Iconic retail chains continue to close, ecommerce is booming and shoppers’ expectations have never been higher. All retailers, big and small, need to provide reasons for shoppers to come back to their store or site. In fact, sixty-one percent of small and medium businesses report that more than half of their revenue comes from repeat customers. Empowered shoppers are now accustomed to receiving offers to make a purchase that may include incentives such as discounts, loyalty rewards or financing options. For small business owners in particular, offering instant financing is an ideal way to meet today’s shoppers growing needs and build loyalty.
Financing: Drive Customer Loyalty and Increase Sales
Repeat customers are essential for small businesses. When a small business offers shoppers a way to pay for a purchase over time and manage their cash flow effectively, it creates positive sentiment and drives loyalty. According to an MMR Research report, nearly two-thirds of previous users of store financing come back and finance at least one additional purchase of $500 or more. The positive sentiment created by financing connects shoppers to your store or site and keeps them coming back for more.
Small business owners are notoriously time-deprived as each day is typically jam-packed just keeping their businesses running. The resources to research new financing offerings and implement these new products has been hard to come by and typically a dreaded “second shift” activity. The good news is that small businesses now have increased access to new technology and processes that require a much smaller investment of time and money to implement. But while offering financing and all of this technology sounds great, how does a small business pick the right option and partner? Here are a few easy steps to follow:
- Align Business Goals – Make sure that the potential results of the financing options you may offer align with your overall business goals. For example, if a small business owner is looking to convert sales and increase average order value (AOV) for the holiday shopping season, then offering point of sale financing is a great way to help meet these goals.
- Assess Cost – As with any investment for a small business, one of the biggest factors in choosing a financing provider is cost. It is important to secure a full picture of how much the option is going to cost your business and when. Will there be fees on every transaction or minimum monthly fees? When does a business get charged? All of this information should be secured up front and clear. If not, move on and fast.
- Listen to Shoppers – One of the best assets in helping this process may be walking through the store right now. Customers can help guide what type of financing option a small business should provide. If a shopper walks away or abandons a purchase, take note of whether they express that they wish the store had other payment options. Are your customers asking about financing terms and specific conditions? If so, find out what they might find attractive.
- Investigate Integration – A new technology or system may promise to be simple, but in reality, the integration to get started may eat up scare time and cycles. Ask the potential financing provider for a clear breakdown of the process and what is involved. If the information is not clear or somehow “not available,” this is a major concern. Financing technology has drastically improved in just the past few years alone. There is new technology available today that makes financing easy and accessible for small businesses and shoppers.
- Explore the Actual Shopper Experience – Be sure to walk through the actual shopper experience. It is really important to understand how a customer is going to interact with a financing offer in a store or online. For example, credit decisions are a private matter, so it is important to choose a financing option that allows a customer to have privacy, especially in a store. Options that allow a shopper to quickly apply right on their phone or mobile device are ideal. And just as a business owner expects terms to be transparent and clear, the same should be true for the shopper.
- Don’t’ Forget the Employee and Back Office Impact – It’s important for a small business to factor in how the new financing impacts sales associates. Will there be a lot of training or sales associate cycles involved? It’s also important to understand the back office impact and when your business will receive its money.
Today’s on-the-go shopper wants flexibility and options. These steps will help small businesses to choose the right financing partner.
Tonya Flickinger is the Co-Founder and Head of Operations at Blispay. Tonya has extensive experience in designing, building and launching consumer lending and merchant financing products. Prior to Blispay Tonya built and managed Bill Me Later’s web products and went on to hold multiple Product roles at PayPal after their acquisition. Tonya began her career in management consulting and cut her teeth on credit at MBNA. @Blispay.