The ROI of Online Customer Experience Management

White Paper

For online businesses, the challenge is to rapidly identify points on the customer journey where business is lost. That requires not only constant monitoring of the site but also tools that provide full understanding of the customers’ experience. In particular, you need to know what problems customers are facing and how those problems affect the outcome of their journeys. Once you know that you can begin to improve their experience.

Read this whitepaper to learn about the role of customer experience management in driving value for any mission critical website, both transactional and non-transactional.

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Introduction

It’s taken little more than two decades for e-commerce revenues to grow from a standing start to their current levels of around $1.3 trillion worldwide.

That sales revolution has gone hand-in-hand with progressive improvements in site design and performance and it’s certainly true that today’s internet shoppers enjoy a far superior online experience to those making their first tentative book and CD purchases back in the mid-1990s.

But it would be wrong to claim that even the most successful of today’s internet retailers have got the design, usability and performance of their websites 100% right. Customers still get frustrated. They still struggle with navigation and technical issues. They get stuck filling in online forms or wrestle with badly executed design when trying to step back to the previous page. And those frustrations all too frequently result in the customer taking his or her business elsewhere.

These frustrations show up in figures such as bounce rates at the beginning of the journey and shopping cart or check out abandonment at the end. In between there may be any number of points where customers simply give up the ghost. The result is lost revenue both in respect of that immediate sale but possibly also in the future if the customer does not return. Of equal importance is that a poor experience undeniably damages perception of the brand.

So for online businesses, the challenge is to rapidly identify points on the customer journey where business is lost. That requires not only constant monitoring of the site but also tools that provide full understanding of the customers’ experience. In particular, you need to know what problems customers are facing and how those problems affect the outcome of their journeys. Once you know that you can begin to improve their experience.

This goes beyond the familiar metrics. Your website stats may tell you that an unexpectedly high number of customers are dropping out at a particular stage of their journey – for example the point at which repeat buyers are asked to enter their account details. In order to reduce this abandonment, you have to also know why that particular function is sending people away, how many people are affected and the impact on sales.

In this eBook we’ll be looking at the role of customer experience management in driving value for any mission critical website, both transactional and non-transactional.

In particular we’ll be exploring how you can improve customer experience – and improve revenues – by deploying UserReplay, a tool that allows you to capture and replay user journeys in real time.

Chapter One - Why User Experience Matters

The E-Commerce Landscape

Let’s return to that $1.3 trillion figure identified by eMarketer in 2014. The company’s analysis of that headline number suggests that in the retail sector online sales represents just 5.9% of the total – not an enormous segment.

However, that simple comparison belies the crucial importance of online sales to an increasing number of merchants. For instance, here in the UK, e-commerce sales passed the $150bn mark in 2014, according to IMRG/Capgemini. That represents a much more significant percentage of the whole and it’s a similar picture elsewhere in Europe and in the US. Add to that the fact that e-commerce sales are growing at a substantial rate – an average of 12.7% across the year according to the British Retail Consortium – and the importance of getting the online offering “right” becomes quickly apparent.

And when you draw back from pure retail what you see is an online channel that is becoming the primary route to make a purchase in some sectors. Who now buys car insurance at a high street broker or airline tickets from a travel agent? Equally, how many of us now use telephone banking when banks are offering much more autonomy to customers via their online services.

So if online is the key channel in many sectors then the ability of businesses to differentiate themselves from competitors is dependent on the creation of a positive online experience. Indeed, the online experience is the brand.

Meanwhile, the omni-channel revolution is well underway. Today’s customer is using tablets and smartphones as well as PCs. Thus, the road that leads from interest in a product and preliminary research to purchase and checkout often takes the buyer on an offline and online journey across a range of devices and locations. For instance, the customer journey may begin with online research but end with a visit to a local shop to touch and feel the goods before making a purchase. A poor web experience may not only manifest itself in a lost online sale, it could also have a partially hidden impact on apparently “offline” customers. In this omni-channel world the experience has to be good on the desktop and on cell phones and tablets.

What all this means is that the problems customers experience when online can make a significant difference to the sales performance of ‘pure-play’ and omni-channel retailers alike.

How would you best describe your understanding (or your clients’ understanding) of the customer journey?

[Download PDF for charts]

Barriers to Conversion

For many retailers the key metric is the conversion rate, currently sitting at between 4% and 5% in the UK, according to IMRG.

That is of course a headline figure. When you drill down to the level of individual merchants, conversion rates are driven by a range of factors. These include not only price, product range, the strength of the brand and the delivery options but also the more fundamental factor of user experience.

