Retailers Can Increase Customer Loyalty By Offering Multiple Financing Options
By Orlando Zayas, Katapult
As the world struggles to deal with the devastating fallout from COVID-19, now, more than ever, retailers need to focus on their customer loyalty strategies. Keeping up with changing expectations and buyer preferences is essential for their long-term survival. While quality and customer service remain the primary loyalty drivers in retail, other factors can carry equal weight when looking to improve retention.
Almost half of all online consumers (45%) say that convenience makes them loyal to a brand. People want what they want when they need it, without having to go through complex buying processes or filling out multiple forms. This makes a straightforward checkout process absolutely vital--with multiple financing options to accommodate a wider net of shoppers.
Consumer Behavior Is Changing
The pandemic has affected consumer behavior most likely irreversibly. As much as 75% of Americans have changed their shopping habits since the crisis started. When forced to stay home and practice social distancing, buyers had little choice but to switch to online shopping. And most of their decisions are driven by convenience and value.
As people have come to realize how much easier and safer shopping online is rather than in-store where they risk coming into contact with the virus, this trend looks set to stay. In fact, as much as 59% of consumers say they’ll buy more home goods online from now on, and more than 6,300 retail stores have closed in 2020 in the U.S. alone.
This means that retailers must compete on a different playing field and figure out how to distinguish themselves online. If you want to turn new clients into loyal returning customers, you'll need to provide them with an experience that not only satisfies their needs but makes them feel empowered.
This means looking beyond quality, customer service, and price, and showing empathy for your clients’ needs and choices. This new approach to selling includes providing convenient payment options to help people affected by the crisis.
Keep in mind that, while the number of online consumers is rising, the overall spend of each one is lower than before. Many people don't have as much income as they used to and, without convenient financing options, they are unlikely to complete the purchase.
The Case For Financing Options
Even before the pandemic, financial fragility was high, with 27% of Americans unable to afford to spend more than $400 without borrowing money or selling something. In addition, one-fifth of all adults had no access to traditional banks or credit unions.
As millions of people file for unemployment and the joblessness rate increases, it's becoming more difficult for people to cover their expenses without help. This means that retailers need to bring smart, consumer-focused payment options to the table. Just listing multiple payment methods will no longer cut it. Customers need to have resources to learn about the payment options retailers provide them so they can self-identify with one of them or determine the right fit for their financial needs.
Offering convenient financing options with transparent terms and examples of payment amounts provides a win-win scenario in which you can be there for your clients when they need you the most--and they can purchase the goods they need and pay for them over time in affordable installments.
A point of sale solution can be easily integrated with your e-commerce store to make paying (especially for higher-ticket items) easier for all buyers, regardless of their credit scores or whether they have a credit card or not. This type of payment flexibility generates brand loyalty, a higher customer retention rate, and eventually, leads to increased revenue.
You can finally bridge the gap between you and online shoppers who would like to buy more but don’t have the financial resources to complete the purchase. As a guideline, almost 10% of the people who visit your store and add to the cart will then abandon it. Of online buyers, 6% exit a purchase due to a lack of convenient payment methods, while 4% quit the sale because their credit card was declined.
The Impact Of Instant Financing On Customer Loyalty And Sales
Financing platforms that offer "buy now, pay later" options allow your customers to get what they need without using credit cards. It’s a highly effective way of attracting new clients and keeping them around. According to a report by Capgemini, 28% of customers prefer financing as an online payment option.
Financing options help you give your clients time to pay for their purchases without getting into more debt than they can afford. Not only do these alternative payment options lead to more clients, but they also convince people to buy more and return less--39% of customers say that they would spend more if given point of sale (POS) financing options.
Instant financing is helpful for multiple types of customers and is not limited to those experiencing financial difficulty. Even Americans who have beyond average credit scores also can benefit from this payment alternative. This is a segment of potential clients that comprises more than 34% of the population. These are people who would like to spend more but are often unwilling to put additional purchases on their credit cards and risk damaging their credit score.
Implementing instant and alternative payment options can turn your e-commerce store into your client’s top choice. Not only does shopping become less stressful and more convenient, but you can greatly improve the customer experience as well. When people know they can buy what they need and pay later, they’re more likely to stay loyal and return to your store for future purchases.
About The Author
Orlando Zayas is CEO of Katapult, an omnichannel payment platform providing alternative purchase solutions for retailers.