.

While Amazon does many things right with the beginning of its checkout, the most

important takeaway is that the page is designed primarily to help new customers get

9 For more information on cookies, see http://www.cookiecentral.com/cm002.htm

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through the page correctly. Of secondary importance is that return customers are

served by the clever cookie-based change.

Design checkout for new customers. Use cookies to remember return customers and

present them with a different checkout path.

Creating an Account

Several sites confused customers by making parts of their sign-in or registration

process too prominent to new customers. For example, some sites required

customers to register before they could make a purchase. The registration process

prevented many customers from buying the products they had added to the shopping

cart.

In Gap.coms case, the site confused customers by reminding them that they had notyet signed in to their account. The Gap.com home page, shown below, contains this

text at the top of the page: You are not signed in.

Customers wereperplexed when

told they werenot signed in.

Several shoppers noticed this text because it loaded first. Because the rest of the page,

consisting mostly of graphics, loaded slowly over the dialup modem, You are not

signed in appeared by itself for several seconds while the other page elements

loaded. While no customers actually left the Gap.com site because of the text, it

certainly didnt enhance the customer experience, as shown in these comments:

One shopper on Gap.com said the message means I cant get access to the site.

Another commented that when the message pops up, I think the page isnt going toshow up.

Another problem occurs on Buy.coms homepage, which urges customers to create

an account to get started:

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Buy.com urges

customers to register

before they evenview products.

Buy.com seems more concerned with pushing registration than with showing

customers products. Why would a shopper sign up before knowing what the site

offers? As on Gap.com, its not a good idea to distract new customers withprominent reminders about accounts and signing in.

A much worse problem on Buy.com occurs when a new customer finishes adding

products to the shopping cart and clicks Check Out: the site immediately requires

new customers to create an accountbefore they can proceed. New customers, credit

card in hand, hardly want to create an account just for the privilege of giving the

site their money. They want to proceed in the checkoutprocess.

To make matters even worse, Buy.coms first Create My Account page includes

Account Type, a requiredfield:

Shoppers cannot buywithout stating what

type of user they are.

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Customers had difficulty

understanding BestBuyspersonal question.

Heres how the process is supposed to work:

Customers select a personal question to be asked in case they forget their password,

and tell BestBuy the answer to the question.

The answer to that question should be something other than their BestBuy

password.

If a return customer clicks Forgot your password? Get help here, the site will ask

him his personal question. A correct answer will permit the customer to log on.

Some customers simply did not understand what BestBuy was asking of them. One

said, I am thinking maybe they mean to put in a fake password.

Solution: passive registration

The problems above show that new customers can get confused if certain parts of the

registration process is too prominent during checkout. Amazon.com avoids this

problem by registering new customers automatically when they make their first

purchase. Amazon quietly creates the account during the regular checkout, without

explicitly asking customers to create an account. We call this process passive

registration.

For new customers, Amazons first-time checkout process involves the following

steps:

Enter an email address

Enter a shipping address

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Choose a shipping method

Choose a password

Enter a credit card number

Confirm a billing address

Review order and submit

The Amazon checkout process is successful for several reasons:

Nowhere in the Amazon checkout process are new customers required to create an

account, choose an account type, or even asked to choose a personal question.

The process is front-loaded with steps that make sense: entering an e-mail address

(as discussed above) and the shipping address and method.

Only in the fourth step are new customers asked to choose a password. By that time

customers are halfway through with the checkout process and less likely to abandon

the site.

Overall, Amazon gives customers the benefitof an account an easier checkout

process on the return visit without subjecting customers to unnecessary obstacles

in creating the account. This focus on the customer experience makes Amazons

checkout a success.

Checkout Error Messages

Some customers will inevitably make mistakes entering information no matter how

easy checkout is. In these cases, its important to have clear, simple, and polite error

messages to help customers proceed.

In our tests, we observed how customers reacted to several different error messages

in checkout. The quality of the error message often meant the difference between a

successful purchase and a failed attempt.

