Are Outdated Retail Credit Options Costing You Sales?

Today’s shoppers are asking for more out of every interaction during their shopping experience, and when it comes to the credit options they want, it is no different.  In fact, according to an eNation study of over 2,000 consumers, 42% of consumers said that they seek out retailers that offer credit. Believe it or not, that number is even higher for millennials, with 56% sharing the same sentiment.

So what are these shoppers looking for? It’s a combination of both features of the credit product itself and the checkout experience. Based on survey data, the top consumer asks include:

  • A simple, short application
  • Flexible payment plans
  • Clear and understandable terms & conditions
  • Available when they need it- at the point-of-sale terminal or in the online shopping cart

The Challenge

If most retailers asked themselves if they were delivering on this promise today, the answer would likely be a resounding “No”. At Vyze, we empathize with retailers, knowing that the journey to building an optimized credit program has been anything but easy:

  • Traditional banks, such as Synchrony & Citi, tend to focus on specific segments of the population. Working with just one lender typically results in a large number of consumers that are left without a credit offer.
  • The secondary and tertiary lending landscape wasn’t thought of as stable, with lenders entering and exiting the market every year.
  • Not every customer wants a revolving credit line. For example, for a one-time purchase, an installment loan may make more sense.

While choosing to add additional lenders is a step in the right direction, their are underlying challanges: dealing with multiple technical integrations and potentially a disjointed checkout process with multiple credit applications or worse, multiple credit declines.  Traditionally, retailers had to rely on their own in-house technology teams for the bulk of the heavy-lifting which was thought of as a time-consuming, and expensive endeavor.

Because of these challenges, many retailers end up narrowing their focus to a select consumer demographic – those with excellent credit. For most retailers, this approach isn’t practical as it excludes everyone from millennials who have little or no credit history, to those who in the past did not have good credit and are trying to build their scores back up. Credit is not one-size fits all. Failing to recognize customer differences could lead to lost sales and customer loyalty.

Putting this into perspective looks a little like this:

  • 28% of today’s consumers won’t even apply for credit for fear of being declined.
  • Even if they do make it to the register and apply for credit, 47% of consumers have been declined.
  • 33% of consumers abandon their purchase and 35 percent reduce or delay their purchase.

Understanding the current retail credit landscape is step one in saying goodbye to outdated methods and building the right program that will have a lasting, positive impact on revenue and brand loyalty.

The good news is, there has been a evolution brewing in the retail consumer financing space, with new entrants (non-traditional lenders) and new technology solutions that are taking away some of the challenges that have made it difficult to offer credit to more consumers.

Offering Full Spectrum Financing Drives More Loyal Customers

Members of formal loyalty programs spend almost 30% more on average than non-members and give brands higher marks for customer experience. And when it comes to eCommerce specifically, repeat buyers comprise a third of online buyers, but generate some 42% of online revenues, according to technology researcher Forrester.

So far, though, retailers have fought an uphill battle. Just 13% of consumers are die-hard loyalists, according to McKinsey; only 29% remain loyal after shopping around, which means the majority of shoppers switch brands at will. Given the steep challenge, merchants need proven strategies to re-engage customers and earn repeat business — prompting investments in tools that support omnichannel points programs, personalization, and customer engagement. But one powerful contributor to brand loyalty has been largely overlooked: the ability to establish a retail credit loyalty program.

Store credit cards are nothing new. Some 63% of consumers have at least one, and awareness is high, with 78% of shoppers saying they know about store-offered credit as a payment option, according to data from Vyze. Store credit also offers merchants a lesser-known — but significant — benefit: Vyze found that some 84% of shoppers who access store credit use it more than once, making it an effective loyalty driver.

However, traditional approaches to retail financing often limit the number of customers who qualify for store credit. Most retailers work with a single lender to implement a store card program, which limits the options available to shoppers. This is changing as innovative brands rethink the model to connect shoppers with multiple lenders, including both secondary and tertiary, at checkout, to provide more shoppers with more store credit. Moving beyond a ‘one-size-fits-all’ program not only boosts approval rates but allows marketers to effectively engage different consumer segments. 4 in 10 retailers that offer secondary/tertiary lenders say customers that use secondary/tertiary lenders, that would have typically been declined by a traditional credit program, are more loyal than other customers.

Merchants who widen access to store credit can potentially win more loyal customers, and ultimately drive their existing customers to be even more loyal to their brand.

Technological Advancements Promises Credit For More Consumers

Businesses can attract and retain financing-conscious customers by embracing innovative retail solutions that extend beyond traditional 20th century options of working with one lender and managing financing solution development and implementation.

A perfect consumer financing program entails technology and lending supply working together. Retailers must go beyond just partnering with a single lender and be open to exploring alternative lenders—those who often approve customers with good and fair credit and potentially some with limited or no credit histories, as well. By partnering with multiple credit providers, businesses can make credit accessible to virtually every customer that looks for it.

If you do decide to partner with multiple lenders, there are really 2 choices: integrate each lender separately or leverage new technologies and platforms to make this process easier. Innovation in the fin-tech space is moving faster than ever before

Depending on the sophistication level of a multi-lender platform like Vyze, there are several key benefits:

  • With a single consumer credit application no matter how many financing providers or financing offers are available, the retailer can ensure a consistent experience for the customer and sales associate – That’s critical because 51 percent of consumers say they are less likely to purchase from a retailer if they have to fill out more than one application.
  • By streamlining back-end management, retailers needing to reconcile multiple settlement reports is a thing of the past.
  • As business strategies evolve or market conditions change, retailers have the flexibility to change lending supply at any time, without significant effort.

The key take away here is that retailers can now offer more options without sacrificing convenience.

Financing Platforms Are Not All The Same

In general, two types of retail financing platforms have cropped up:

  • Platforms that focus on the customer application experience but still only approve a limited number of customers. These platforms deliver their own user interface and are minimally customizable.
  • Platforms that focus on the entire customer experience, via partnerships with multiple lenders to facilitate a streamlined process.

That last part—without a significant integration effort—is crucial to the long-term success of any credit strategy. A new technology isn’t valuable if it isn’t built to meet the changing needs of the customers, and the same goes for financing platforms.

Today’s most sophisticated platforms go the extra mile to ensure that lending supply integrates seamlessly with pre-existing checkout systems, be it the eCommerce shopping cart or the POS terminal. This level of support also makes it easy for retailers to on-board or change lenders quickly. Perhaps most importantly, in addition to saving retailers time, resources and stress, this support delivers a consistent experience across every retail channel.


The days of single lender solutions and in-house financing are slowly becoming a way of the past. Creating the most satisfying financing checkout experiences for customers is now possible.  Investing in updating your retail credit program can make the difference between a lost sale and a happy customer.

Doug Filak is Vyze’s chief marketing officer.

by Doug Filak

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