With online transactions surging in popularity across many industries, businesses must be constantly refining their strategies to encourage customers to complete purchases. According to the Baymard Institute's 2023 round-up of nearly 50 studies, 70% of online shopping baskets are abandoned. If businesses can convert even a fraction of these abandoned baskets, it could mean significant revenue growth. But how should businesses convert a meaningful number of abandoned baskets? Part of the answer lies in the checkout moment itself.

Conversion doesn't just hinge on attractive product images or compelling descriptions. It doesn't even rely entirely on offering a product or service that your target market actually wants. Ultimately, conversion boils down to how a business succeeds – or fails – at engineering the right checkout experience.

Of all the challenges that businesses face, one of the most important is ensuring that potential customers complete their purchase. A frictionless and intuitive checkout process which inspires trust can mean the difference between a sale and a lost opportunity.

This article explores 11 actionable strategies to improve checkout conversion rates, focusing on the origins of customer hesitation and drop-off – and addressing them in a proactive and holistic way. From technological tweaks to psychological nudges, we'll explore how businesses can transform their checkout processes into conversion machines.

What's in this article?

• What are conversion rates?
  
• What do conversion rates tell you?
  
• Why conversion rates are so important for businesses
  
• Ways to increase checkout conversion
  
• How Stripe can help improve checkout conversion
  

What are conversion rates?

Conversion rates represent the proportion of website visitors or platform customers who take a specific desired action. The action can vary from purchasing a product to signing up for a newsletter. For businesses, monitoring and improving conversion rates is essential for understanding the effectiveness of marketing strategies and identifying areas for improvement.

Typically, conversion rates are expressed as a percentage. They are calculated by dividing the number of actions taken by the total number of visitors and then multiplying that figure by 100. For instance, if a website has 1,000 visitors and 10 of them make a purchase, the conversion rate would be 1%. Improving this metric can lead to increased revenue – without needing to increase traffic.

What do conversion rates tell you?

Conversion rates are fundamental indicators that provide deep insights into multiple aspects of a business, especially surrounding the effectiveness of marketing strategies and customer experience.

• Customer experience
  One significant determining factor of conversion is the customer experience. If visitors find it easy to locate information, understand offers and take the desired actions, it's likely that the business's conversion rate will be higher.

• Effectiveness of marketing strategies
  A business might drive heavy traffic to its platform through different channels, but a low conversion rate could indicate that the traffic isn't qualified (i.e. those visitors are not likely to become customers) or that the marketing message isn't resonating with the audience.

• Pricing strategies
  Sometimes the issue isn't with the product or the platform, but with the pricing instead. Conversion rates can offer insights into whether a business's pricing strategy is appropriate for its target audience.

• Product-market fit
  Low conversion rates can hint at a product-market mismatch, meaning that the product being offered might not meet the needs or desires of the visiting audience.

• Trustworthiness
  For online businesses in particular, trust plays an important role. If visitors don't trust the platform – whether that's due to its design, lack of clear information or lack of reviews – they might not convert.

• External factors
  External factors, such as economic downturns, industry-specific slowdowns or global events, can affect purchasing decisions. Monitoring conversion rates during such times can provide businesses with insights about their resilience and ways to improve in the future.

Why conversion rates are so important for businesses

Modern businesses that are attempting to convert new customers and accept payments online operate in virtual spaces where it's possible to measure and analyse every click, hover and scroll. Within this data-driven environment, conversion rates are one of the most revealing metrics, providing an immediate pulse check on performance. The importance of conversion rates stems from several factors.

Here's how analysing conversion rates can surface key insights to inform business operations:

• Direct correlation with revenue
  For many businesses, conversion rates translate to sales. A higher conversion rate typically means that more visitors are turning into buyers, which leads to increased revenue.

• Marketing return on investment (ROI)
  Typically, businesses invest heavily in marketing and promotional efforts to drive traffic, and conversion rates help to gauge the return on these investments. If a particular marketing campaign drives traffic but not conversions, it's a sign that the campaign might not be effective.