Barnes & Noble customers see the following error message if they fail to complete

the name this address field:

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Shoppers did notrealize this message

applied to the bottomfield.

The error message, which reads Please name this address for future reference,

appears on the top of the page, far away from the field it refers to. The name this

address field is halfway down the page with no indication to the customer that it

needs to be filled in. Unsurprisingly, customers did not find this error message very

helpful.

Problems with email address entry

Many shoppers, especially AOL users, had difficulty entering their email address

when creating an account during checkout. Some entered a username (e.g. JohnDoe)

but no domain name. Others entered only part of the domain name (JohnDoe@aol)

and were unable to buy because they did not understand to enter their full emailaddress ([email protected]).

On the sites we tested, error messages did not always help customers with email

problems. For example, Buy.com shows the page below if a shoppers email address

is invalid:

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Buy.com asks for a

valid email butprovides no exampleto help shoppers.

Buy.coms error message reads, Please provide a valid email address. It tells

customers theyve made a mistake but does not show them how to fix it. Customers

may try again, only to be baffled when their address is repeatedly rejected. Buy.comshould include an example of a complete, valid email address to help customers

through checkout. Throughout all our tests, over 10% of customers were never able

to correctly enter their e-mail address on the site they were on, despite repeated tries.

Note what happens if a new BestBuy customer chooses the return customer checkout

path:

New customers

think theres aproblem with their

email , unawarethat theyve takenthe wrong

checkout path.

BestBuys error message reads, The email address and password you entered do not

match suggesting that the shopper entered the email or password incorrectly. The

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real problem, however, is that as a new customer, the customer has no password at

all on the system and should have taken the new customer checkout path instead.

Solution: clear, simple, polite error messages

eToys, by contrast, helps customers succeed with its clear and prominent checkout

error messages. For example, below eToys asks customers to Please enter the credit

cards month of expiration.

All shoppers noticed

and understood eToys

error messages.

eToys error message succeeds for three reasons:

The error message is writtenpolitely: Oops! Before we can go on, please see if

you can fix this...

Its displayed clearly : The message is displayed in bright red text, beside a large

graphic, to indicate that an error occurred. (clearly displayed)

Its worded simply: The message clearly explains how to fix the error and continue

to make a purchase. (worded simply)

eToys could improve the message further by moving the credit card number field

closer to the error message, making it even easier for customers to correct the mistake

and proceed in checkout.

KBKids also displays its checkout error messages clearly, helping customers see

where they need to make a correction:

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KBKids uses bright red,

blinking triangles toindicate which fieldsneed to be filled in.

KBKids places blinking red triangles next to the fields that customers need to fill in.

While this practice would be annoying on practically any other page on the site, its

helpful in checkout, since its then especially easy for customers to see where to fix

the problem and move on.

Amazons error messages go a step further to explain its checkout process:

Amazon tells

shoppers why itneeds their

phone number.

When customers leave a required field blank, Amazon explains says why the

information is necessary. Doing so helps shoppers through the checkout process, and

in this case explaining the need for a phone number reflects sensitivity tocustomers privacy concerns.

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What to Learn About Checkout

In our tests, over 40% of failures in buying attempts were due to checkout.

Fixing checkout alone would save the industry billions of dollars in lost sales and

raise conversion rates by 20%.

Shoppers are confused by sites that offer two equally prominent checkout paths.

Design checkout for new customers. Use cookies to remember return customers

and present them with a different checkout path.

Do not require shoppers to register before they can buy.

If a form is incomplete, prominently highlight for the customer whatever needs to

be changed, and word the error message simply and politely.

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C H A P T E R 5

Promotions and Merchandising

Promotions and merchandising are opportunities for retailers to boost revenues

during the holiday season. Customers in our tests were highly responsive to

promotions and featured products, especially so because they, like most holiday

shoppers, were shopping for a gift for someone else:

In 30% of tests, customers clicked on at least one featured product.

In 19% of tests, customers clicked on a promotion or special offer.

