by Aurangzeb Agha
In today’s world, data rules all. Though you can sometimes have too much of it, the better you can leverage it, the better you can position yourself to succeed. In the world of e-commerce, there are some key data points that every retailer must know at all times:
- Your online conversion rate
- The number of unique visitors that come to your e-commerce site daily/weekly
- Your daily number of orders and revenue.
These are the obvious ones and are pretty easy to track and calculate.
Another very important metric that all e-commerce decision makers must constantly keep their eye on is cart abandonment rate (CAR). As you probably already know, the average online cart abandonment rate is 70% (and by some measures, even as high as 78%). Knowing your online store’s specific cart abandonment rate allows you to better understand both how much money your shoppers could be spending and how to address their abandoning behavior.
Surprisingly, many retailers we speak with don’t actually know their cart abandonment rates and tend to assume it is around the industry average. In most cases, we’ve found that’s not the case! But have no fear! We’ve developed a very simple and easy to use calculator that you can use to determine your store’s cart abandonment rate.
Here is how it works:
1. Download a copy of our complimentary Cart Abandonment Rate Revenue Calculator by clicking here—it’s a Google Sheet. A new page will open in your browser that looks like this:
2. Go to File -> Download As -> Microsoft Excel if you’d like to edit the file to plug in your own numbers
Alternatively, if you don’t mind working in Google Sheets, just make a copy of this worksheet:
3. Once you have your own copy, plug in your numbers from last month in the three green boxes:
- Your Average Order Value (AOV)
- The number of times people pressed “Add to Cart” for products on your site and
- The number of Purchases (or orders)
In the spreadsheet, we’ve entered:
- Average Order Value (AOV) = $100
- “Add to Cart” = 200
- Purchases / Orders = $300
4. Plugging in these three numbers calculates our approximate revenue for last month and your cart abandonment rate (CAR). You can see from cell F7 that our revenue for last month was $30k and from cell H7 that our cart abandonment rate was a high 88.9%!
5. Now comes the fun part! In cell H9, we can start playing around with what happens to our revenue if we reduce the cart abandonment rate. In this example, we’ve plugged 1.5% into cell H9:
What manipulating cell H9 (CAR Reduction) shows us is how even a minor reduction in CAR can impact our revenue.
In this example—assuming the same number of people Add to Cart—reducing our CAR of 88.9% by 1.5% (cell H9) to 87.4% (cell H13) increases our purchases from 300 to 341 (cell D13) and our revenue to $34,050 (cell F13):
These are huge impacts to revenue! With 41 additional purchases, we’d see $4,050 more in revenue. That’s a 13.5% increase!
Can you imagine how much more revenue you would see if you reduced your cart abandonment rate by 3%, 5% or 7%! Just plug in the numbers and see for yourself!
If you would like to learn more about how to calculate your cart abandonment rate—and more importantly—reduce it and increase your conversion rate and revenue, then please drop us a note. Metrical use artificial intelligence (AI) to detect cart abandonment before it happens and gives you creative ways of turning your shoppers into buyers before they leave your site. We are more than happy to help!