How to establish retail finance as a key part of your customer journey

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Jonjo Maudsley
Content, PR and Communications Manager

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The checkout process is one of the most critical parts of your customer journey. It’s at this stage that, on average, 7 in 10 customers will abandon their baskets, with the most common reasons being extra costs incurred, too many forms to fill out and a sudden loss of trust.


Ecommerce professionals therefore spend a lot of time and money thinking of ways to optimise this stage of the journey. In recent years, Buy Now, Pay Later (BNPL) – or checkout finance – has become one of the most popular ways to drive customers through the checkout process and reduce basket abandonments. Around three-fifths of merchants who have implemented checkout finance have seen a reduction in customers dropping out, according to data from one BNPL supplier.


But there is still a way to go if retailers want to claw back some of the $18 billion dollars they could lose every year through basket abandonments (as was reported in a Forrester study back in 2010 – given the growth of ecommerce since then, the modern day number is likely significantly higher). Implementing retail finance at the checkout is a good starting point, but how can you make your solution work even harder? The trick may be to establish checkout finance as a core pillar in your ecommerce journey. 

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Retail finance: a last-minute surprise at the checkout?

So, you’ve integrated Buy Now, Pay Later into your platform. Your customer fills up their basket, clicks through the checkout process and reaches the payment screen. This is usually the last step in their journey – making it also one of the most critical.


Here, they find themselves face-to-face – perhaps for the first time – with the option presented by your provider. Usually, there will be a calculator or slider letting them know how much they’ll be expected to pay back each month, and sometimes also options for how long they would like to split the cost. They spend a few moments jiggling things around, find an option that suits their needs, and click through. Badda bing, badda boom.


That all sounds good on paper. After all, more choice at the checkout means greater potential to encourage the customer to complete their transaction. But once they’ve made their decision, what happens next?


A lengthy process often follows, wherein the customer is diverted to a third-party platform. This is usually on the lender’s own site, one which the customer may not be familiar with. You’re not in control of what they see or experience at this stage, and if they see something they don’t like, something that interrupts their shopping experience, it could impact poorly on your brand – perhaps without you even knowing.


While on your supplier’s platform, the customer may need to re-enter details (“Didn’t I enter all this a moment ago?”), read through lengthy legal documentation, sign their life away, wait on a loading screen while the lender processes their application and – worst of all – they may end up being rejected, making their whole ordeal a waste of time. (Again, the feeling of rejection may impact upon your brand, rather than the lender’s.)


This, it should go without saying, is not an optimal experience. So then, how can we ensure checkout finance works harder for your business?


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Optimising the customer journey: work backwards from the checkout

One idea is to position checkout finance earlier in the customer journey. This can be achieved by providing a soft credit check at the very start of the customer’s shopping experience as a means of ‘pre-approving’ them for retail finance. That way, by the time your customer reaches the checkout, they will know that they can choose finance with confidence.


Not only will this help to remove some of the friction from the checkout process, this proactive process may also encourage shoppers to spend more: for instance, showing the customer a calculator early on in their journey could let them know the maximum amount they could be approved for, which could in turn encourage them to fill up a bigger basket.


Also, by promoting finance as an option sooner rather than later, the retailer establishes expectations for the break in the journey that is going to happen at the checkout. This gives the retailer greater control of the journey up to that point, positioning checkout finance as though it were any other aspect of their brand.


Thus, by the time the customer switches to the third-party site, they have a greater understanding about what to expect, having been fed the essential information from your brand. This is also a benefit with regards to upcoming regulation, which stipulates retailers and lenders must provide clearer communications around their checkout finance products.


By establishing finance not merely as an option at checkpoint, but as an essential component of the ecommerce journey, the retailer also creates a potential point of differentiation. Not only is a shopper who knows they are entitled to interest-free credit more likely to shop with you there-and-then, they are also more likely to choose you again in the future over one of your competitors who does not offer the same level of flexibility.


Indeed, a McKinsey study found that 75% of customers purchasing large-ticket items prefer to commit to retail finance early in their journey. The study found that advertising finance options earlier in the journey could therefore increase conversion rates by almost three times.


In this sense, checkout finance can not only enable spending, but generate demand too, thus helping to support your brand’s image as trustworthy and accessible.


Better still, retailers with an omni-channel operation (wherein checkout finance can be offered both in-store and online) have even more to gain from introducing finance earlier in the customer journey. A customer’s credit status can be transferred across different retail environments, encouraging brand loyalty regardless of where the purchase is taking place.


Thus, your customer experience can find itself crossing retail formats: a customer could feasibly process their finance application on a mobile device, view the product in-store, then complete the purchase online – or any combination of these. This keeps them within your brand journey for longer, helping them to feel reassured and connected to your brand.


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Could checkout finance be working harder for your brand? 

Few industries are as invested in user experience as retail. And, in an increasingly competitive space, where every aspect of a customer journey can be chopped, changed and optimised, retailers are always on the hunt for the next best way to drive completions, encourage repeat spending, create a positive experience and ultimately foster loyalty. Integrating checkout finance is a fantastic way to achieve all of this, and more – but only if your platform is fully connected to your customer journey.


By extending checkout finance backwards from the point of sale, by aligning the solution with your brand and ecommerce strategy, and by ensuring your messaging is consistent, you can both mitigate the risk of basket abandonment and streamline your sales process, giving the customer a truly seamless, positive and on-brand experience.

Divido is the platform partner enabling lenders and merchants to launch their own-brand checkout finance, fast. Consumer journeys are seamless, and can be optimised to convert more customers at every point of sale, online and in-store.

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