At the end of every year, retailers dive head first into planning mode. This includes strategizing, setting goals, and most importantly figuring out how to execute on them in the coming year. For retailers sizing up the trends for 2017, some of the biggest developments are taking place in the consumer financing space. That’s because innovative lending platforms are opening opportunities to extend credit to a wider range of customers.
For many retailers 2016 was about creating memorable and positive customer experiences to increase engagement. It was also a year in which many retailers invested in ways to remove “friction” from the shopping and checkout experiences. 2017 will be about continuing to execute on that vision by making consumer financing an integral element of those customer engagement and frictionless shopping strategies. Providing customers with an easy way to pay for large purchases creates loyalty with retailers. Retailers have long worked with consumer financing providers to extend credit to their customers. The challenge lies in finding a way to serve as many customers as possible. Many retailers, however, have missed out on the benefits that more robust credit programs can bring in terms of increased sales, loyalty and improved customer experience.
A new paradigm appears to be emerging for 2017, as sophisticated lending platforms provide streamlined access to lenders with broader options and greater ease, speed and security. What trends should retailers take notice of in thinking about their credit program in 2017? Here are a few that have the potential to make significant opportunities available to retailers and their customers.
1.All in one platforms that offer more financing options
Retailers look for simple yet robust solutions that will help them drive more sales. New powerful platforms are making financing easier and more accessible by being an all in one financing partner for retailers. These platforms have the ability to connect retailers with multiple lenders that offer not only bank cards, but also revolving lines of credit branded to, and offered exclusively at that particular merchant. Also available are term-based loans with fixed payments, and lease purchases with fixed-term payment plans that offer customers the option to buy, return or extend the lease. The best part of this function? It provides the tools needed for management and settlement for every option without retailers having to juggle separate integrations.
2.Advanced technology that enable simple and secure integrations
For every retailer, security is top of mind. No matter how lending capacity changes, payments technology now allows retailers to securely serve customers whether they shop in-store, online or via any connected device. Through this kind of technology, a single application can smoothly run a customer’s details through a network of lenders and financing options, and provide an instant offer. With security being top of mind during development, compliance with the PCI data security standard enables these platforms to better protect businesses and their customers from fraud and security breaches.
3.Multi-lender solutions to serve more customers
Relying solely on a primary lender tends to exclude all but those customers with excellent credit. Why? On average 47% of customers that apply for primary credit don’t get approved when they apply in store. Online the situation is more pronounced at about 75%. Turning these customers away can affect customer loyalty and their buying confidence, 28 percent of today’s consumers won’t even apply for credit for fear of being declined, and if they are declined, 68% percent abandon their purchase or spend much less. For retailers it’s important to consider using multiple lenders, from each section of the credit spectrum, in a financing program to make financing available to as many customers as possible to give customers the purchasing confidence they seek and continually bring them back into the store.
4.Customer empowered customer experiences
A good customer experience doesn’t just entail a fast check-out or the latest in mobile app design. Consumers now seek choice and control when making purchases — not just in what they buy but also in how they pay. When retailers offer their customers a variety of financing options, as opposed to declining them for financing, they empower customers and increase brand loyalty. Customers seek spending power yet want retailers to empower them to spend. Studies show that nearly two-thirds of past users of store financing come back and finance at least one additional purchase of $500 or more, and 33 percent do so three to five times.
5.Omni-channel solutions that improve the speed of online applications
When today’s consumers search for financing, 44 percent consider a simple online application to be an important part of the financing process. This is especially true for Millennials, more than two- thirds say that applying for online financing is important to them. Convenience is also essential, with 33 percent of consumers applying for financing on the same day they want to make a big-ticket purchase. In short, the more channels that a retailer is able to offer a seamless consistent experience the better.
For retailers, new lending platforms have the ability to revolutionize the convenience, security and financing options to enable them to reach a larger pool of potential customers. Ultimately, when it comes to financing in 2017, a retailer’s primary goal is simple: to deliver accessible satisfying experiences to as many of their customers as possible. Retailers who align this goal with the sophisticated capabilities of today’s lending platforms will stand the best chance of capturing market share, greater revenue, and increased customer loyalty in the new year.
Want to learn more about how you can get ahead of the competition and your credit program planning in the New Year? Download our new report, Growth Trends in Retail Consumer Financing for 2017, to get insight into exclusive research from First Annapolis Consulting and how you can use financing to meet your sales goals and improve your customer experience.