In an ideal world, a well designed website will provide the customer with a seamless route to the checkout. The customer arrives, uses the navigation options to find the necessary products, registers (if necessary) and moves through to make a purchase. Everything works seamlessly.

But in reality most sites have barriers to conversion that fall broadly into three, sometimes overlapping categories, namely:

  • Usability
  • Technical issues
  • Performance

All of us have probably encountered usability problems. It may sometimes be as simple as a navigation system that makes it difficult to find certain items or a page layout that is confusing or counter-intuitive, but even at the most basic level, poor usability is a real barrier. Some customers persevere, but others don’t – they simply go elsewhere.

When it comes to infrastructure, the marketing of the modern internet is reliant on the speed provided by fiber-optic networks and 4G masts. The consumer expects seamless operation. Once upon a time customers may have indulged pages that were slow to load or a site that proved sluggish at peak times. Not today. Poor performance drives away customers.

But perhaps the biggest frustrations are caused by technical problems, such as forms that don’t accept certain e-mail addresses or links that connect you to an apparently blank page (with the next step hidden off screen). Sometimes these problems are caused by poorly designed software, in other cases a glitch has developed. The bigger and more complex the site, the more likely it is that there will be technical problems that hamper the progress of the customer towards the checkout.

It’s important to remember that in terms of technical integrity, a website is not a static thing. Every time sections or features are added, there is a danger of undetected technical issues arising. Equally, technical issues may well relate to the rendering of the page across the wide range of browsers deployed on mobile devices. To adapt a well-quoted aphorism:

“if the site ain’t broke now, it probably will be.”

And technical problems have a disproportionate impact. In terms of barriers to conversion, usability is the biggest category but it is technical problems that cause the greatest number of drop offs. For instance, a technical issue such as a form that doesn’t take double-barreled names, can make it impossible for certain customers to make a purchase.

Poor performance (sometimes related to technical issues) also plays a major part in reducing conversion rates. Faced with pages that are slow to load or forms where the fields are sluggish in response to key strokes, many customers will drop off.

Beyond Assumption – Tracking the Customer Journey

This then raises an important question – how do you know what impact a technical problem or poorly designed navigation system is having on customers and their spending? Even in the case of something that looks like a real obstacle – such as a poorly executed registration or payment component – how do you really know that the problem is stopping a significant amount of customers from progressing?

Perhaps the most common means to assess the impact of a problem is to rely on customer feedback, via hotlines or online chat. This kind of direct engagement does yield vital intelligence but it is also anecdotal and incomplete. A customer may call a telephone hotline in order to complete a transaction without ever really explaining why the call was necessary. Equally the customer may complain about an aspect of the site when really the frustrations began to build earlier in the process. More worrying, for every customer who calls, there may be 1,000 who don’t.

Nor will web analytics help much. While tools such as Google analytics will tell you where customers are dropping off, they won’t tell you why.

To get real actionable intelligence you really need to gather the kind of hard evidence of problems arising that underpins effective action.

UserReplay has been designed to provide that evidence.

Essentially UserReplay is a software system that enables website owners to capture and report on customer journeys through a site and replay any significant segments. Thus, the system will show you what individual customers do on your site and where they go. It will also identify those points where barriers to conversion arise and what the response is in terms of their behavior.

In other words, UserReplay helps you move beyond assumption by providing you with fact-based data that allows you to identify and quantify the effect of problems, which can then be fixed rapidly. In doing so you both provide a better service for customers while addressing the barriers that inhibit sales.

In addition, UserReplay enables marketers to be proactive, for instance by re-targeting those who are seen as loading up shopping carts and then bailing out at the last minute.

Fraud and Customer Disputes

Having an exact record of what your customers do, offers benefits above and beyond the ability to identify and quantify the impact of problems. A replay of a journey can also be a vital means to identify incidents of attempted fraud or a tool to resolve a dispute.

For example, let’s say an account holding customer fails to make a payment by an agreed monthly deadline, triggering a penalty. He or she might claim that an attempt was made to settle that month’s bill but a glitch in the system prevented them from doing so. With a full record of the customer journey, it is a simple matter to establish where the fault really lies.

The same principles can be applied to detecting fraud. For instance, a customer journey replay showing a repeated attempt to log in to part of the system could be an indication of an attempt at fraudulent behavior. Importantly, this kind of activity can be detected immediately, in real time, allowing the merchant to take brisk action.

The Voice of the Customer

From a strategic perspective, UserReplay shouldn’t be seen as a set of tools existing in isolation. In fact, it is an important piece of a much bigger picture.