• Feedback on customer experience
  Conversion rates offer indirect feedback about the payment experience. A drop in conversion might hint at issues such as a complicated checkout process, unexpected delivery costs or problems with website speed.

• Inventory management
  Understanding conversion rates can also help with inventory planning. Businesses might need to stock products with higher conversion rates more often, while products with lower rates might require re-evaluation or promotional strategies.

• Strategic decision-making
  As businesses experiment with new features, layouts or promotional strategies for their online channels, conversion rates serve as an immediate feedback mechanism. This allows businesses to move fast and make data-informed decisions.

• Trust and credibility
  For online businesses, establishing trust is key because conversion rates can reflect how much visitors trust the website. A well-designed, transparent and user-friendly site is more likely to have higher conversion rates.

Businesses across sectors are constantly trying to find ways to stand out from the competition and connect with their audience. Conversion rates shed light on what's working and what's not. Conversion metrics can tell complex stories about visitor interactions, preferences and choices – information that businesses can leverage to improve the customer experience.

Ways to increase checkout conversion

Understanding your target customers' preferences and how they're interacting within your online environment is only as useful as what you do with that information. Building a data-informed digital environment with a frictionless and intuitive checkout experience can be the difference between a completed sale and a lost customer.

With that in mind, here are 11 effective tactics for boosting checkout conversion:

1. Simplify the process

Often, the checkout procedure is the last line of defence against basket abandonment. Every additional step or field can act as a hurdle for the buyer. While it's tempting to collect as much information as possible or upsell other products during checkout, stay focused on the primary goal: facilitating a hassle-free purchase. A streamlined process reduces friction, allowing customers to focus on completing their purchase without any distractions. As a result, businesses can experience a substantial increase in conversions when the process is made as straightforward and swift as possible.

2. Offer guest checkout

Every online shopper has faced account creation pop-ups, and for many, it's a moment of friction that derails their interest in moving forwards to complete their purchase. While the intent behind account creation pop-ups – building a database and generating ongoing customer engagement – is valid, the execution can deter potential buyers. Offering customers a guest checkout option respects their time and preference for a quick purchase. The less effort and commitment you require from them, the more likely they are to finalise the sale, leading to potential repeat business down the line.

3. Provide multiple payment options

Modern customers expect choices in every aspect of their shopping experience, including payment methods. Some prefer traditional credit or debit card transactions, while others lean towards newer methods, such as digital wallets. Many customers also prefer the flexibility of being able to pay in instalments by using buy now, pay later. Meeting these diverse needs is no longer a bonus – it's a basic expectation. Catering to a variety of payment options serves existing customers better and also attracts a wider audience.

4. Display trust signals

Online transactions demand trust. With rising concerns over data privacy and security, it's more important than ever for businesses to show customers that their data and money are safe. Displaying trust signals – whether they're positive reviews from fellow shoppers or badges from recognised internet security organizations – provides that reassurance.

5. Be transparent about costs

No one likes hidden charges. Surprise at high prices, especially during the final stages of checkout, is one of the leading causes of basket abandonment. Clearly listing all of the costs associated with a purchase, from taxes to delivery fees, prevents last-minute surprises and also builds trust with the shopper.

6. Optimise for mobile

A checkout process that isn't optimised for mobile devices is a missed opportunity. It's essential to consider factors such as touch-friendly buttons, easy-to-read fonts and simple navigation tailored for smaller screens. This attention to detail makes it possible for mobile shoppers to have the same easy and enjoyable experience as their desktop counterparts.

7. Retarget abandoned baskets

Despite a business's best efforts, basket abandonment will happen – but it's not always a lost cause. Retargeting strategies, whether email reminders or targeted ads, can bring back visitors who were on the fence by re-engaging them and reminding them of the value that they originally saw in the product.

8. Offer incentives

Everyone appreciates feeling special or getting a deal. Offering incentives, whether it's a discount, free delivery or a bonus item, can be the tipping point for a hesitant shopper. Such incentives are not just about reducing prices, but also about showing appreciation for the customer's choice to shop with the business.