Some promotions were so effective that 50% of customers who saw the promotion

clicked on it.

Promotions and featured products appeal to holiday shoppers.

Effective promotions and merchandising can generate substantial revenue gains. For

many retailers, effective promotions and merchandising may mean the difference

between profitability and continued losses. According to Shop.org and BCG:

The average conversion rate for apparel sites is 1.8%.

The average order size for apparel sites is $81.10

On an average apparel site, increasing the average order size by 10% would add $8

per purchase. Increasing the conversion rate by 10% (a modest increase) would

increase conversion to nearly 2%. For a site with $100 million in sales, the impact of

10 Shop.org and BCG, The State of Online Retailing, April 2000

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these two changes would amount to $21 million in incremental revenue.

$100 million

x 1.1 (due to increased order size)

x 1.1 (due to increased conversion)

= $121 million.

If the overall e-commerce industry raised average order size by a conservative 10%

and raised conversion rates by a modest 10%, the increase in holiday revenue would

total over $4 billion.

$19.5 billion

x 1.1 (due to increased order size)

x 1.1 (due to increased conversion)

= $23.6 billion

Effective promotions and merchandising can significantly raise holiday revenues for

many e-commerce sites.

In this section, we present promotion and merchandising tactics that our tests showed

to be most effective. We also describe several lost opportunities how sites may be

losing sales by hiding good offers or by making them hard to use.

Effective PromotionsWe discovered that promotions, like other areas of e-commerce sites, are more

effective when they are presented clearly and are easy for customers to use. (For the

purposes of this report, we define promotions as monetary offers or discounts that

are not tied to specific products for example, offering 10% discount off a

customers first purchase.)

The most effective promotion we saw was on the homepage of Gap.com, and it

enjoyed a 50% clickthrough rate in tests:

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Half of all testcustomers clickedon this homepage

promotion.

Multiple customers

clicked immediatelyon GapMaternity.

Gap.coms prominent and straightforward promotion, $100 gets you $20, appealed

strongly to shoppers. Consumers immediately understood the premise of the

promotion a $100 purchase would get a $20 Gap ShopCard good towards your

next purchase. One shopper said, I would do this. A hundred dollars gets you

twenty. I would definitely check that out. Another noted that it would be easy to

spend a hundred dollars shopping at the Gap, and thus the promotion was attractive

to her. Half of the customers who saw the promotion clicked to see the details.

Another element on Gap.coms homepage showed good merchandising. Multipleshoppers immediately clicked on the large GapMaternity graphic. By prominently

displaying this section of the store, Gap.com communicated its breadth of product

offering to customers who might not have known otherwise. One shopper remarked,

I would never even have thought that they had maternity clothes. This is great.

Although the $100 gets you $20 promotion drew a high clickthrough rate, more

than one customer had trouble taking advantage of the promotion. The page took so

long to load that one customer left the site entirely. Frustrated, she said If its going

to take so long, whats the point? Its just a special offer. Another customer

commented that it might be easier to drive to a nearby Gap store than to go through

the online promotion.

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One customer left

Gap.com becausethe promotion

page loaded tooslowly.

From studying Gap.com, we offer two lessons about promotions:

Display promotionsprominently and explain them clearly.

When customers click into the promotion, make it quickand easy to take part in the

promotion.

Admittedly, these are basic, common-sense guidelines but as evidenced in our

tests, many top e-commerce sites arent following them. Just following these simple

rules could improve revenues substantially.

Good promotions, poorly presented

LandsEnd.com offered a good promotion but missed the opportunity to present it to

customers:

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LandsEnd doesntmention free hemming

until customers beginthe buying process.

During the checkout process above, LandsEnd asked customers if they wanted the

wool pants to be hemmed at no extra charge. Customers were happy to learn of

the offer of free hemming, but multiple customers commented that they would have

liked to know about the offer earlier in the shopping process. LandsEnd does not

promote its free hemming anywhere else, such as on the product page, and it may be

losing potential sales by not making the free hemming offer more prominent.