Increasingly companies of all types are realizing that it is vitally important to capture the voice of the customer as a means to provide better and much more responsive service. Failure to do so not only risks sacrificing competitive edge (and ultimately market share) to more customer-centric rivals, it can also push up costs. According to research by consultancy Aberdeen, businesses that don’t capture the opinions and experience of customers risk seeing customer service costs rising by 2% a year.

Typical customer feedback channels include e-mail, call centers, social media monitoring and one-to-one conversations in stores. Added to that, businesses are increasingly measuring CSAT (customer satisfaction) and Net Promoter scores.

Sitting alongside personalisation strategies, the goal of the various voice of the customer tools is to provide the information that will provide the best possible experience to the customer base as a whole and identified segments of that total.

The ability to chart and analyze the customer experience at a granular level is more than a nice-to-have. It improves conversion, cuts down the time it takes to find and fix problems, speeds the resolution of disputes and in some cases provides a weapon to deal with fraud.

In subsequent chapters, we’ll be looking at the financial impact of website problems and the ROI achievable by deploying UserReplay.

Chapter Two – The Cost of Poor Customer Experience

From a customer’s arrival on a home or landing page, through to the final checkout there are numerous factors that filter the conversion rate down from a possible (if extremely unlikely) 100% to the current UK average, which is in the region of around 4%.

Customers arrive at websites for many reasons. Some are simply curious, some are researching products and others have definite intent to buy. Within that last group, there is hard evidence so suggest that usability, technical and performance issues play a major role in dampening sales.

Nowhere is that more evident that at the shopping cart/check out stage. By the time they get to this stage, customers have clearly identified themselves as minded to buy and yet according to statistics published by the Baymard Institution, the shopping cart abandonment rate currently stands at around 67%.

And that figure could actually be even higher. In a poll by Cloud IQ, 75% of shoppers admitted to regularly abandoning their carts. (Fig. 7)

There are, of course, various psychological reasons why this should be the case, including the kind of pre-buyers’ remorse that sees the customer simply deciding that, “yes it would be nice to have a new computer but I really can’t afford it.”

On the face of it, buyers’ remorse is not something that a website owner can do anything about, but it doesn’t exist in a vacuum. Any doubts about the wisdom of a purchase will be exacerbated by any perceived problems with the website. And the issues that customers encounter have a tangible impact on sales. Witness a 2013 survey by Statistia that asked why customers bailed out at the point of purchase. The reasons neatly fall into the usability, performance, and technical matrix.

For instance on the usability front, 25% said they had bailed out of a purchase because website navigation was too complicated.

Meanwhile, 21% said checkout processes were too long.

As you would expect, technical failure also triggered abandonment, with 24% citing the crash of a page as a reason.

Overall, importantly these figures emphasize that any obstacle, whether related to usability or performance, reduces sales.

Meanwhile in the Real World

Chapter Three – The Return on Investment

The Broad Benefits

As we’ve seen, any problem that a customer encounters on a journey through a website is a barrier to conversion and thus has an impact on sales and ultimately the bottom line.

That impact manifests itself in a number ways:

  • The immediate loss of a sale.
  • The loss of future business. A customer who bails out of a site because of frustration with a particular component or the overall usability and performance of the site might never return. And in a worst-case scenario any sharing of the experience with friends (or via social media) may dissuade others from sampling what you have to offer.
  • Pressure on sales and customer service lines. Some customers will bailout, others will ring your site’s helpline. Left unfixed, problems with the site will result in more traffic through your call center than is necessary, putting a drain on resources.
  • Less than optimal resolution times. When customers call in one of the immediate challenges facing agents to establish exactly why and where a technical problem has occurred. Relying on a customer to describe a problem may not yield the necessary information to put things right.
  • The cost of identifying and fixing repairs.

As such the broad benefits from deploying UserReplay to identify and rectify problems (or deal with customer queries) can be measured across a number of metrics.

  • Higher sales. By enabling site managers to remove barriers to conversion, UserReplay pushes up conversion rates.
  • Lower traffic to customer service centers (particularly traffic related to problem resolution).
  • Faster customer problem resolution on the phone or by other channels.
  • Faster identification (and therefore fixing) of technical and usability issues, which in turn results in lower IT and development costs. In addition, the analytics and diagnostic capabilities of UserReplay provide the fact-based evidence that allows managers to focus scarce resources on the most pressing or damaging problems.
  • More repeat business. By focusing on continual improvement of the customer experience, managers make enhance the brand and make it more likely that customers will return.

In addition companies can boost revenues by using the information provided by UserReplay to re-target those who have abandoned shopping carts.

