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3 Ways Brands Can Leverage Modern Credit to Engage Today’s Shoppers

The following post was written by Pat Suh, VP of Client Success at Affirm. Affirm is revolutionizing the banking industry by allowing consumers to buy now and make monthly payments for their purchases—without hidden fees or surprises. By modernizing credit and changing the way people shop, the solution is a game-changer for both consumers and brands.

Retail has innovated, charging into the modern digital ecosystem. Direct-to-consumer brands have impacted the ubiquity of department stores, while Amazon Prime has made it possible to get anything you need almost instantly without leaving the comfort of your own couch. So, too, has the experience of shopping in a store evolved, becoming a cultivated and interactive experience instead of endless rows of overstuffed racks and shelves. Yet one part of the shopping experience has remained curiously static—payments.  

The way people pay hasn’t evolved the same way other parts of the shopping journey have, but that’s all beginning to change. The payment process is a fundamental part of how shoppers interact with a brand or a store, and it could be the deciding factor on whether or not they follow through with a purchase. That’s why it’s vital for retailers and brands to invest in modern credit alternatives that attract new customers and increase their likelihood to convert. Here’s how:  

1. Appeal to Millennial Shoppers

One-third of millennials don’t have a credit card, and 60 percent actively fear getting into credit card debt. Instead, they want more financial control when it comes to accessing credit. They also like the growing subscription business model—instead of splurging one month and having to scrimp the next, modern shoppers want to know exactly what they will owe every month.

Modern credit is moving in the same direction. Younger generations may not be willing to put their purchase onto a piece of plastic where they have no insight into the total interest they’re paying, but they may be attracted to paying over time in monthly installments where they know, upfront, what the total cost will be.

2. Reduce Sticker Shock While Maintaining Price Integrity  

Amazon accounted for 44 percent of e-commerce sales in 2017, leaving everyone else fighting for the remainder. For many, that means offering lower prices than the nearest competitors to turn window shoppers into paying customers. In the short-term these sales can drive awareness and some acquisition, but perpetually offering discounts will only lead to brand and product degradation. If shoppers come to expect those lower prices on a regular basis, why should they ever pay full price?

But price sensitivity is still incredibly important. While perpetual discounts can hurt a brand in the long-run, allowing customers to break up their purchase into monthly payments reduces sticker shock and increases affordability without impacting value.

3. Give Customers Another Reason to Take Action With Personalized Emails

It’s increasingly hard for brands to rise above the noise and engage with their customers in a meaningful way. More than 75 percent of shopping carts are abandoned due to price, so retailers send abandoned cart emails to re-engage those customers and ask them to reconsider.

While personalizing emails is the perfect first step, it’s imperative to give them as many reasons as possible to engage with your brand. Asking them to reconsider a purchase they abandoned with a clever email can work if they get it at the right time. But if you let them know that they can make that purchase for “as low as $X a month,” they may be more likely to actually reconsider.

Just as modern credit that’s offered at the point of sale in the form of monthly payments act as an alternative to a sale, it can be used as an effective tool to engage, or re-engage, customers.

The Bottom Line

For too long, payments have been an overlooked part of the buying process. Brands are missing out on customers who are averse to traditional credit methods and aren’t leveraging modern alternatives to grow their businesses. It’s time to start thinking about the payment process as the beginning of the customer relationship, rather than the end of it.