9. Provide clear call-to-action (CTA) buttons

Clear directives guide the shopper, making sure that they don't feel lost or overwhelmed. CTAs that are prominent and self-explanatory, such as "Proceed to payment" or "Continue shopping", make the checkout journey intuitive. Focus on reducing guesswork and providing a smooth transition from one step to the next.

10. Have a clear return or cancellation policy

Returns, downgrades and cancellations are an important part of the experience when you process sales and handle customer sign-ups online. Rather than shying away from them, businesses should use return, downgrade and cancellation policies as a selling point. A clear and fair policy showcased during checkout can alleviate any lingering purchase hesitations. It demonstrates the business's confidence in its product or service, as well as its commitment to customer satisfaction.

11. Fast loading times

A slow website is a fast way to lose a customer. Every second of delay can make a potential conversion less likely. Investing in optimised website infrastructure and ensuring quick loading times isn't just about aesthetics – it means respecting the customer's time and minimising the chances that they will get impatient and give up.

For businesses, increasing checkout conversion means employing a blend of psychology and technical optimisation. Understanding the challenges and hesitations of customers, and addressing these proactively, can lead to a more fluid and high-converting checkout experience. As payment technology and customer expectations surrounding online checkouts continue to evolve, businesses must remain vigilant and look for ways to refine and improve the path to purchase. Doing so will help turn potential buyers into repeat customers.

How Stripe can help improve checkout conversion

Stripe offers various features to help businesses tackle the issue of basket abandonment, each designed to make the checkout experience smoother for customers and help improve checkout conversion. Let's look at some of these features and how they address common factors that lead to basket abandonment.

• Unexpected costs
  Stripe provides an API that allows for the real-time calculation and presentation of fees, taxes and delivery costs. This gives businesses the capability to display a fully itemised summary as customers progress through the checkout flow. Transparent pricing can help to prevent customers from abandoning baskets due to unexpected costs.

• Streamlined checkout process
  Stripe Checkout is a prebuilt solution that has been designed to minimise the number of steps that a customer must take to complete a purchase. It's optimised for mobile use and localises automatically based on the customer's location, even auto-filling fields when possible. This optimises the customer experience, reducing the chance that customers will exit the process prematurely.

• One-click checkout
  Stripe's Link allows returning customers to skip entering their payment information for every new purchase. Payment details are stored securely and the checkout process becomes a single action on the customer's end. This speeds up the transaction and also decreases the chance of basket abandonment due to a cumbersome checkout process.

• Account creation requirements
  With Stripe, businesses have the flexibility to offer guest checkout options. Some customers prefer not to create accounts for single transactions. Stripe's guest checkout options allow these customers to complete their purchase without the added step of creating an account, effectively reducing a common barrier to conversion.

• Security concerns
  Stripe is compliant with the highest industry standards for security, including Payment Card Industry Data Security Standard (PCI DSS) Level 1. It also offers two-factor authentication and encryption services. This level of security is designed to instil confidence in customers, alleviating fears that could otherwise lead to basket abandonment.

• Website errors or slow loading times
  Stripe's infrastructure is designed for resilience and speed. Businesses that use Stripe are less likely to experience downtime or slow loading times during the payment process, providing a reliable and smooth customer experience.

• Ambiguous return policies and out-of-stock items
  Stripe doesn't manage inventory or return policies directly, but its API does allow for easy integration with inventory management systems and the display of return policies during the checkout process.

• Comparison shopping and distractions
  Stripe can integrate with customer relationship management (CRM) systems to enable strategies, such as personalised email reminders or targeted discounts, to engage customers who may be comparison shopping or otherwise distracted.

Overall, Stripe's solutions are engineered intentionally to focus on important details such as optimised checkout pages, each targeting specific factors that increase checkout conversion. Businesses can integrate these features in various combinations and create a checkout flow that is tailored to their customer base.

To learn more about how Stripe can improve conversion rates in a wide range of customisable payment scenarios, visit Stripe Checkout.