In the competitive world of electrical retail, staying ahead of consumer expectations is paramount. Over the years, usage of flexible payment methods has surged, driven by the rise of e-commerce and more recently by the ongoing cost of living crisis. However, shoppers today expect more than just having tailored finance options available to them - whether they’re buying a new washing machine or the latest gaming console. They now demand a seamless and frictionless experience when applying for and using checkout finance. A recent study found that 70% of shoppers abandon baskets because they find checking out too complicated!
So, how can electrical retailers adapt to these heightened consumer expectations and prevent potential sales losses? The answer lies partly in integrating flexible finance solutions directly into their site. Forcing shoppers to leave the checkout page to fill out poorly designed finance application forms is a sure way to increase basket abandonment rates. The final piece of the puzzle for retailers is to leverage new product innovations that are proven to improve application acceptance rates - reducing drop off at the last step of the purchase journey.
Shifting consumer expectations
When making a purchase, consumers now expect finance options to be available, and if not, are often quick to look elsewhere. Partnering with the right strategic checkout finance partner enables merchants to go one step further and offer their customers finance options that are tailored to their needs and their specific shopping choices. For example, a high-end domestic appliances store would most likely benefit from their partner connecting them to a solution that offers interest-free finance across longer-term repayments; as opposed to a “Pay in X” solution that is capped at a lower spending limit.
However, the growth of the digital payments landscape, and the emergence of one-click purchasing means that the purchase journey is just as important in converting browsers into buyers, as the repayment options are. Checkout finance products should be built with a user-centred design approach and tested thoroughly before launch to ensure the minimisation of bugs and issues. It’s important these products are also embedded into the merchant’s site so customers never have to navigate away from the checkout.
Deko’s digital credit account product, Newpay, does this extremely well. It requires just one finance application to set up a revolving line of credit, which customers can use for future purchases with just a few clicks after logging in. In addition to this, the solution is built upon the tenet of removing friction and complexity, featuring UX techniques such as progressive disclosure; which aims to reduce cognitive load on users by gradually revealing and requesting more information.
Frustration and rejected applications
The last and arguably the most important step of the purchase journey that too often invokes customer frustration is the decision stage. Forms, no matter how well they’re designed, take time to complete. And, when customers invest their time to complete finance applications and then are rejected, they’re naturally disappointed - often abandoning their basket.
This is particularly pertinent for electrical retailers who typically have lower acceptance rates compared to other industries. There’s a combination of reasons that contribute to this, including higher levels of fraud, weaker credit score quality and higher average order values.
Deko’s eligibility checker tool, ‘Will I Qualify’ helps to mitigate this issue as it lets customers know upfront the likelihood of them being accepted for finance without them needing to go through the entire application process. This means fewer customers experience the consequent disappointment that comes from having a ‘no’ decision returned.
Deko also offers a unique multi-lender Pay Monthly product which uses the principle of waterfall lending to automatically pass on rejected applications to a sub-prime lender whose lending criteria may be better catered to the customer’s financial needs. There’s also crucially no need for customers to complete another application, as their information is safely and automatically passed onto the second lender. This removes additional friction and frustration for customers and is a proven way to increase acceptance rates.
Tailored repayment options and frictionless purchase experiences lead to fewer abandoned baskets and consequently happier (and loyal) customers. This is especially important for those electrical merchants who rely on repeat purchases as a foundation for sales.
The risk of not getting your credit strategy right is big. Demand for frictionless payment options will only continue to grow, and many merchant’s reaction will be to offer a whole range of finance products at checkout. However, instead of empowering their customers with financial flexibility, merchants will inadvertently disorient them through ‘choice overload’. The result is that basket abandonment levels and lost sales will actually rise from decision paralysis. But, by leaning on the expertise of a strategic checkout finance partner, merchants can provide comprehensive credit coverage and embedded user experiences, without any surprises.