Similarly, Buy.com offers free shipping on office supply orders over $50 but

doesnt explicitly tell customers about the offer:

Buy.com customers

were surprisedto see shipping

was free.

Just as with LandsEnd, customers on Buy.com said that they would have liked the

site to mention the free shipping earlier in the buying process. Buy.com makes no

mention of the offer on its office supply product pages, and it doesnt remind

customers of the offer when their order is close to $50. The only other way that

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customers can find out about the offer is in the shipping section of Buy.coms

Frequently Asked Questions not the best place for promotional announcements.

Strangely enough, even when customers are in checkout and their order exceeds $50,

they still are not told of the offer. They can only assume that shipping is free because

the shipping dropdown defaults to Standard Delivery $0.00 (but it doesnt mention

the $50 minimum). One shopper on Buy.com said, If theres no shipping charge,

hey great... tell us that up front on the site.

Communicate special offers clearly and early in the buying process.

Merchandising

By merchandised products, we mean featured products and other items presented in

a special manner distinct from the sites standard product listings.

Many customers appreciated seeing featured products on sites home or category

pages. In 30% of tests, customers clicked on at least one featured product, showing

the importance of merchandising.

LandsEnd, for example, featured two products on its Womens category page,

causing a third of customers to click to get more information on one of the products:

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LandsEnds category

page prominentlydisplays two featuredproducts.

Once again these highlighted products caught customers attention because they were

presentedprominently and clearly. The interested customers considered buying these

items even if they came to the site for something else.

BestBuy, by contrast, buries its featured products on a homepage cluttered with

graphics and links to pages without products:

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Featured products

only appear nearthe bottom of the

page.

The center of

BestBuyshomepage is

devoted to a

sweepstakes.

None of thelinks in thiscolumn lead to

products.

BestBuy devotes most of its above-fold homepage space to a sweepstakes, which

doesnt lead to any products. All of the featured products appear below the fold at

800 x 600 browser resolution. While theres nothing wrong with promoting

sweepstakes, our tests suggest that holiday shoppers are more interested in getting to

products that they can buy.

Place featured items above the fold on the homepage.

Featured products were particularly important on the toy sites we tested (eToys and

KBKids). Adult customers, shopping for children, were especially eager to get giftsuggestions. This was particularly true when customers shopped for other peoples

children and had little idea of the childrens preferences.

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Notice how KBKids effectively uses its homepage to display featured products:

KBKids homepagefeatures products fromvarious categories.

The Surprise of

the Day is adiscounted

product.

KBKids shows products from several categories alongside links to the entire

category. The site also displays a Surprise of the Day in the left-hand column

(though near the bottom of the page), a featured product at a discounted price.

Both KBKids and eToys let customers shop by age as well as by category. In our

tests, almost all customers shopped both by age and by category within a single

session. Providing multiple ways to browse was helpful to shoppers eager to find

ideas for gifts to buy.

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eToys customers who shop by age for a five-year-old see this well-rounded page:

The center of thepage provides

categoryrecommendations.

The right-handcolumn features

characters and

brands.

The page offers customers over a dozen product or brand suggestions. The

suggestions range from brands (Lego and Barbie) to categories (books they can

handle) to situations (Plan a Stress-free Playdate). Because the product

suggestions were prominently and clearly displayed, several customers in tests

clicked into various products from this page. eToys shop-by-age page is an example

of thoughtful and varied merchandising.

Use brands, categories and situational merchandising to suggest products to

customers.

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What to Learn About Promotions and Merchandising

Promotions and featured products appeal to holiday shoppers.

Effective promotions and merchandising can significantly raise holiday revenues for

many e-commerce sites.

Communicate special offers clearly and early in the buying process.

Place featured items above the fold on the homepage.

Use brands, categories and situational merchandising to suggest products to

customers.

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C H A P T E R 6

Case Study: BestBuy

The BestBuy case study shows the benefits of improving the customer experience.

