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Matt McDowell, Litle & Co.
In my last article, I discussed ways Internet and Multichannel Retailers can prepare for the holiday season to ensure the highest Average Order Values by putting some risk management techniques into place.
In this article, I offer some tips on how to increase revenue and improve customer satisfaction in preparation for the holidays by offering alternative payment methods to your customers.
The current economic conditions are fueling consumer adoption of alternative payments for those who might not be able to access credit. For other consumers, choosing alternative payments provide them with a greater level of personal identity security when purchasing goods online.
And if you needed even more reason to offer alternative payment methods, Javelin Strategy & Research reported that these alternative payments will represent 31 percent of online dollar volume by 2012.
Sharing some tips from my associate, Bala Janakiraman, our resident alternative payments guru, online retailers should first:
1. Define their objective. Is the objective to bring in new business or retain existing customers and increase their average order values? Are your customers switching from credit-based to a cash-based payment approach? The answers to these questions will help determine the best alternative payment method for your audience.
2. You may not qualify for all payment methods. There may be dollar limits or acceptable-use-policies you must meet before a provider will qualify you for their payment method. So know your options up front.
3. Your alternative payment provider can be an ally to capture new market segments. Ask what kind of support the provider will offer you on the marketing side. An email campaign to their users telling them you now offer PayPal or Bill Me Later could help you bring in that extra holiday traffic.
4. Measure, measure, measure. Track whether or not any new alternative payment method is really attracting new customers. You may actually just be cannibalizing another form of payment where customers are moving to your new one. Make sure any lift in sales is attributed correctly. Your payment processor’s reporting capabilities are valuable here. But also just as important is patience. Allow the new payment method to run for a good 8-12 months to make sure you have a good baseline established and determine then whether or not you should continue or cancel that particular method of payment.
Don’t lose out on those potential sales. By providing your customers with alternative payment methods such as PayPal and Bill Me Later you are increasing your chances of conversion. And by offering alternative credit options, you also have the potential to capture an increase in sales of higher priced items while also guaranteeing timely payments and a lower risk of chargebacks.
A great case study I like to use is from one of our customers, Jewelry Television – the nation’s top retailers of fine jewelry and loose gemstones. Prior to the 2008 holiday season, Jewelry Television worked with us to expand their payment options and chose to implement a new consumer credit program with Bill Me Later. As a result, they were able to generate nearly 45,000 new accounts in four short months – bringing additional value to their customers and increased revenue to their business. Read the full Jewelry Television success story.
If you have been thinking about offering alternative payments or installment billing options to your customers, don’t wait. Now is the time to work with your payment processing partner to discuss which alternatives are right for your business to help increase your sales this holiday season and beyond.
