You started a business, own an online store, and are selling your best product or services. But now what? Your next task is finding ways to acquire and retain customers all while boosting your sales. To do that, you must adjust your business to the needs, wants, and budgets of your customer base. Depending on the type and price of your inventory, offering customer financing might be a great way for you to increase sales and customer loyalty.
What Is Customer Financing?
Customer financing gives shoppers the opportunity to have freedom of choice. At checkout, they will have the chance to continue with a third party and complete their purchase. Similar to a credit card, the merchant receives full payment upfront. On the other hand, the customer receives the purchased item right away but pays it off over time.
Important for Millennials
Financing has been steadily rising in popularity among customers and retailers as credit cards and private label credit cards become less attractive. With more shoppers looking to stretch their budget, customer financing is becoming more popular every day.
In fact, US adults are on the lookout to find the best payment option to finance their purchases without hurting their credit score.
Many consumers, especially millennials, are trying to avoid revolving debt that comes with most payment methods. A study by Transunion shows that millennials are notoriously averse to credit and debt. They carry two fewer credit cards and private label cards on average than their Gen X counterparts. And, less than one-third of Millennials even have a credit card.
Also, 76% of U.S. consumers are more likely to make a retail purchase if offered a payment plan backed by a simple and seamless point of sale experience.
Consumers today expect total transparency from their payment terms coupled with clear and simple ways to pay, whether they’re in-store or online, and point of sale financing is a viable alternative in an increasingly omnichannel marketplace. Retail lending fits a growing need, and if you aren’t taking advantage of it, you’re missing out on sales.
8 Reasons Why Customer Financing is Good for Your Business
As a merchant, customer financing offers you many benefits, it gives you the ability to compete with larger retailers all while increasing your customer satisfaction and retention rate. Here are some high-level benefits customer financing also offers.
There’s no risk for you to start offering your customers financing. Most customer financing companies take care of all credit risk and fraud.
ViaBill is one of them! It easily integrates with your existing eCommerce platforms such as Shopify, WooCommerce, Salesforce Cloud, or Magento in less than 24 hours. They take care of all credit risks and fraud so that you wouldn’t have to worry about it and just focus on boosting your business.
Increases Your Average Order Value
Customer financing is often successful at getting customers to make add-on purchases, which increases the customer’s average order value (AOV). It also encourages customers to upgrade to expensive versions of products rather than settling for the more affordable product they can pay off immediately.
Higher Repeat Purchases
The majority of merchants that offer customer financing to their shoppers have seen a high percentage of repeat purchases. In fact, 66% of shoppers make an additional purchase because they’re offered customer financing. That’s a benefit of current and future revenue that you wouldn’t have received otherwise.
Helps You Compete With Big-Box Retailers
Offering a customer financing program is almost a must in today’s market, especially if you’re selling more expensive products. Big-box retailers all seem to offer a financing option or store card with beneficial promotional offers. If you don’t offer customer financing to your customers, then you could be losing countless revenue dollars directly to these big-box retailers.
More Sales, Larger Orders
Offering a payment plan on your expensive items makes it possible for customers, who might have left without buying anything, to complete a larger purchase. When offering to finance, you are opening many doors to your shopper and allowing them to afford items they couldn’t afford without financing. Offering more payment options will most likely turn your snoozers into buyers.
You Gain Customers
When you offer customer financing, shoppers are more likely to buy from you than from a competitor that doesn’t offer to finance. That customer might also be more likely to return to your store for future items since they already know that they’ll be approved for your payment plan.
100% Upfront Payments
If you’re working with an outside customer financing company, you’ll get paid upfront and in-full and they then collect incremental payments directly from the shopper. Not only does that limit the risk for you, but it also increases your immediate cash flow, making it easier to take care of other things in your business.
When offering to finance you’ll be able to showcase lower prices since the payment will be broken up into smaller chunks. Smaller prices are often more enticing to customers and will help increase the overall amount of sales. For example, an item that costs $1,000 can be displayed as “$250/month” paid over four months.
How to Maximize Customer Financing Sign-ups
Convinced? Great! Here are some ways to encourage customers to finance.
Show the Payment Option’s Price on the Product Page
Engage customers long before they reach checkout by presenting financing options at the early stages of the customer journey. Displaying the reduced price option on the product page, will incentives shoppers to make their desired purchase.
Give Shoppers Information About Your Payment Options
Let your payment option partner provide you with a pop-up window that informs the shopper about how this payment option works. This will automatically build a relationship of trust right between the payment option you are using and your shoppers right from the start.
Show Payment Options at Checkout
Provide customers with a last-minute customer financing option with 0% interest.
Partner With a Payment Option That Has an Easy Checkout Process
Some payment options such as ViaBill, require very little information from shoppers, like their phone number, email, and credit or debit card information, making the purchasing process seamless and quick. Here’s a visual example.
Step 1: Enter your email address
Step 2: Enter your phone number
Step 3: Enter the 4 digit verification code
Step 4:Enter your credit or debit card information
In today’s online shopping economy it’s more important than ever to offer your customer options, and this includes multiple customer financing methods. Take time to do your research before committing to work with a financing firm. Your choice to offer customer financing could help double or triple your monthly sales quota.
Looking for more ways to increase sales? Here are 22 ways you can optimize the checkout process! If you really want to kick your sales into high gear, be sure to join OptinMonster today and set up an exit-intent popup to keep abandoning users from leaving.
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