After testing the BestBuy site with customers, we applied the Creative Good

consulting methodology to prototype our own new customer experience for

BestBuy.com. When we tested the prototype, the results were dramatic: shoppers

were four times more successful on the prototype than they were on the original site.

Why a Case Study?

In our tests of eight top e-commerce sites we observed that customers failed to

complete an order over 40% of the time. Ironically, this large failure rate was causedby a handful of problems in the customer experience of the sites we tested. We

hypothesized that fixing that small set of problems could yield significant gains for

any e-commerce site.

To test our hypothesis, we chose one of the eight sites we had tested originally

BestBuy.com and created a new version of the site. New is in quotes because

(a) we created and tested new versions of only a few pages from the site, and (b)

BestBuy wasnt aware of the case study process and therefore wasnt a participant.11

We significantly improved the BestBuy customer experience with a relatively small

11 Copyrights, trademarks and all proprietary rights included on or comprising the BestBuy.com website areproperty of BestBuy.com Inc., a wholly owned subsidiary of Best Buy Co. Inc. Use of these materials by

Creative Good, in connection with this Case Study, is for illustrative and analysis purposes only. Thetrademark BestBuy.com is property of BestBuy.com Inc.

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investment in time and effort. Instead of prototyping the entire site, we just improved

those areas of the site that confused customers in the first set of tests. Many

e-commerce sites also could improve significantly with a small investment in the

customer experience.

This case study will show the following:

Where customers had difficulty on BestBuy.com during the initial tests (on the live

BestBuy.com website)

How we designed our prototype to address those problems

How customers reacted to our prototype during the tests of the prototype

Summary of Results

The new BestBuy prototype shown in this chapter represents a sizable improvement

in the BestBuy customer experience, as shown in before-and-after tests:

In our first set of tests (that is, the tests on the live BestBuy.com website), over

70% of customersfailedto complete a purchase.

In the second set of tests (the tests of the prototype), over 80% of customers

succeededin completing a purchase. The BestBuy conversion rate quadrupled

between the first and second set of tests.

Also, three times as many customers clicked on featured products in the prototype

as they did on the live site.

Customers in both tests met the same criteria, got the same instruction (to shop for a

holiday gift), and of course, no customer appeared in both sets of tests.

Developing the Prototype

To develop the BestBuy prototype, Creative Good first created wireframes, block

diagrams with the location and description of each page element. Below is an example

of a wireframe that we created; notice the descriptions of Customer Goals,

Prominence, and Notes on the right side of the page.

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The wireframe

explicitly lists thecustomer goals

on the page andthe relative

prominence ofpage elements.

The wireframe

shows the positionof page elements

but not their graphicdesign treatment.

It took three days for Creative Good to create wireframes for eleven new BestBuy

pages. Once they were done, interactive agency Red98 (a Boston-based interactive

agency committed to creating great user experiences) turned the wireframes into the

working HTML prototype that Creative Good used in the second set of tests. It took

one week for Red98 to create the HTML prototype. Thus, in less than two weeks, we

transformed the customer experience on BestBuy at least in prototype form. An

actual e-commerce site would take longer to implement and integrate such changes,but even doubling the time period is still a tiny investment of time to get higher

revenues in return:

With a few simple, fast changes to the customer experience, many e-commerce sites

can substantially increase their revenues.

We designed the new BestBuy prototype with new customers in mind, rather than on

return customers. More specifically, the prototype design was guided by four pieces

of data:

Customer objectives, as observed in our initial tests

BestBuys business objectives, based on some research on the company (see

below) and some basic assumptions about the objectives of any e-commerce site

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Best practices of online retailing, based on past Creative Good research and client

work

An informal competitive analysis of five other e-commerce sites that sell electronics

BestBuys business objectives

As stated above, we conducted some informal research on BestBuy to better inform

the decisions we made in creating the prototype. From reading BestBuys public

statements, we conclude the following about its Web strategy:

BestBuy is investing heavily in its website.

BestBuy wants customers to buy from its website.

