5 Key Takeaways From The State of Retail Lending in 2017 Webinar

As a retailer, you know how valuable credit is in acquiring customers and driving sales. However there are certain aspects of your credit program that you may be overlooking.

During our State of Retail Lending in 2017 we sat down with five industry leaders in retail credit to talk about customer trends, optimizing the experience, and how retailers can get ahead of the competition.

Here are a few of the key takeaways:

1) CX (Customer Experience) is #1 priority for retailers

It should come as no surprise that customer experience was a hot topic amongst our panelists. The fact of the matter is retailers can prioritize revenue as much as they want but if their CX is lousy, their customers will look to buy elsewhere and revenue will never materialize.

Where do you start in making CX a priority in credit? At the most basic level, it’s about making it simple and convenient to apply for credit and make a purchase.

“Technology has evolved and the demands of the retail experience have evolved such that sophisticated retailers are demanding of their providers that they make available technology that is consistent with the process that they have in-store or that is in front of the consumer” said Jeff Howard of Fortiva.

Customers have come to expect applications that are clean, with fewer data fields, and an overall fluid look and feel. Applying for credit should not disrupt the flow of the purchase process – on the contrary it should be integrated in the in-store POS or in the shopping online so that the transition from applying for credit to purchasing with credit is as seamless as possible.

2) Humanization of Credit

“When you get down to the human level, and you explain that you can’t serve or more importantly aren’t even walking through your door because you won’t offer it, well that’s a big segment of the market you’re missing out on.“ -David Minero of Tidewater

Your customers aren’t the only part of this process that needs to be looked at on the human level.

Sales associates can be your biggest brand advocates, and making this process easier and stress-free for them can make all the difference in the experience. When it comes to sales associates, 20% drive 80% of the financed volume.

The key is to start by breaking down the barriers of multiple credit offers and technology. With high declines for credit, store associates are used to the awkward conversation with customers, and this leads to hesitation in offering credit altogether.

The benefits of solving for this can be significant. Jeff Howard, CEO of Fortiva, revealed “Retailers can see up to a 20% uptime in top of the funnel credit applications after adding second-look or lease to own credit just because sales associates are more comfortable offering it”

Working with multiple lenders that can serve more customers, is step one in humanizing the credit process.

In offering more options for more customers, your sales associates are less anxious about offering credit, they can make customers more aware of credit options that they might not have known about previously. This kind of communication can often make a difference between happy customers & associates, and unhappy ones.

3) The most successful retailers have a strong omni-channel focus

When it comes to omni-channel, the latest research by TD Bank predicts that super powers like Amazon will continue to take a larger percentage of retailer growth if retailers don’t prioritize omni-channel initiatives.

The good news is the advances and ubiquity of technology is making this easier than ever before. One way retailers are reacting to the Amazon threat is by making credit offers available much sooner in the buying journey.

The benefit of doing so means you can capture the attention of customers in advance of making a decision of what retailer to purchase from. Research suggests that as much as 80% of shoppers start their purchase on a mobile device or online but that doesn’t necessary dictate where they purchase.

It should come as no surprise to you, but retailers that want a competitive advantage should also consider investing heavily in their online & mobile credit customer experience. That includes getting smarter about the use of data:

“In terms of addressing the online experience, the lending market has been slow to adapt to the trend, in two respects: the length and the look and feel of the credit application, and working with lenders who are capable of feeding data back to the retailers so they can integrate back into their digital or in-store data for increased conversions” said Zac Prince of Zibby.

4) Even cautious retailers are realizing they need to expand their credit options

Retailer’s have a demographic of customers that is likely far more expansive than what they can serve today with their existing credit options. Approximately 100M people in the US have credit scores that qualify as sub-prime yet most retailers only have credit solutions for prime credit score customers. Retailers are beginning to realize that they are inadvertently abandoning these customers.

“We get questions all the time on what is the demographic of the lease customer. The demographic of the lease customer is the American population. You never know what people have experienced or life that has happened to them that results in a change of circumstances that may even be temporary, but the way credit scores are implemented today, one little slip up can be punitive for quite a while. We see all kinds of customers that come into the door so just making sure that you offer customers products to let them choose what they would like,” said Phil Layher of TEMPOE.

With the average lease customer having an average $44,000 household income and typically looking to make a $1,000 purchase, not having a solution that can cater to this demographic leaves revenue on the table.

5) Optimizing Customer Acquisition and Loyalty Through Enticing Offers

Retailers are constantly looking for ways to market to customers and get them in the door (or on the website). Once they get in the door you have to convert them and oftentimes you need additional credit options to do so.

Across the board, customers are looking for flexible credit options that will allow them to keep coming back to the store time and time again.

“Primary programs consumers are requesting longer-term promotions. A number of retailers are offering different types of promotions on those longer-term payment plans, “ said Paul Hamilton of TD Bank. The one to two year traditional payment plans are just not long enough for today’s customers that look for promotions that last up to 5-6 years. Reduced APR promotions can be equally as effective at improving brand loyalty.

Lenders, like retailers, know the value of customer acquisition and loyalty. Do to so, retailers should take a step back from the technology and first look to their data to understand who their customers are and what drives them to make a purchase. For example, a retailer might not have known that their lease-to-own customers are their most loyal prior to looking at data. With this kind of information, retailers are able to make smarter decisions to drive loyalty.

In offering more options for more customers, your sales associates are less anxious about offering credit, they can make customers more aware of credit options that they might not have known about previously. This kind of communication can often make a difference between happy customers & associates, and unhappy ones.

For more insights or to re-watch the webinar, you can view it in full on-demand here.

About Matt Welton (Vyze VP of Customer Success)