CarRentals.com:
Pay Now vs. Pay Later
The Challenge: Increasing sales of Prepaid Car Rentals
CarRentals.com was booking a lot of car rentals reservations. Everything seemed to be going as planned, until data analysts uncovered that over half of renters were never showing up to pick up their cars. This was a significant problem, considering that most reservations booked on the site were paid at pickup.
Most vendors also offered cars where you could pay for the rental at the time of booking (prepay) and save a bit of money. My challenge was to find a design solution that shifted users towards booking prepaid car rentals in order to increase revenue.
Original Design
In the original design, a user was shown a list of available cars priced from low to high. Most of the results were for booking types where a user pays at pickup (pay later), but an increasing amount were for cars where a user was required to pay at the time of booking (prepaid).
When a user clicked on a pay later car (standard, no banner), they were taken to an order page where they were were could complete the booking without entering a credit card.
When a user clicked on a prepaid car (featuring the “Pay Now Special” banner), they were taken to an order page in which they had to enter their credit card to complete the booking.
Notable Data
15 % conversion rate for users who clicked pay later car first
3%. conversion rate for users who clicked on a prepaid car first
30% bounce rate after viewing pay later order page
50% bounce rate after viewing prepaid order page
It is understandable that more users would prefer to pay later than pay now if the prices were the same for both options, or if the user was not able to pay at that moment.
The much higher bounce rate for prepaid clicks was concerning because it affected overall conversion rate. If users were leaving at a higher rate, then they were by definition less likely to make a purchase.
Design Hypothesis:
Users who click a prepaid car result first may assume that CarRentals only offers prepaid booking. If they are not interested in a prepaid car rental, then they are more likely to bounce. If users were aware that CarRentals offers prepaid and pay later bookings, then they are less likely to bounce.
Filter Test
To increase awareness of both booking types, I added Pay Now vs. Pay Later options to the top of the filters section. This also gave users more control over what results they see.
Filter Test: Results
15 % conversion rate for users who clicked a pay later car first
3.7%. conversion rate for users who clicked on a prepaid car first
7 basis point increase
30% bounce rate after viewing pay later order page
46% bounce rate after viewing prepaid order page
Reduced bounce rate by 4 points
Banner Test
The filter test was a success. The hypothesis that making users aware of both booking types would reduce bounce rate had worked, and conversion was higher for prepaid rates, which was a major win for revenue. However, I was concerned that the filter approach may have been too subtle a method for educating creating awareness of booking options. This was backed by the fact that only 40% of users utilized filters.
To better ensure that users were aware of the two distinct booking options, I designed a more aggressive approach. I added a banner to the top of the results list that:
Made users aware of prepaid options (and pay later by inference)
Highlighted the lowest prices for pre-paid cars across car sizes/classes
When clicked, presented a prepaid only list (functions as a prepaid/pay later toggle.
Banner Test: Results
25% of users clicked the prepaid banner
5%. conversion rate for users who clicked prepaid banner
30% bounce rate after viewing pay later order page
Reduced overall conversion
The results for this test were a net conversion loss, but an overall win for knowledge. The loss in overall conversion meant that the test had to stop, but the reduction in bounce rate supported the idea that awareness of payment time options kept people on the site.
The cause of the overall conversion drop was hard to pinpoint, as there were several potential causes. The most likely cause is that we added an additional page to the funnel for prepaid users (and also for pay later users who clicked on the prepaid banner). From prior tests, we knew that adding pages was strongly correlated with conversion drop (this adds massive friction).
Analysis and Regroup
The Banner and Filters tests confirmed that:
There is a significant number of users who want to book prepaid, especially if they are able to save
Making it clear to users that we offer both prepaid and pay later bookings reduces bounce rate.
Adding additional pages has a negative impact on conversion rate
Points 1 and 2 were addressed by the previous test. The next goal was to create a way to present users with both options without causing backtracking or adding page to the flow.
I took a step back and went back into exploration mode. I held design labs with the Sr. PM and we experimented with different layouts and discussed their pros and cons. We narrowed the options down to the most promising flows and presented low fi prototypes to users for validation and feedback.
Order Page Toggle Test
The most successful design option involved showing only one result for each prepaid/pay later car on the results page, and only displaying the lowest price at that stage. When a user clicked on this result, they were taken to the order page, where they were met with a new option: a toggle that lets them choose their payment time. This module featured two radio buttons, and defaulted to the price point that the user originally clicked. The prepaid option was further emphasized with a savings callout, to incentivize the user to commit.
When a user selected Pay Now, they were asked for credit card number below, when they chose to Pay Later, they were not asked for their card info.
Order Page Toggle Test Results
This test had improved results for each segment and increased conversion overall.
15%. conversion rate for pay later
8% conversion for prepaid
2x increase!
Overall conversion increase
Increase in share of prepaid sales
Conclusions
Sometimes a “loss” is a win if the results advanced your pursuit of knowledge.
It’s ok to take steps back. Going from testing live designs back to the drawing board is what enabled us to take the design from an incremental win to a major win.
The principle of presenting incentives to balance out requests is always important.