E-commerce Insights: Add the Fifth ‘P’ of Marketing
Turbocharge your cart with ‘payments.”
In e-commerce, add a fifth “P” to the traditional four Ps of marketing — product, pricing, promotion and placement: payments. Catalogers can see real incremental sales improvement by offering customers and prospects additional ways to pay. I’ve devoted this article to review PayPal, Bill Me Later and Google Checkout. Adding some or all of these payment methods to your site can significantly lift Web sales.
A 2004 CyberSource study shows that merchants offering four payment options, such as credit cards, gift certificates, e-checks and PayPal, get 20 percent higher conversion than those offering just credit cards.
I suspect this 20 percent statistic is somewhat inflated by the fact that the best online merchants also are the most likely to implement additional payment types. But there are real gains to be had. PayPal spokesperson Sara Bettencourt claims an average of 14 percent in conversion lift after adding the PayPal payment method to a site.
Vince Talbert, vice president of marketing at Bill Me Later’s parent company, I4 Commerce, quotes a 5 percent typical lift after adding Bill Me Later to a site. Added benefits come from an average order size bump of 50 percent to 150 percent. Benjamin Ling, product lead for Google Checkout, declined to cite specific conversion improvement statistics, given the product’s relative youth, but says early results are encouraging.
PayPal Leads the Way
After conventional credit cards, PayPal is the largest online payment type currently in use. The eight-year-old service boasts some 114 million accounts worldwide, with 30 million active in the past month. In the second quarter of 2006, PayPal handled 143 million transactions totaling $8.9 billion, for an average transaction size of $62. PayPal is growing quickly, up 37 percent in revenue year over year for the quarter. Though PayPal is owned by and linked to eBay, 35 percent of PayPal payments are non-eBay transactions.