Paypal Conversion Testing Results

Recently reading one of my favorite marketing newsletters TalkBiz News written by Paul Myers I came across an amazing 100% increase in sales with one simple change in wording for an email campaign.

As many small businesses using AWeber also use Paypal to accept payments I thought this result and how it was achieved would be immensely helpful.

The Secret:

While tracking clicks on several product sales messages Paul noticed that his order page had a significant abandonment rate. After ruling out pricing objections and other factors he thought the problem might lie in the Paypal order process itself. To test, in the next email he mentioned it wasn’t necessary to have a Paypal account to order and explained how to order without one.

That one simple addition of several short paragraphs dropped the abandoned order rate by 50% and doubled sales!

Lesson to Learn:

What can we take away from this result?

Never assume that your visitors know how various payment providers operate. Although we may find paying via Paypal to be an everyday occurrence it may not be the case for your potential customers. A few sentences describing the order process can go a long way towards making a sale occur.

Further Reading:

If you’re not subscribed to Paul’s free TalkBiz News ( http://www.talkbiznews.com/ ) I would strongly recommend it as required reading. I’ve been a subscriber myself since ~1997 and have picked up many valuable insights throughout the years.

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34 Comments

  1. Excellent advice, which may help somone down the road to stop doubting themselves, just by fine tuning their method of payment communications skills for their own customer base. Great common sense selling!

    10/11/2006 12:45 pm
  2. Very interesting study.

    Although I do have to add to this blog that the fact that you did not have Paypal as a payment system deterred me from being a customer for a pretty long time. And you still don’t… :)

    10/11/2006 3:13 pm
  3. Domen,

    We probably never will accept Paypal. They are some pretty bad ways of treating merchants and have chosen to not do business with them any time in the near future. Credit cards are still very much the standard way of doing business and we don’t see that changing anytime soon.

    10/11/2006 3:27 pm | Follow me on Twitter
  4. Anik,

    From what I know of this particular case it was a market I would generally consider to be web savvy and familiar with Paypal. Have to remember, there are a lot of folks that don’t live and breath the internet like we do on a daily basis who may still be well within your market.

    I shot Paul an email, we’ll see if he can comment further.

    10/12/2006 6:14 pm | Follow me on Twitter
  5. Hey Tom,

    Very interesting indeed. The funny thing is that in the marketing world I’ve always read that adding Paypal increases sales, etc…

    I wonder if the testing product was in a "niche" where maybe the market is not used to having a paypal account?

    Any word on that?

    10/12/2006 5:43 pm
  6. Paul Myers

    Anik,

    In this case, it was a special sale and PayPal was the only payment option offered. The market was my subscribers, who cross the entire business spectrum. Some are very familar with PayPal, others less so.

    The key point is that the simple explanation of the process, to let them know they had an option (paying without having to open a PayPal account), made that big a difference.

    You look for the bottlenecks. In this case, it was abandoned shopping carts. You test things to figure out why, and you address them. When you correct them, the improvements are usually significant, as in this case.

    10/12/2006 6:24 pm
  7. Matt Gallant

    I tested this a while back…

    And I got the same results…
    I DOUBLED my sales.

    It blew me away…

    Testing reveals it all

    10/13/2006 4:54 am
  8. I have accepted Paypal payments since the bad old days before they were bought by Ebay. At that time they hid their phone numbers and would only respond to complaints at their leisure.

    Although I do have an Ebay store to subsidise my website, I am no huge Ebay fan. But I do have to say that Paypal has improved leaps and bounds in the last few years since being purchased by Ebay.

    They now offer customer support phone numbers as well as online support. I went through some really tough times with them in their prevous life and found myself involved in a class action law suit against them for some really unethical practices in 2003.

    I now recommend them in their latest incarnation because they truly do help me to make more sales on Ebay as well as on my website, and their customer service is much more accessible and reliable than it once was.

    10/14/2006 9:14 pm
  9. Cliff

    I have a simple rule

    Whatever you do in marketing, if you can’t test and measure it
    don’t bother doing it.