Measuring the ROI

One of the most effective ways to measure the ROI from UserReplay is to focus on the core problem that the system addresses – namely the direct impact on sales of problems within the site.

The first step is to identify the scale of lost profits due to technical problems. This is achieved by making a calculation based on:

  • The average number of orders per day on the site.
  • The average order value.
  • Average gross margin - the number of orders lost due to, say, technical problems.
  • The average fix time per problem.

So let’s say UserReplay proves that 2% of your customers are encountering a problem – for example a software bug – that is preventing 50% of them from converting. That feeds through to a loss of 1% in overall orders and by factoring in the gross margins and average order value you have a figure for the profits lost over the period of the problem. Multiply this by the fix time and you have a figure for lost profit over the life of the problem. Reduce the fix time by 60% and you get a direct cost saving.

That’s what UserReplay delivers. When a problem occurs, it enables you to track the journey to the point where issue arises and quantify its impact. This is a rapid diagnostic process that rapidly improves fix times by removing the need for testers to recreate the problem. And by speeding up the fix process you reduce the hit on profits.

Initially this calculation requires a certain amount of estimation on the part of the site operator, but once UserReplay has been installed you can use the system to gather absolutely accurate information on fix times, when can be used to establish a ‘real ROI’.

In the Real World

The sums lost to technical problems can be considerable. For instance, UserReplay recently worked with a food and beverage company, with an average basket value of about $30.

Through the UserReplay system we established that customers were being asked to enter their postcodes on multiple occasions. Elsewhere customers were getting through to the ‘pay now’ button, only to be kicked back to the beginning of the order process. By applying the above formula, we found these issues were costing $1.8m a year in lost profits.

Poor usability can have an equally corrosive impact on profits, and can be hugely hard to detect without a full understanding of the customer journey. UserReplay recently worked with a fashion site that had a problem with customers getting stuck when entering their address. By deploying UserReplay it was discovered that certain fields were hidden on the page. The result was a 12% conversion rate at that stage compared with a usual figure of 57%.

In a similar case, a food and beverage site found was losing $380,000 per year on its mobile app because the details of restaurants where orders could be collected were hidden, reducing the conversion rate from 30% to 3%.

Sometimes technical issues can exclude certain groups of customers. UserReplay recently worked for a travel company where it was discovered that an online form rejected double-barreled names, effectively preventing them from booking holidays.

And the scale of these problems is often hidden until a proper analysis is done. Yes, some customers resort to a telephone hotline to resolve their issues but according to one of our biggest retailers, for every individual who calls, at least a thousand don’t. That represents a lot of lost business and brand/reputational damage.

UserReplay also enables businesses to react proactively to opportunities. For instance, real time analysis of shopping cart abandonments identifies high value orders that have been lost allowing the merchant to re-target customers with a call or e-mail.

Reducing the Cost of Fraud

According to figures from security company CyberSource, approximately 1% of online transactions are fraudulent. On the face of it, that doesn’t seem like a huge figure but when you dig below the surface the impact of the problem becomes apparent. The same company found that 50% of physical goods sellers said they had turned away good customers in trying to detect fraud. Overall, around 32% of card charge-backs are fraud related.

UserReplay enables businesses to detect the activity – such as multiple-logins, excessive deliveries to one postcode and multiple IDs from the same IP address. These fraud detection capabilities can save between 0.25% and 0.5% of sales turnover.

Thus the ROI from UserReplay is derived from its ability to solve very real and costly problems. Users pay a license fee along with modest hardware costs, although this reduces if the implementation is on the optional Software as a Service (SaaS) basis. The ROI averages between 10 to 30 times the original investment.

Conclusion

E-commerce revenues are rising but so is customer choice. From electrical equipment to insurance and travel, consumers have no shortage of online destinations on which to make purchases. Today’s consumers also have a short attention span. If a problem arises they will go elsewhere.

For online merchants in all sectors, the imperative is to ensure that the customer journey is seamless and uninterrupted, but very few sites are free of glitches. What’s more, every technical upgrade or addition to the site holds the possibility that an error or problem will have been introduced or that come component parts don’t work well with all browsers and operating systems. Often the merchant won’t find out until a significant amount of business has been lost.

One way of describing UserReplay technology is that it’s a ‘black box’ recorder for the web. By recording and replaying journeys, it not only finds the faults and weaknesses within a website, it also provides a power tool to ensure that barriers to conversion are rapidly removed. In doing so it makes a major contribution to boosting the bottom line. Our customers have found that the ROI can be truly remarkable.

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