Point of Sale Financing and the New Year
Now that Black Friday and Cyber Monday are behind us, and the start of a new year is just hardly a month away, go ahead and take a good deep and long look at your websites conversion rates vs. your cart abandonment rates. If your analytics are set up correctly it’s probably reading something along the lines of 2-2.5% CVR and about 80-85% cart abandonment rate. While the avg. eCommerce site does have a 2-3% CVR and an 85% cart abandonment rate, we’re not discussing averages here, we’re talking about actual numbers. We’re talking about your own store. The very one that you paid serious money on advertising spend to stand out from your competitors and drive traffic to your site. ROI and CVR’s are critical.
Let’s face it, the visitors that came to your site were looking for a specific item; they wanted to find a product on the cheap, or at least be “affordable” and they wanted to have an easy, painless streamlined checkout process with the least steps required to go on with their day.
Those visitors were probably also looking for a free shipping offer and to receive the order fast. So far, this story probably sounds obvious and not new to you. A story that you probably know well. What you probably didn’t know or were simply unaware of, was that up to 40% of those visitors were from the “generation Z” and “millennials” demographics. Why is that important? Glad you asked. According to recent studies, by mid to end 2020, 40% of online consumers will be from those demographics. Another fact that you probably weren’t aware of is that 63% of millennials do not own credit cards. And the “gen Z” rate of “card (plastic) free” consumers are even higher.
What does this mean to you and your business? How will these numbers affect your business today and in the future?
Welcome to the next generation of credit!
Credit or financing is an evolving service/product that has taken on many faces and one that changes based on the needs of consumers and that of the financial and economic needs of the times. In fact, one of the very first forms of credit in retail was the layaway program that was ever so popular in stores such as Macy’s and Sears in the early to mid-1900’s. From there, we were slowly introduced to store charge-cards, network cards (VISA, Mastercard, AMEX, Discover etc.) which are rapidly (or slowly) replacing cash, and now point of sale financing that can be found in eCommerce and retail stores and are swiftly becoming the payment of choice by many consumers.
So why is Point of Sale Financing so important? How is credit and point of sale consumer financing connected to your holiday sales and your future sales? Let’s do a quick rewind to the fact that 63% of millennials don’t own cards and that by 2020 the same 63% that don’t own cards, will comprise 40% of the total consumer base.
The fact is that we have now entered a new phase of consumer credit. One that is based on personalized financial capabilities and one that where credit is offered in a dynamic method where the consumer can make a decision on how they want to pay for their purchases, over what time period, the APR’s and have the options to select the best offers for them from multiple sources. Consumers are looking for alternative payment methods to replace the “standards” of a static plastic card with static rates without any regard to their own personal needs, wants requirements and capabilities.
Many retailers can attribute about 40% of their annual sales to the holidays season which roughly lasts about two months. Your goal as mentioned is to get the consumers to add the product to the cart and checkout as fast and pain-free as possible while keeping cart abandonment rates down, and conversion rates up.
One of the biggest deterrents to a streamlined checkout are the lack of payment options in checkout. In fact, were you aware that the average eCommerce site has cart abandonment rates that reach 70-90%? Here are the facts:
- 28% of shoppers abandon their carts due to long and complicated check out processes
- 19% leave because they don’t trust the site with their credit card information
- 8% leave due to lack of payment options
- 4% skip the checkout because their credit cards are declined
From this data, we can learn two things. First, the longer the checkout process, the more likely customers are to walk away. Second, traditional credit cards may be an extra source of grief when it comes to starting or completing a checkout.
Additionally, none of these numbers took the millennials and “gen z” consumers into account. But as mentioned, this new generation of consumers are mostly avoiding plastic credit, and are rightfully demanding alternative payment methods in the form of immediate, personalized Point of Sale Financing that allows them to decide how and when to pay and by De facto, is returning the power of purchasing and financial stability to the consumer.
So just how do you close the sale?
The solution is simple: Consumer Point of Sale Financing.
ChargeAfter adds a financing button to the payment options, taking care of the 8% of customers demanding more diverse ways to pay. Clicking on the financing button brings up information about how financing works, as well as the first step of the credit application.
If consumers choose to proceed, the credit application consist of just 5 fields of required information that can be filled out in seconds. When the application is submitted, consumers get to see their financing options moments later. This helps address the 28% of customers who are concerned about the long or complicated checkout process.
After they’re approved and select terms, consumers can check out without entering a credit card. Instead, they accept the financing for the order. This satisfies the 19% of shoppers who are wary of giving away their credit card info and the 4% of customers dealing with a declined card.
Consumer Point of Sale Financing streamlines the checkout, addressing all the major factors that might otherwise lead to abandoning carts.
Consumers making a high dollar purchase already have enough decisions to make. When it comes time to decide how to pay, they’ll avoid pressing the buy button at all costs when their credit card is at the receiving end of the transaction. However, when they’re able to painlessly pick their own financing terms, the decision to check out becomes a lot less painful!
Instead of the last decision being “should I stay, or should I go?” make sure your customers’ last decision is “which of these financing terms is right for me?” Your abandoned carts rates drop, conversion rates rise and, best of all, returning customer numbers soar.
Now is the time to get ready for the new year and to empower your consumers with the exact payment tools and options they want. To learn more about Point of Sale Financing click here