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Maximizing eCommerce Sales is about more than a simple Payment API, it is about process excellence and Checkout Conversion Management

(Although the Payment API is important…)


Our CEO, Ralph Dangelmaier, was interviewed yesterday on – the article is an insightful take on the complexity of selling online. I recommend you check out the article and think about your own online checkout and payments experience. The article, in many ways, reiterates the message we have been bringing to the market about the Checkout Conversion Problem. As I listened to the podcast, it occurred to me that the challenge is about more than awareness, technology or even vendor selection – the Checkout Conversion Problem is a classic business issue in need of process excellence. Let me explain.


eCommerce will never change more slowly than it is today

We should all agree on a “Bezos Law” (think Moore’s Law for eCommerce). Not only are changes coming from the traditional eCommerce entrepreneur – the biggest banks, retailers and technology giants are all exerting themselves on the industry. The reasons for the pace of change may feel self-evident; here’s my partial list:


  • eCommerce and web design trends move fast: New concepts on what is a good aesthetic change rapidly. Think of the eCommerce sites of one year or three years ago. The Uber checkout experience is only three to four years old for most of us. Only two years ago we were scolded if we put any important content “below the fold”, now the long scroll dominates UX trends. Hover animations, interactive product reviews and a litany of cool animations are raising the bar on what a consumer expects in their shopping experience – and will result in heightened expectations of the checkout flow as well.
  • I hear that Mobile might be important: I have read approximately 54,345 blogs that have told me that Mobile is important – I think this might be true. This matters to your Conversions because checkout on Mobile is not just about form factor, but it is about a new set of payment options that shift authorization from a set of numbers or a piece of plastic to a set of credentials that leverage the cloud, biometrics and context. The pace of change here is staggering and a whole set of prognosticators (including our CEO) are trying to call the winners as mobile wallet announcements show up every quarter. If all you are doing for mobile is responsive design, you are at risk.
  • The Payments industry is undergoing a once in a lifetime shift: (This is not a Bitcoin commercial).The emergence of Wallets, led initially by PayPal, now contested by Apple, Google, Visa, MasteCard, AMEX and others, is changing how checkout will occur. The Wallets will enable consumer convenience, shield merchants from PCI burdens and improve authentication. Wallets are just one of the changes to payment form factors. Under the covers, the industry is moving toward real-time payments that can further improve authentication and authorizations, shorten settlement times and dramatically reduce fraud. And while Bitcoin may not replace the dollar anytime soon, the Blockchain technology that supports it is receiving massive investment from the largest banks and financial players in the world. The results for a merchant are a dizzying array of payment methods that all require evaluation and effort to accept.
  • Omni-channel will become Agnostic-channel as far as payments are concerned: There is a lot of talk about omni-channel. Retailers are trying to figure out how to serve their customers as they migrate on and off line – expecting a consistent experience and service. As payment models mature, the payment experience will likely move to an online authentication (via a Wallet, or some new cooler idea I wish I could be the one to invent). The simplicity of a cloud-based authentication that could ensure privacy, guarantee funds and allow purchases to be made interchangeably online and in-store is too attractive for consumers and merchants to not be the logical conclusion.
  • Fraud, fraud, fraud: The banks are frantically adapting 40-year-old processes that were designed to prevent fraud coming from in-person, point of sale transactions to eCommerce. The patterns and risks of online fraud are very complex – with great solutions like Kount being developed to meet the challenge. That said – according to another leader in the space, ACI Worldwide, eCommerce fraud this holiday season grew by 8% over last year. The word frantic above is used deliberately. Issuing banks are constantly changing fraud rules in an attempt to stem the bleeding caused by the movement online of sophisticated fraudsters.. These fraud rules can decline a transaction today that went through successfully yesterday.


Add together Bezos Law, banks trying to exert their presence, and the “mobilization” of consumers and it is clear that success this quarter could be a disaster next. In particular, each of these issues compounds the Checkout Conversion Problem by adding a dimension of change to the factors that reduce successful conversions. So – what should an eCommerce merchant do to keep ahead of change?



Plan, Do, Check, Act – or is it Define, Measure, Analyze, Control, Improve…I can never remember

My Six Sigma nerds in the audience will be quick to help me get my facts straight here (anyone who knows me well will laugh that I am lecturing on process excellence). Maximizing conversions in an eCommerce setting requires a thoughtful process to be set in place that looks at continuous improvement. The multiple issues that add up to the nearly 40% of risk in online sales are all changing at different rate. To stay on top of this, requires a new process to be put in place – Checkout Conversion Management.


six sigma_scott blog checkout conversion management


Defining Checkout Conversion Management:

We have written a lot about the issues that make up the Checkout Conversion Problem.   In collaboration with PYMNTS, we designed a Checkout Conversion Index that measures relative excellence across merchants. All of this information warns you of the same thing – don’t lose a customer who has decided they want to buy because you have not optimized your checkout process.