BestBuy values customer service and explicitly tries to focus on customers.

Best Buy, the leading off-line electronics retailer, has 360 stores spread across 40

states.12 The companys projected revenues for the year 2000 are over $1.2 billion, an

increase of nearly 25% over 1999.13 Best Buy is successful and growing rapidly.

In May 2000, BestBuy.com (a wholly-owned subsidiary company of Best Buy Co.,

Inc.) announced it was spending $50 million on an online and off-line marketing

initiative.14 BestBuy.com is investing heavily to drive traffic to the site. As part of a

multi-channel strategy, the site aims to give customers access to all three of Best

Buys shopping channels: in-store, online and catalog.

15

Shoppers can buy products from the BestBuy.com website and pick them up at a

BestBuy store. Consumers can also browse the off-line store and place their order

through the website.

BestBuy.coms senior management has cited customer focus as a top concern.

Company president John Walden said Best Buy seeks to pioneer the clicks-and-

mortar revolution by creating a better shopping experience for our customers at every

point we interact with them.16 BestBuy recognizes that customers drive any

companys success.

12 Hoovers.com13 Twice magazine: Twice 2000 Retail Registry14 BestBuy.com: press release, May 1, 2000.15 BestBuy.com: press release, June 12, 2000.16 BestBuy.com: press release, June 12, 2000.

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We drew several conclusions from this information:

We concluded that BestBuy primarily wants to sell products on the site (hence the

prototype focused on making it easier to buy products).

We confirmed that store pick-up was important (hence the prototype featured store

pick-up on a homepage banner).

We knew that since BestBuy has a strategic commitment to the performance of its

website, and tries to focus on the customer, it would reasonably want to make such

customer experience improvements as we made in the prototype.

Comparing BestBuy and the Prototype

Below we describe the problems customers had on BestBuy.com in the first set of

tests, and how our prototype attempted to fix those problems. To help keep the two

sites straight, BestBuy or BestBuy.com refers to the live site; the prototype

refers to the prototype that we created and used in the second set of tests.

BestBuy.com: Homepage

For some shoppers, problems with BestBuy.com began on the homepage:

One customer wanted

a DVD movie but did notsee the Movies link.

At 800 x 600 browser

resolution, there are nofeatured products

visible above the fold.

Shoppers must waitas the backgroundimage a mans

face slowly loads.

Instead of a plain background, BestBuy.com uses the faded image of a mans face,

thereby lengthening the load time of the homepage without helping customers shop.

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When the homepage does finish loading, there is nothing visible above the fold that

customers can buy. The most prominent element of this page is the home

entertainment sweepstakes.

One shopper came to the site looking for a movie on DVD. She was unable to find the

Movie category link, since it was located below the main list of departments and

separated from them by a white line.

Prototype: Homepage

In our prototype homepage, we tried to make it easier for customers to begin

shopping right away:

On the prototype, all

categories werepresented together.

Almost every

customer clicked on a

featured product.

The prototype highlighted the product categories and listed them in blue underlined

text links. In tests, customers more easily saw the range of products the site offered.

We also renamed and created categories so shoppers could find items more easily.

For example, we added links to DVD Players and Camcorders categories, so that

customers could find popular products right away. (The BestBuy.com site currently

groups these products under the Home Audio and Video category.) The prototypehomepage also displayed four featured products.

One note on the prototypes revised product categories: the categorization scheme

isnt perfect. It was merely based on what we heard from customers in our tests and

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on our informal review of competitor websites. In an actual client project, Creative

Good would also use site data and the clients expertise to create a more accurate set

of categories.

BestBuy: Results Page

Aware that BestBuy sells DVDs in its off-line stores, one customer searched by

DVD from the BestBuy homepage and received the following results page:

Finding no DVD moviesabove the fold, one

shopper thoughtBestBuy.com did not

sell any DVDs.

BestBuy.com presented its search results by category. In this case, results from theMovie category appeared below the fold. The customer assumed BestBuy.com did

not sell DVD movies and thus gave up trying to buy one.