    Cheers

    10/14/2006 10:11 pm
  10. PayPal is much better now and interaction with them over fraudulent use of credit cards is much better than with banks. I hear they still have some issues with merchant treatment and published a story called
    "How I sued PayPal and Won".
    newsblaze.com/story/20060825191634nnnn.np/topstory.html

    10/16/2006 3:44 pm
  11. I have used Paypal as my primary source of receiving payment for products and services on my website. It never dawned on me that some folks are not seeing that you can pay without having a Paypal account. (Even though it says it right on the payment page…)

    I got so excited from reading your article that I am trying this out TODAY on my next email campaign. Sometimes you just can’t see the forest for all the trees, huh?

    Thanks for the great insight!

    10/17/2006 1:19 pm
  12. Rachel,

    Certainly let us know what your general results are. It’s always extremely interesting to learn if certain tests carry over to other markets.

    10/17/2006 1:21 pm | Follow me on Twitter
  13. Thanks for publishing this finding Tom.

    Looking forward to Rachel’s results as well.

    We’re an advocate of PayPal as they will return the transaction fees if you need to refund a customer. No banks or merchant processor will do that. In fact, some processors charge you for refunding as well.

    10/17/2006 1:46 pm
  14. ernest

    I need a copy of this newsletter that talks about Paypal. Can someone send me a copy?

    10/17/2006 4:57 pm
  15. Thanks for the info everyone. It’s too easy to forget the ‘little things’ in Internet marketing simply because they are every day to us. We tend to forget that not everyone is as familiar with certain activities that we consider routine.

    I work in a market that I’m educating to even use their email addresses in their advertising; so to be reminded that I need to also help them in ways to do business online has been a helpful jolt.

    To date, I have had no problems with PayPal and will keep recommending them as a reliable method of receiving payments online.

    Regards to all

    10/17/2006 5:14 pm
  16. And the same goes with ClickBank.

    Just last night I found 3 sites from the same author that included a short paragraph of explanation under the purchase link (or before it in some cases), explaining what ClickBank is and more importantly that they never see your credit card details… only your bank does… CB doesnt keep them on record.

    While I dont know if he’s tracked and tested, it is obviously a good move to eliminate fear and uncertainty in the minds of prospective buyers.

    10/17/2006 5:21 pm
  17. Hi Tom,

    I have also been a happy subscriber of Paul’s for many years. His emails are some of the few I read religiously, and I often buy his product offerings because he always has some great deals.

    He & I have even exchanged the odd email which is cool. None of the other "gurus" (I say that tongue in cheek) :) do that, which makes Paul even more unique!

    And yes, I have every intention of using his Paypal suggestion with the upcoming launch of my new "SEO Traffic Secrets" product.

    Keep up the good work – aweber rocks (I was with your competition for a year and wasn’t overly impressed) and I recommend it to my clients all the time.

    10/18/2006 12:07 am
  18. Another reason for abandoned shopping carts that I haven’t seen mentioned much is the lack of a price in the main ad. i.e. the only way to find the price of the product being offered is to click the order button.

    I find it amazing that some of the largest financial newsletter marketers like Agora ($120 Million) use this format. Any gueses as to why? The only thing I can think of is that they feel the customer has already "committed" and might be more likely to buy. But their abandonment rate must be horrendous.

    10/19/2006 12:43 pm
  19. Very helpful tip, thanks for that!

    You know, I bet we could write a book of
    workarounds for paypal, given the way their
    ordering system works.

    While there are a lot of reasons to use paypal
    (at least for my market), I’ve been forever
    frustrated that they take advantage of MY sales
    cycle to integrate THEIR account enrollment
    process.

    It makes me nutty that when my customer enters
    in the order process through a paypal link,
    that he’s not just thinking about ordering my
    product, but he’s now also offered the choice
    to open a paypal account.

    "A confused mind never buys", and paypal
    diverting my customer while s/he’s IN THE
    BUYING cycle, into an account enrollment
    process is contributing to order abandonment.

    Then, *I* have to do a workaround.

    In addition, the order confirmation page seems
    to be as much a paypal account enrollment offer
    as it is an order confirmation page.

