The way consumers pay for items and services continually evolves, and the last two years have only turbocharged specific behaviours around online transactions. One of those changes is the need for point of sale consumer financing to buy goods and services during the checkout stage. In this guide, we’ll be looking at the benefits of using point of sale financing for your online store.
Cart abandonment is a very real problem
Studies for UK cart abandonment vary depending on the merchant interviewed, but the numbers can go as high as 80 per cent. That’s a huge amount of transactions failing to complete and a missed opportunity for many businesses.
Fortunately, flexible financing options are one of the primary drivers for reducing drop-offs at checkout. But that’s not the only benefit of having point of sale consumer financing for your online store. Here are six handy tips to boost your online offering and provide a better customer experience.
Benefits of introducing point of sale consumer financing
1) Boost sales
Providing options for customers is important because it makes their lives easier and helps to build trust. The result is increased sales, with consumers taking advantage of the options available to them when they reach the checkout stage of the journey.
Customers feel like they have more buying power with financing options. Therefore, merchants who offer finance can stand out in a crowd of ecommerce options in the online retail space.
Studies have found that companies who offered point of sale consumer financing saw their overall sales increase by an impressive 32 per cent. Consumer finance reduces the barrier to entry for customers, and that’s a surefire way to increase sales.
2) Increase average order value
The power of customer finance lies in its flexibility. Many people use it for smaller-priced items, but it also allows you to increase the average order value. High transaction sizes can often deter customers from completing a purchase by leaving items at the checkout stage.
By offering finance, however, you can empower those customers to make higher-priced purchases. For companies in industries like jewellery and home furnishings – where item prices are typically higher – finance can be particularly beneficial.
It helps with upselling, as customers can use an online calculator to see how much their payments will increase when buying high-value products and services. Seeing only a slight increase in monthly payments is likely to boost confidence and see consumers transacting at the higher end of the pricing points.
3) Offers more flexibility
By offering more options and payment flexibility at checkout, you can increase your appeal with consumers. This will help attract more people to your brand as you begin to grow your customer base due to more affordable products and services.
Not every customer has the resources to pay for items all in one go, whether it’s lower or higher-priced products. Millennials, in particular, are more likely to use finance options like buy now, pay later rather than credit card payments with high APRs.
If your offering includes flexible payment options at the checkout, you can appeal to one of the most important buying demographics. Financing options break down purchases into manageable payments – and the more people who can afford to make these payments, the larger the pool of customers using your website.
4) Build your brand
Working with a retail financier to provide flexible payment options can help with your wider branding. We live in a world where online referrals hold plenty of weight, and consumers are happy to openly talk about their experience with a brand and share it on social media and across the web.
By actively offering smarter ways to pay for products, you can position yourself as the brand that looks for solutions for its customers. That loyalty is likely to be reciprocated, with consumers happy to share your products and services to help “spread the word” about your brand.
Once they understand that you offer financing options and appreciate how it can benefit them, they’re more likely to return as repeat customers. The result is more business and an improved brand reputation.
5) Upfront payments
How you receive payments is another plus-point for consumer finance. You won’t have to wait the term of the repayments to collect your money, with the finance retailer paying the entire amount at the point of the customer purchase.
As a result, you’ll gain faster access to finance and will be able to build cash flows that provide more. The finance company is the one responsible for collecting the money from your customer over the duration of the agreed repayment plan.
So not only can you offer customers better prices by allowing them to split the payments over a specific amount of time, but you can also benefit from instant access to the cost of the item purchased.
6) Increase acceptance rates
You can increase your customer acceptance rates considerably if you’re using a retail finance provider that offers a multi-lender product. With multi-lender, a customer rejected by one lender automatically moves on to the next one. This will significantly boost their chances of being accepted for finance.
What’s even better is that it all happens in the background without the customer knowing they were initially rejected. The product is built into the platform and integrates with the merchants’ websites.
This provides for a more fluid and seamless service, with merchants benefiting from a higher number of accepted customers. Higher acceptance rates lead to an increase in sales and better bottom lines.
Summary: Making smart decisions with point of sale customer finance
Customer finance is an alternative payment method that can increase confidence with customers, provide higher acceptance rates and boost sales for your business. As customers become more reliant on alternative payment methods, you have the chance to exceed their expectations and grow the business with point of sale customer finance designed to remove the friction from checkout.