BestBuy.coms search was, however, helpful for some customers. Note what the site

returns if a shopper searches by cell phones. Shown below, BestBuy.com

effectively maps a cell phones search to a page explaining that wireless products are

not yet sold on the site. Further, the page includes a prominent link to the store

locator. Shoppers can thus easily find a BestBuy store that sells what they are looking

for.

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Shoppers who

search by cellphones see thatwireless products

are not yet offered.

How do home

office productsrelate to a searchby cell phones?

BestBuy: Category Page

On the BestBuy category page (see below), several customers were disappointed by

what they perceived to be a limited product selection. BestBuy.com does offer a fairly

broad selection, but the sites categorization gave shoppers an impression of a narrow

selection. One problem was that the sites category pages featured very few products

and made subcategories hard to find:

Only two imagesof camcorders

are visible on thecamcorder page.

Links to product

listings are hiddenin the left- hand

navigation bar.

Customers had difficulty, for example, realizing that BestBuy carried more than two

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camcorders, since only two camcorders are displayed on the Camcorders page

(shown above). Other camcorders were available through the subcategory links in the

left-hand navigation, but customers didnt know to go to the navigation elements to

find more products.

Customers familiar with the broad selection in BestBuys off-line stores were

disappointed. One customer commented: Not a big selection. It would be nice if they

had more selection on here... When you go to the store, there is more selection.

What the customer didnt realize is that BestBuy.com offered far more products than

she could see.

Prototype: Category Page

Our prototype made featured products and subcategory links much more prominent:

Subcategories werehighlighted at the top

of a contextualnavigation bar.

Subcategory links werealso displayed in the

center of the page.

At 800 x 600 browserresolution, four

products are visibleabove the fold.

If customers wanted more camcorders than the four displayed on the page, the links

to subcategories (containing more camcorders) were located prominently in the top

center of the page.

BestBuy: Product List

BestBuy.coms product lists the standard way that BestBuy displays its products

within their subcategories may frustrate customers by failing to show items

prices:

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For some items,

customers mustclick on See ourPrice.. .

Inexplicably, BestBuys product list doesnt display prices for each product. In the

screenshot above, the top three products show crossed-out prices, presumably

because they are discounted. Customers who want to know the price of those items

might reasonably click on the See Our Price link but even that doesnt display

the price. Instead, customers get a paragraph of text saying that customers must first

click the Buy button in order to see the price.

... and find theymust add to cart

to really see theprice.

Clearly, this is a poor customer experience. How many customers will begin buying

a product without knowing its price?

Its particularly surprising that BestBuy would make some prices hard to find,

considering how expensive some of the products are. One customer commented that

she would compare prices between different retailers: A big purchase like that I

would not impulse buy... I would have printed [the page] out to compare.

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Prototype: Product List

The prototype displayed a price whenever a product was displayed. Here is the

prototypes Digital Camcorders page:

The price ofevery item is

clearly visible.

Customers on the prototype could clearly see the price of each item. This also made it

easier to compare the prices of listed items.

BestBuy: Begin Checkout

On BestBuy.com, several new customers mistakenly chose the checkout path for

return customers (a common problem in many sites checkout, as described in

Chapter 4):

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New customerswere drawn to the

empty email andpassword fields.

Customers naturally gravitated toward the empty email and password fields on theleft-hand side of the page, without reading the Registered Customers header above

them. After clicking Continue Secure Checkout, those customers saw an error

message, since they were new customers and didnt have a BestBuy password.

Prototype: Begin Checkout

The protoypes checkout process focused on the new customer checkout path, as

suggested in Chapter 4:

The prototype leads

new customers downthe appropriate path.

Return customerscan click into a

shorter checkout.

To the right of the default checkout path is a small text link allowing return customers

to enter into a shorter checkout. Since return customers are more familiar with the

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site, it makes sense to provide them with a less prominent entry to checkout. Every

customer who began checkout on the prototype successfully completed the

transaction.