    I notice, for example, that paypal now puts a
    big button in the intuitive bottom right corner
    of the screen that says "open a paypal account
    now", and a small text link in the bottom left
    corner that says "return to merchant".

    In my books "Return to merchant" doesn’t imply
    "Click here to complete your order" or "Click
    here to download the product you just ordered".
    So from what I can tell (based on my customer
    service logs) at least half the time, buyers
    just go off page instead of to my thankyou page
    where they would be able to :

    - instantly download the product

    - optin to my (Aweber!) customer list

    - take advantage of an upsell or one time offer

    Paypal’s intervention in MY sales process is an
    inconvenience for the customer, a missed sales
    opportunity for me, and forces *ME* to create a
    back end process to accomodate paypal.

    I’m having to design workarounds systems just to
    have the customer activate my post-purchase
    sequence, when it really should be a seamless
    integration at the time of purchase.

    I’d like my merchant service to be "seen and not
    heard", and to help me transact sales and keep
    customers happy. Instead, it feels like they
    hijack my sales process and interject their
    marketing to my detriment, and without my
    permission.

    On the practical side, my most effective order
    abandonment prevention tactic was to add a
    2Checkout order link in addition to my paypal
    order link. I did this on some of my sales
    pages and so far, roughly 60% of the orders
    are going through 2CO, with order abandonment
    through 2CO at about 20% of my paypal order
    abandonment rate.

    I haven’t done exhaustive testing yet across a
    lot of sales pages…but if these preliminary
    results hold, I’ll have to test the impact on
    sales – and my costs of sales – of not using
    paypal at all. Who knows Tom, maybe I’ll end
    up on your side of the fence on this one. ;)

    10/25/2006 3:48 pm
  20. Hi Lou,

    That’s valid complaint and I can see how it could seriously affect your conversion rates.

    One possible solution could be to set up your payments page so that anytime a customer migrates to the Paypal site to sign up, the Paypal page opens in an external window or frame with no browser window in it.

    That would require the customer to click off the external window after signing up with Paypal.

    Your site would then be visible in the original browser window right where the customer left off.

    I have used this technique in the past for other purposes and I cant see why it wouldn’t work for the issue you raise.

    10/25/2006 4:31 pm
  21. Hi Brian,

    Thanks for the input.

    I’m not seeing how that would address the issues I’m mentioning – could you explain more?

    If I understand you correctly, it seems that all the same things are happening, except in it’s own window/frame, right?

    It’s true that my site’s visible once the extra window/frame’s shut down, but that would be on the order page, not the "thank you" page, yes?

    10/25/2006 9:24 pm
  22. Hi Lou,

    Yes you are correct. Everything is happening in a new bowser window outside your website as soon as the Paypal link is clicked.

    The way I see it is that when the customer clicks on the Paypal link and is "Extorted" to Paypal, it would be in an external window without a browser, so when customer is finished with the dirty deed at Paypal, he/she would click off the external window which would then reveal your site in the location where the Paypal link was originally clicked, since Paypal opened up in a new window, leaving your payment window unmolested.

    That would mean that the customer could then go ahead with the transaction from where he left off having just signed up with the devil…Or, I mean..Paypal. (I know that after being dragged through that ringer, a person might forget why he was even at Paypal in the first place!)

    The fact that the external window would have no browser visible, means that the customer is then forced to close the window when finished opening the Paypal account.

    (My thought is that it would prevent them from migrating away from your site, and thereby not completing the original transaction.)

    I’m no JavaScript expert Lou, but I have implimented this function using Macromedia Dreamweaver under "Attributes > Behaviors".

    I hope this is clear and that I’m not wasting your time and the space of this very nice forum!!! [:=

    All the best to you!

    10/26/2006 12:29 am
  23. I wonder if what has been said above is still relevant if you have TWO payment providers on your site: PayPal and one for processing credit card payments?

    On our site prospects can purchase our directory script via two alternate methods: PayPal or 2Checkout. So, if a visitor does not have a PayPal account, but has a credit card he/she can still do a purchase. So, will adding the statement (mentioned in the article) next to PayPal link help increase sales?

