Businesses are finding creative ways to remain strong in the face of the coronavirus, whether they sell online or from a physical storefront. Every customer and every sale is more valuable than ever.
Your customers are often having to think outside the box. What can you do to help your customers buy the things they need, even on a smaller budget?
Offering multiple payment options to your customers and business is a great strategy. Customers will appreciate the ability to pay less upfront and not worry.
These are five reasons why BNPL or monthly payments can be a win-win.
1. More visitors can be converted
Dan Kennedy, a marketing legend, tells the story about a client who sold an item for $29.95 in his book Almost Alchemy. Kennedy advised him that he should sell the item in two payments of $19.95. He sold twice the units even though the price was $10 more.
This has been proven in numerous industries. Customers who can pay monthly instead of one lump sum will sell more products.
Orders with multiple items can be paid in installments. This option is not only for higher-value items. Let’s say a customer wishes to purchase six products at a total cost of $138. You can offer the customer the option to pay the full amount upfront or in three monthly payments of $49. If you offer a monthly payment option, buyers will be less likely to question the price tag.
2. Buyers will spend more
The Kennedy example shows that people will spend more on the same item if they have a payment plan. It’s a win/win situation. Buyers can get more of the items they want by not having to pay lump-sum fees. A predictable monthly budget is also a benefit. You’ll also be able charge more for certain products.
An online business is offering a course for $99. There are three payment options available: a lump sum, four installments of $225 each, or ten payments over ninety-five dollars.
They have gained 27% more customers ever since they started offering monthly payments. 90% of their customers who pay monthly opt for the ten-payment plan even though it is $100 more expensive than the four-payment plan. 90% will pay more for a lower monthly fee in order to receive a larger total.
It’s possible to do the exact same thing. Charge more for the same item with a monthly payment option. People will gladly pay the higher price in order to avoid paying the one-time larger cost.
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3. Buyers love choices
Customers will appreciate the option of having several payment options, even if they choose to pay a lump sum or not buy at all. You want your customers to be able to purchase easily by offering payment options. You are trying to meet them at their level.
Neil Patel reports that 56% customers expect a variety payment options on a checkout webpage. Over half of your customers desire the ability to pay in installments. In times of economic hardship, more customers will want these options.
These options and the goodwill generated by non-buyers can only be good for your business. It can result in positive word-of mouth recommendations, better reviews and customer loyalty.
4. Offer a touch-free solution online and in-store
You don’t have to offer monthly payment options only for online shopping. Customers can also receive this option regardless of where they are located.
We love the services provided by Affirm. This integrates with WooCommerce to allow you to offer monthly payment options and touch-free payment processing right from your customer’s smartphone, without ever having to go into a physical shop. You don’t need to give them a credit card. It is a contactless, in-person payment.
Affirm has experienced an average increase in order sizes of 85% for businesses that use their service. You just need to make the sales.
5. Lower overhead costs and administration costs
One primary reason to not offer monthly payments is a strong one. Monthly payments can lead to many administrative headaches and could potentially reduce your revenue. You may have to follow up if credit cards expire before all payments are made. You may experience an increase in product returns which can reduce your revenue and increase your time spent on each purchase.
The good news is that it doesn’t have be this way!
These situations are also great for Affirm. Affirm pays you for the entire transaction within two days after a customer purchases through its gateway. Affirm takes over the risk of the loan, including chargebacks and fraud. Customers often return to Affirm for repeat transactions because of the simple and fast customer service.
Offer the payment options that your customers require
The buy now and pay later options bridge the gap between customers and stores, benefiting both. Affirm has provided immediate access to nearly five million customers with the products they require, while also easing financial strain. Their tools have been used by thousands of online shops to increase order values and find new customers.