There’s a big global ecommerce problem: some customers are primed and ready to buy online, but they don’t complete the process. Cart Abandonment has progressively got worse since 2006, and if you read that article you’ll see how it’s risen to 70%.

It’s not just about the loss of money, but also the cost incurred to bring that customer to the site. When you factor in marketing costs and fixed overheads then the impact of improving the ecommerce conversion rate on your site becomes bigger – your cost per acquisition, measured on a marketing or business basis, goes down.

So how big is the problem on your site? I spoke to one online retailer who estimated that they only lost one in ten of their online sales due to abandonment, and that 10% of loss was unfixable. How did they know this? “Gut Feel”.

Forget your assumptions and calculate your checkout loss – understanding the problem is the first step in fixing it, and having data allows you (and the stake holders in the business) to put resource in to it. Does the CFO/CEO know that you lose seven out of ten customers after they click “Checkout”?.

## There are two important ways to measure checkout abandonment:

### Step 1: Where are people dropping off?

*Or: What’s the visitor flow from Visit Checkout to Start Filling In to Sale Complete.*

To work out this funnel you’ll need some data – some you can get from Google Analytics, and if you have goals or ecommerce tracking set-up to monitor sales then it’s less complicated.

An even easier way is to use Formisimo – we track conversions and sales, and also the important metric of “How many people start filling in my checkout”. Blatant Plug: You can get started with Formisimo for free.

**In Formisimo:**Log in and head to the overview report. Below the graph you’ll see the number of website visitors who visit your checkout, the number who start filling it in, and the number of conversions.

We also show you the percentage of people who move forwards from each stage, and the final conversion rate from checkout visitor to sale. That final conversion rate can be inverted to show the raw loss, so if your conversion rate is 3% you’re losing 97% of your potential customers.

**In Google Analytics:**To get your Sales Complete figure you can use Goals (if you have them setup) or Ecommerce tracking.

- If you have ecommerce Tracking set-up then head to Conversions > Ecommerce > Overview.

The second box on the right, transactions, gives you the number of sales in that period. - If you use Goals, and don’t have ecommerce tracking set-up then head to Conversions > Goals > Overview. Select your goal in the mid-left of the report, and the first box below the graph will give you your sales in that period. Sanity check this against figures from another source, it’s easier for Goals to be setup incorrectly.

To get the number of people who visit your checkout head to Behaviour > All Pages. Find the URL for the start of your checkout process and click on it. This could be /checkout, or similar. If you’re unsure of what it is then visit your site, add an item to the basket and then follow the checkout process until you reach the first page. Use the number in the second data column of the table (“Unique Pageviews”) as your Visit Checkout number.

In GA it’s not possible to see how many people start filling in your online checkout without further work– that’s where Formisimo has a one-up on Google Analytics. You could use Google Analytics events, firing an event whenever a user engages with an element of the form. It’ll take some coding and testing to get it working right.

When you’re pulling out data what’s a good date range to cover? I’d suggest three months, it’s a long enough time period to iron out any abnormal peaks/troughs. If you get a large volume of visitors then you could reduce that.

If you’ve changed your online checkout recently then use data after this change was made. If that change was recent, and your date range would be short (<1m) then cover a longer period but bear in mind that your data will be split between the old (perhaps worse) online checkout and the new version.
You now have three numbers: checkout visitors, checkout starters and checkout completions. You can pop these numbers in a spreadsheet, calculate the ratio between each step and have a simple funnel that shows where the pinch point is. I've put together a simple spreadsheet in Google Sheets, so you can drop your numbers in there.
**You can access the shared spreadsheet – Please take a copy and add your numbers in.**

### Step 2: How much money are you losing?

In the last step you calculated the conversion rate from Checkout Visitor to Sale Complete. Let’s say it was 3%. You should also know the value of sales over that period, let’s say it’s £200,000 (you may know this internally already.

**Calculate your theoretical maximum**

What if everyone who visited your online checkout bought from you? To roughly calculate the theoretical maximum use the following equation:

Conversion Rate: 3%

Sales: £200,000

Theoretical Maximum Calculation: (100 / 3) * 200,000

**Result: £6,666,666.66**

So your theoretical maximum is £6.6million. 100% conversion rate is rarely reached, so let’s take a more pragmatic approach to understanding loss.

**What could you really be earning?**

Let’s consider your online checkout and – if we improved it – where your conversion rate could end up. From Formisimo’s data we know that users who install us get an average 76% increase in conversion rates, so a shop with a 1% checkout conversion would go up to 1.76%. That gives us a general idea of the impact of understanding and improve a checkout.

If we have a goal in mind, then we can work backwards from that. Going back to that previous example of a checkout that converts at 3%:

- Let’s assume that every time we improve the checkout the conversion rate goes up 15%. We won’t make huge changes, but instead we’ll tweak it, and the page, and improve the user experience.
- We’ll do this four times in the next year, each time learning more about the how the user engages with it.
- Our 3% conversion rate goes up to 3.45% after the first changes, 3.97% next, then 4.56%, and we believe the project will end on a 5.25% checkout conversion rate.

**We can then calculate what our sales would be at the final stage – and this can be our baseline for understanding the lost opportunity with checkout abandonment.**

In our example (3% conversion, £200k income) our goal is to improve the conversion rate to 5.25%, which gives us £350,000 in sales. Right now we’re doing £200,000 in sales – so the lost opportunity is £150,000. When we get the checkout to convert at 3.45% the revenue is £230,000 and the lost opportunity is £120,000.

To make this easy I’ve put together a spreadsheet that you’re welcome to copy and use. It assumes there’s four steps in optimising the online checkout, but you can enter your current conversion rate, current revenue and how much you think you’d increase it by each time.

The lost opportunity is the difference between where you think you’ll be, and where you are now – in this example there’s a £150k improvement in sales, all driven by reducing checkout abandonment.

**You can access the shared spreadsheet – you can take a copy of a Google Sheet by going to File > Export.**

If you’d like an even easier way to calculate this, head over to our Ecommerce Abandonment Calculator – if you use Google Analytics, and have ecommerce tracking enabled, it will draw in your data and show you what your conversion rate, and revenue, could be.

(Image in the header by r. nial bradshaw, used under CC license)

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