Retailers, you are ever the optimists. There were some major retail winners and losers in 2017, but as a whole, 60 percent of you rate the state of the overall retail sector as “very healthy”. That’s according to our Vyze Merchant Credit Report, where the overwhelming majority of respondents are bullish on the future of retail.
However, your optimism is laced with a healthy dose of realism. You know that in order for the retail sector to achieve and maintain market health, you’ve got a lot of work to do. Nearly 100 percent of retailers reported that they planned to invest in both the checkout experience and financing and credit options. Coincidentally, these two aspects of the business go hand in hand with each other.
Retail credit options can play a major part in improving your online checkout experience, including driving increased sales and higher customer loyalty. Let’s take a closer look at how credit can play a strategic role in your ecommerce strategy.
Leveraging Retail Credit to Boost your Loyalty Program.
Credit financing sales account for about 30 percent of the total purchase pie. So what can retailers do to get a bigger piece of that pie for retail credit? Give more customers more opportunities to use it in a fast, easy manner. With more purchases taking place online each year, ecommerce is the perfect place to focus your loyalty efforts.
Retailers are under the impression that to stay ahead of the competition when it comes to ecommerce, they must constantly add and adopt the latest and greatest technology. This couldn’t be further from the truth. Retailers should take a step back and look at how their loyalty program weaves throughout the online experience, and the role that retail credit currently plays in it, or could play in it.
Related: What to Expect from Retail in 2018
Customers look for promotions, discounts, and incentives at retail checkout, with the goal of lowering their ticket sizes. These same customers are also unafraid of shopping around for the best deals and promotions at other retailers that carry the same product they are looking to buy. This risks a lost customer. It’s important for retailers to not only offer the best promotions but to also provide a loyalty driving experience that exceeds the competition. Attaching these discounts to a credit program, not only makes applying for credit more attractive to the customer, but also boosts the likelihood of repeat purchasing and keeping that customer long-term.
Today, 80% of retailers have a loyalty program that is tied to credit, however half of customers are being declined by these credit programs. Yet retailers have been slow to fix this program, even though 89% of customers say they are more likely to return to shop at a store they have retail credit with. A loyalty program is truly only valubale if it works. While it’s imporant to make sure that you have the right offers and promotions available to attract customer attention, it’s equally important to make sure that customers can actually use the program. Which leads us to…
Turn a negative credit experience into a positive one.
Getting rejected – for credit financing options or any other offer – generally makes for a negative experience. Prospective customers get embarrassed when their request is declined in-person, and may even decide to abandon their purchase. And with the financing options offered by retailers today, nearly half of applicants are declined at checkout.
One way to reduce the chance of getting rejected is to provide multiple credit offers that can accommodate customers wherever they fall in the credit spectrum. With various credit products, retailers have a higher likelihood of presenting an applicant with an offer, and turning what could be a negative experience into a positive one.
For retailers that have been early adopters and have multiple lenders in their credit program, the results are impressive. Brands like Adorama, an online electronics retailer, and Build.com, an online home improvement retailer, were able to triple ticket sizes using the Vyze platform and its extensive lender network. The Home Depot and ICON saw increases in year-over-year credit sales of 54 and 122 percent, respectively.
Some of these retailers are online only, but others (like The Home Depot) have brick-and-mortar locations. So for those with physical stores, what might happen if you offered credit financing in your ecommerce experience as well as in stores? Customers might be more likely to apply online, and will appreciate the flexibility to shop however they want, be that in store or online.
As of the 2017 Vyze Consumer Survey, customers applying for financing is pretty evenly split between in-store (44 percent) and online (43 percent), with mobile trailing behind (10 percent). As online shopping continues to rise, the opportunity to apply online and avoid an embarrassing “no” at checkout may push online financing applications to the forefront.
Increase sales opportunities in the developing mobile channel.
Mobile shopping is growing at breakneck speed. On Cyber Monday 2017, mobile purchases accounted for $2 billion of the total $6.59 billion in sales. And if that’s any indication of what’s to come, mobile will continue to control a large share of online purchases.
If mobile is where shoppers are making purchases, credit options must follow. And our research shows that retailers are following the trend, with 6 out of 10 reporting that they already offer credit financing via their mobile shopping app.
Taking credit financing offers and replicating them consistently in the mobile shopping experience will drive a larger share of retail credit purchases there. With Vyze’s credit platform, Adorama found that 33 percent of customers accessed credit options via mobile – and that’s just the tip of the iceberg.
Credit options can drive real results for forward-thinking retailers.
Retail credit is one of the most impactful resources retailers have, when it comes to driving sales and customer loyalty in today’s competitive landscape. Want to learn more about the window of opportunity for your business? Stop by booth #1433 at ShopTalk between Sunday, March 18, and Wednesday, March 21, 2018. We’ll be sharing our next gen ecommerce experience – be the first to have a look. And join us on Monday, March 19, at 3:21 pm at Stage 5, for our Tech Talk on loyalty marketing.