Using Buy Now Pay Later Solutions to Increase Conversion
What are conversion rates and why do they matter? Well, there is no one right answer. Conversion rate refers to any desired action you wish your customer to take. That can be anything from clicking on the ad to subscribing to your newsletter to signing up for your event. Depending on your business, you will need to develop your own key metrics to measure the success and growth of your business based on the outcome you would like to achieve.
Key Metrics of Conversion All Businesses Should Be Tracking
There are, however, a few baseline metrics that all businesses should monitor and measure. First and foremost, how many of your leads have bought, or, in other words, how many leads have you “converted” into paying customers? Your total sales conversion rate is the most obvious metric you should be measuring, which may already be common sense, since you only make money when someone makes a purchase. But it’s important to note anyway.
The next key metric that is vital to consider is your Average Order Value (AOV). How much did each of your purchasing customers actually spend with you each time they made a purchase? Increasing this number has a direct correlation to growing your business. Better yet, if you can increase this number AND get this client to be a repeat customer, you’ve secured yourself more business down the road.
The last key metric I would suggest online merchants monitor closely is your cart abandonment rate. How many of your customers place products into their shopping cart, but leave your site before actually making a purchase? Today, on average 7 out of 10 shoppers leave a site before completing a purchase. That’s a 70% cart abandonment rate, which means a LOT of lost potential sales. If you don’t know your number, you will want to figure it out in order to determine a strategy to re-engage these potential customers.
So, to summarize, pay attention to your sales, average order value, and cart abandonment rates. Finding creative solutions to improve these conversion rates will be a highly valuable and sustainable way to consistently grow your business.
How Can Offering Buy Now Pay Later Solutions Increase Conversion
One option that can be incorporated quickly and that is proven to grow sales is offering a Buy Now Pay Later (BNPL) option. The way people shop today is rapidly shifting. BNPL options are becoming very popular, especially when spreading costs over time can help a person, or family, better manage their cash flow. Also, they provide an alternative to a “race to the bottom” by lowering prices to beat out competitors, because monthly payments are more affordable (would you rather pay 25% of the total, or get a 10% discount?).
There are a lot of BNPL solutions available in the market, but they are not all comparable in value – not only to you as a retailer, but also to your customers. Shoppers don’t necessarily like having to apply for more credit, especially when it’s tied to a bank, so they can afford to buy a quality mattress or to replace their old television or refrigerator. First of all, their credit score takes a hit when they do, plus they have to spend time filling out applications and sharing personal information. Additionally, most solutions come with fees and interest in their plans. I’m sure when you find yourself on the shopper’s side of a store, you are always wary of the fine print when considering financing options.
Splitit as a Solution
This is why Splitit developed a unique solution that avoids all of the previously stated pitfalls. A shopper is able to take advantage of our installment payment plans without having to fill out an application or run a credit check. They simply fill out the standard billing information, select how many payments they wish to make using Splitit, and hit the “buy” button. It’s instant.
How does this work? Splitit runs off a shopper’s existing credit card, which means they are optimizing their existing credit (not opening a new line), collecting their benefits and building their credit score (because they are using their credit card to make their purchase), and there are never any fees or interest (a key reason why Splitit has been able to drive repeat business).
What’s in it for retailers? First of all, Splitit secures transactions, so retailers are sure to receive the full payment for all deferred payment orders. Also, providing Splitit as a BNPL solution has proven to increase key metrics: +12% in sales, +80% in average order value, and -11% in cart abandonment rates. Our solution works globally online, in-store, and on mobile. It has the highest approval rate (which means happy customers) and is the quickest checkout solution (which means less friction that could lead to cart abandonment).
Want to know more about Splitit and how it can help you grow your business? Click here.