    10/26/2006 4:54 am
  24. Vincent,

    Any answer I’d give would be a guess. My recommendation would be to test it and let us know the results.

    10/26/2006 12:07 pm | Follow me on Twitter
  25. Vincent,
    My comments/results are based on adding 2checkout to the sales page in addition to paypal, not replacing paypal with 2CO.

    10/26/2006 2:55 pm
  26. To Tom,

    anyway, I think that putting the statement next to PayPal that Paul Myers is talking about won’t do any harm to the sales process.

    To Lou,

    that’s exactly how our order page is organized: we have 2Checkout not instead but along with PayPal link.

    10/26/2006 11:35 pm
  27. Tom

    Any merchants you care to comment on that you’d avoid?

    11/4/2006 1:08 pm
  28. Robert,

    Personally I’m not a fan of Paypal for numerous reasons. Heard far to many horror stories from other vendors.

    11/6/2006 10:54 am | Follow me on Twitter
  29. Hi Tom,

    Paypal offers the newbie a great way to get up and start quickly taking orders, and building a ‘sales history’ – which they can then use to get approved for a merchant account. Or, for getting a new product up and running quickly. So for newbies it’s a great solution. But you have observed what I have experienced. Clarifying the actual process dramatically improves cart retention rates. Offering a secondary payment option also helps. Moving away from PayPal to a permanent ‘internet merhcant account’ is the best solution though.

    11/6/2006 5:24 pm
  30. K thanks for feedback.

    we actually got a huge bump in sales when we got a merchant account
    and continued to offer paypal instead of just paypal.

    so your not the only one who feels that way.

    11/8/2006 7:25 pm
  31. Allen Farlow

    My thanks to all above for the great info!

    Hey, Lou, don’t you know yet that PayPal doesn’t care about you (or me or any other customer)? They still seem to have the attitude that they don’t have to care about anyone but themselves. I agree that they should be seen and definitely not heard! If they want to recruit they can do it on their own time, not ours!

    I feel that any merchant who relys solely upon PayPal for credit card processing is leaving themselves and their business seriously flapping in the breeze. I’ve heard too many accounts of PayPal cutting merchants off for the most frivilous of reasons. Sometimes it’s for nothing more than a slight violation of TOS, which if interpreted one way is not a violation, but PayPal still interprets it their way and calls it a violation of TOS. What recourse would a person have? Good luck!

    Something else I wanted to mention: when I was a real newbie, I wanted to buy someone’s ebook but they only accepted payment through PayPal. Well, my PayPal account only had five bucks in it, so I didn’t order the book.

    Now, if the guy had accepted credit cards I would have gladly bought it, but he didn’t accept credit cards…

    At least that’s what I thought before I found out that PayPal will charge it to the credit card I had on file with them if I didn’t have enough money in my PayPal account!

    Of course, by the time I discovered that, I couldn’t remember where I had seen the guy’s book! :(

    Clearly explaining the various payment options is nothing but good business. I’m glad you guys brought that up because I would never have thought about it myself.

    Makes me wonder how many thousands of dollars I’ve lost already.

    1/17/2007 3:04 pm
  32. Diane King

    I have read some of you alls comments regarding PayPal. I’m not sure about PayPal. I have rencently went into PayPal to gather some information so that I may have an alternative to using my bank information for safety reasons and I contracted a spyware virus after visisting the sight.I don’t trust it!!

    2/28/2007 1:39 pm
  33. I used PayPal for an entire year so I had a real good idea of my monthly conversion rate and thought by switching to another on-line merchant might improve my conversion rate. So I signed up with Authorize.net, and I must say the check out was much simpler than PayPal. I ran exclusively with Authorize.net for two months an I noticed NO difference in conversions – they were exactly the same as with PayPal. So I switch back to PayPal and my conversions actually went up.

    I must also say that PayPal has treated me very well, much better than A.net, plus they put all my money in a revolving money market fund and as my monthly volume increases, they lessen their transaction fees. Since they are both my merchant account and gateway, I never have to wait for funds to be deposited into my merchant account.

    9/15/2008 7:14 pm

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