Checkout Conversion Management is a dedicated process that reviews the results of your checkout process, identifies potential problem areas and root causes, implements fixes and then reviews if the changes are improving results. Our experience with merchants shows that a quarterly review of Checkout Conversion results allows for adequate data to draw real conclusions of results and the impact of changes.


Measuring Checkout Conversion – you can’t manage what you don’t measure:

Ok, it’s cheating to invoke Peter Drucker – I apologize. But a large percentage of the merchants we encounter do not have a process for regularly evaluating their checkout friction or the success rate of their payment attempts (payment conversion rate). Two key elements that need to be measured include:

  • Checkout Page Abandonment – a tool like Google Analytics can help here but doesn’t tell the whole story. Understanding the geography of those that abandon is a good clue. Lack of local language or issues around cultural expectations can cause checkout friction. In some countries (like Spain), the shopper expects the availability of a coupon. In other countries (like Germany), you need to offer more payment options than just cards and PayPal to avoid abandonment. As you work to optimize, there are sophisticated approaches of recovering lost shoppers such as the Ve Interactive platform; enabling merchants to hone in and act on abandoned carts. Each shopper saved is real revenue – every stone should be turned (but in an orderly fashion, otherwise you get a big pile of rocks instead of a mosaic).
  • Payment Conversion Rates – A general sense of the overall success rate of payment attempts as a baseline for your business is critical. Elements like average ticket size, shopper location, subscription frequency and purchase currency all can affect the overall conversion rate.


The baselines established become the yardstick for your checkout process. Constantly monitoring allows you to prioritize changes whether they are

  • The addition of new languages, currencies, payment types or
  • Changes to your fraud rules
  • Addition or removal of coupons and special offers
  • Changes to your subscriptions, etc..


Analyzing the Data is a multi-disciplined effort

Showing a Web Designer, a CFO and a Marketer the same checkout conversion data is a great Rorschach test (btw – I see the monster from Alien).ink blot_scott blog checkout conversion management

  • Web Designer: “We need a better mobile UI to ensure we don’t lose mobile shoppers”
  • CFO: “We need to offer local currencies to ensure our customers aren’t abandoning because of cross-border fees.”
  • Marketer: “The customers are abandoning because we don’t have a great coupon campaign running.”


Who is right? Everybody? Nobody? The right team around the table can help analyze the data, ask questions and get to a real root cause. This requires both a regular process and the system capability to assemble and the right Payment Analytics and website data. Analyzing this data together as part of a Checkout Conversion Management process provides the best probability of improvement.


[BTW – you were all wrong! The problem was higher than average declines based on a $599 ticket price due to a recent addition of more expensive headphones to your website. If only they looked at the Conversion reports by ticket size!]


Improvement – you have measured twice, cut already!

Once the analysis yields the results, you need the power to act. As above, actions will tend to revolve around two primary elements of your environment.


  • Improving Frictionless Checkout: Design issues like mobile optimization or minimizing clicks to checkout have a huge impact on success. However, simpler fixes like displaying prices in local currency can improve results.
  • Maximizing Payment Conversions: The greatest sin of all is losing a shopper after they click the “Buy” button. Minimizing payment declines is an on-going process of reviewing success rates. Changes as simple as dropping the price from $99 to $98 might give you a couple percentage point improvement. In other cases a more significant change of how transactions are being routed is required. Ensuring that transactions are being authorized in local currency is often worth several percentage points’ improvement on conversions. The data will tell you where you are falling short. Your eCommerce stack’s ability to implement the change easily is key so your Checkout Conversion Management process can start to deliver to the bottom line. We are working to develop a calculator to help you realize the places you may need work, check out the preview video here.


Controlling your destiny – means understanding what changes occurred

Back at the start I talked about how many moving parts are swirling around your business – all potentially harming (or aiding) your conversion rates. I am sure I missed more than I included. Making a process of improvement both effective and a continuous improvement model requires a period of establishing the new normal. Understanding the impacts of your new set of improvements on conversion rates will take time. Our experience says the control period should be at least one quarter before you declare victory or defeat on your changes.  Every business is different and, for some, twelve weeks is like twelve years, but a patient and deliberate approach to checkout and payment optimization is called for.


Understand where you are to know where you are going

I have, admittedly, trotted out Apple Pie advice here – largely stolen from Drucker, Welch, and impersonating Bezos.  However, I believe that it is new for merchants to think of the challenges of Checkout Conversion as a distinct management process. There is great work that goes in to building your product. Another tremendous set of efforts to drive consumers to shop and make the decision to buy. This is where we see merchants spending the lion’s share of their efforts. The discipline of Checkout Conversion Management needs to be added to the lexicon and the monthly or quarterly agenda.


To get started, download the Checkout Conversion Index. It will help you think about the way you are set up today and decide if you are ready to send out that recurring meeting for the Checkout Conversion Management committee (yuck – I feel like I am from Office Space recommending a new TPS report, but, with all due deference to Peter Gibbons, at least you will grow sales from this report.):


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