This question was asked of Bryan Eisenberg in yesterday's Google Website Optimizer webinar. Bryan recommended split-path testing, reducing the number of steps in your process and using your analytics data to determine what part of your checkout path needs attention.
What is Split-Path Testing?
The definition of a split-path test, according to GrokDotCom:
Split-Path Test — This test will split your traffic among different linear paths containing multiple pages for each path. This is different in that you're testing the performance of grouped pages against other grouped pages. For example, you could test a checkout process by splitting it into two variations; one with four steps (or pages), and another with only three steps. Each variation of grouped pages will have the same Goal Page (e.g., order confirmation page). Once the data is collected, the winning checkout process will be the one that converted a higher percentage of visitors.
Reducing Checkout Steps
Different ecommerce stores have different checkout paths, ranging from one-page AJAX checkouts to 6 steps or more. Bryan believes less is more - in fact, he recommends going under 4 steps. But you can find out for yourself if this is so for your website by doing your own testing.
I've gathered some examples of checkout steps (many are generally the same aside from labeling) that can give you some ideas for how to simplify your process. For example, you may want to test a new path with a combined billing and shipping page vs. your existing separate steps. Or you may want to ditch a step that may be clogging your funnel, such as "Rewards Program."
Alexis Brion discusses checkout usability improvement with shares his own screenshots here if you need more inspiration.
Using Analytics Data
You'll want to look at analytics to identify a "hole" in your funnel where your customers abandon most often. (If you're using Google Analytics, click on "Goals" then "Funnel Visualization").
You'll want to come up with a test that potentially plugs that hole, rather than a new process for the sake of designing a new process.
It's a good idea to give your new checkout process pages their own URLs so you can pinpoint abandonment in your analytics more effectively, depending on which analytics solution you are using.
The good folks at GrokDotCom have written 2 follow-up posts to the webinar and this post, definitely worth checking out:
Using Funnel Reports to Improve Conversion Rates by Ron Patiro
Website Optimization and the Price of Perfection by John Quarto vonTivadar