An improvement to the prototype, had we had the means to implement it, would have

been to use cookies to identify return customers. Then, when they began checkout,

the site would know to place them automatically in the shorter checkout path for

return customers.

A Prototype Weakness

Even though our prototype performed much better than the live BestBuy site, the

customer tests of the prototype revealed an improvement we could have made. In one

test, the prototypes shortcoming prevented a customer from being able to buy from

the product page:

One shopper missedthe Buy button and

instead clicked

Shopping Cart to buy.

One customer tried to add a camcorder to his cart by clicking Shopping Cart instead

of Buy. While we intended to make the Buy button prominent, the customers

difficulty showed us that we had not made the Buy button prominent enough.

In an actual client project, its common even desirable to find problems in the

prototype during listening labs. By continually improving the prototype based on

customer feedback, the site in development becomes that much more effective.

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Rough Calculation of Results

When we tested the current BestBuy site, only 22% of customers who wanted to buy

were able to do so. When we tested our prototype of the BestBuy site, 88% of

buying attempts succeeded. If our case study is anywhere near accurate, these

findings suggest that BestBuy.coms sales could be several times what they are todayif simple improvements were made to the customer experience on the site.

We made a rough calculation of the revenue gains that such improvements would

bring to BestBuy:

Although we dont know BestBuy.coms current conversion rate, the average

conversion rate for electronics sites is 0.8%17 . Assuming BestBuys conversion rate

to be the average, quadrupling it (a 300% increase) would raise conversion to 3.2%.

But to keep our revenue estimate conservative, we assume an increase of half that size

150% raising conversion to 2.0%. This also seems like a modest enough goal,

since 2% is still less than the average conversion rate on toy sites (2.7%), on books

and music sites (2.1%), and just above the overall e-commerce average

of 1.8%.

Since we dont know BestBuy.coms annual sales, we assume a modest estimate of

$100 million. This figure is less than 10% of its off-line sales ($1.2 billion) and only

twice the amount that BestBuy.com is spending to market the site ($50 million).

If BestBuy.coms annual sales are $100 million, raising conversion 150% wouldincrease sales to $250 million.

$100M x 2.5 (due to increase in conversion rate) = $250 million

Given our assumptions, simple improvements to BestBuys customer experience

could bring in $150 million more in annual revenue than the site makes today. This is

an enormous revenue gain, translating to several million extra dollars per month. Any

investment in improving the customer experience would pay for itself in a matter of

days, with hundreds of thousands of dollars in daily incremental revenue. Its hard to

see why a site would invest in anything other than the customer experience when

improving the experience can have such profound impact on the business.

17 Shop.org and BCG, The State of Online Retailing, April 2000.

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Again, given our assumptions, two other results are interesting to note:

With $250 million in online sales, BestBuys website would generate revenue equal

to about 20% of its off-line revenues. The change would bring BestBuy closer to itsgoal of pioneering the clicks-and-mortar revolution.

Increased revenues would also dramatically raise the effectiveness of BestBuys

marketing campaign. If BestBuy.com now grosses $2 for every dollar it spent

marketing the site, a better experience could bring in $5 per dollar spent on

marketing. Improved marketing efficiency would justify further investment in

BestBuys customer experience.

The lesson of our BestBuy case study is clear: it pays to invest in the customer

experience.

What to Learn from BestBuy

While the BestBuy case study provides valuable tactical lessons, the most important

lessons are strategic:

Even well-intentioned companies, committed to focusing to the customer, can

greatly improve their online customer experience.

With a few simple, fast changes to the customer experience, many e-commerce sites

can substantially increase their revenues.

When testing a website in front of customers, do it in a non-directive way. Instead

of directing customers, watch and listen to how they experience the site.

When creating prototypes, keep in mind the business objectives while applying the

lessons from customer tests.

Test the prototype in front of customers to assess the changes and identify newproblems.

It pays to invest in the customer experience.

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Written by Creative Good founder Mark Hurst, Good Experience contains news and

commentary about customer experience in

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