Category : Sales
Why every Shopify store should offer a "Buy Now, Pay Later" payment method
There are so many aspects that go into running your ecommerce store — finding the right combination of products, creating eye-catching product pages with tasteful images, reaching relevant customers with your marketing efforts, managing inventory and shipping, to name a few. The decision of which payment option to use likely falls to the bottom of your list. A payment is a payment, right? Wrong! Selecting a payment method is one of the most critical elements of the customer journey, and offering the right assortment of payment options is one of the most direct ways to impact your conversion rate. Think of it this way: by the time a prospective customer has reached the payment phase of the checkout, they have already made a purchase decision. They’ve found your site, chosen a product, selected the right size and color, etc. They’ve already done the main leg work. At this point, any friction in the payment process can result in a lost sale. A customer is not a customer until they click that pay button. Your job as an online store is to make clicking that button as easy as possible. By now, you've probably heard of “buy now, pay later” solutions, like Sezzle. This new wave of alternative payment methods make optimizing conversions at this critical juncture especially easy. By allowing shoppers to pay for purchases over time (rather than all up front), this new payment solution has opened doors for consumers all over the world that fear the use of traditional credit. What is a “buy now, pay later” solution? Retailers have long provided shoppers the ability to pay over time with installments. “Buy Now, Pay Later” solutions offer a new twist on financing for Shopify merchants (and any online retailer) with simple installment plans. Layaway options became popular in the United States after the Great Depression, when retailers began offering them as a way to generate sales with cash-strapped consumers. In the old layaway model, shoppers would physically go to the store and put down installment payments for merchants to hold an item they wanted. Once a shopper had made enough payments to cover the purchase, the sale was complete. But in the 1950s, a new innovation was introduced that allowed shoppers to pay over time: the credit card. Credit cards allowed shoppers to swipe, receive their items immediately, and then pay the credit card company back at a later date. Credit cards quickly expanded to the nearly ubiquitous presence they are in retail today. Of course, the downside of paying with credit cards is that they are only available to those who are approved for credit; as many of us know, they also carry the threatening potential of exorbitant interest and fees. Luckily, new fintech solutions offer a modern alternative to credit cards designed for the modern consumer. Sezzle, for instance, allows shoppers to pay for ecommerce purchases in four equal, interest-free installments. With this solution, shoppers pay only a fraction of the purchase price during checkout and merchants ship their orders right away. The buy now, pay later platform then pays the merchant upfront for the full amount, less a small processing fee. The remaining installments are automatically collected from the shopper every two weeks, with no interest or additional cost to the consumer. In short, buy now, pay later options provide a new way for shoppers to buy now, get their item now, and pay over time, at no additional cost. Why offer a “buy now, pay later” option? Buy now, pay later solutions are a proven way to increase sales for merchants. There are many benefits to adding an installment payment solution to merchants, including: 1. Reaching new customers To maximize your reach, it's no longer sufficient to offer only credit card options. Credit cards are a great purchasing tool, but only for customers who have them. However, the number of credit card holders in your target audience might be far fewer than you think; only one in three millennials own a credit card, according to a 2016 bankrate study. There are many underlying factors driving this statistic — from the credit crisis of 2008, to mounting student loan debts for young people, to regulatory changes that made it more difficult for credit card companies to extend offers to those under the age of 21. The key point for merchants is this: payment behaviors are changing dramatically for young consumers who have increasingly come to expect to be able to pay with a digital wallet, alternative payment platform, or an installment plan. In fact, over 87% of consumers want a simpler way to pay over time that is not a credit card. By not providing these options, you are leaving potential money in the cart. 2. Increasing conversions More than two-thirds of all online shopping carts are abandoned, according to the Baymard Institute. The second most commonly-cited reason was the cart becoming too expensive. When customers see the total tallied up, they get sticker shock. Offering an installment payment solution that lets shoppers check out now and pay over time dramatically reduces cart abandonment rates. On average, for stores that have added a buy now, pay later method, checkout conversions have increased by almost 40% for first time visitors. Reducing sticker shock of a one time purchase reduces cart abandonment, which means more sales! [note]There are other effective methods for reducing cart abandonment, too.[/note] 3. Reducing return rates High return rates are a pain point for merchants. When customers are consistently returning their purchases, it can add a lot of unwanted and unneeded stress to your store. For merchants that use interest-free installments, return rates have decreased dramatically — some stores even drop down to 1% in returns by adding this alternative payment method. Through lowering these returns rates, buy now, pay later solutions can keep you and your customers happy. 4. Tapping into a millennial trend Buy now, pay later solutions have exploded in popularity in recent months. In other parts of the world, similar payment methods have become the predominant form of payment, with young shoppers mainly driving this trend. Young shoppers like the freedom of paying over time, without the financial pitfalls that credit cards pose. For them, they see these solutions as a kind of layaway on-demand or layaway for the digital age. As more and more major brands accept these payment methods, the trend will only accelerate. Why not get ahead of the curve by implementing this solution for your store now? Global expansion of “buy now, pay later” The rapid customer acceptance and adoption of buy now, pay later solutions led to Sezzle’s first international expansion into Canada in 2019. This market was chosen given the similar customer profile and online shopping habits of American and Canadian consumers. Much like their American neighbors, Canadian consumers have an aversion to credit cards and a desire for more flexible and lenient payment methods, making this move a logical extension of Sezzle’s platform. This entry gives Canadian merchants the opportunity to offer a new payment solution to their customers. As Kappa Canada CEO stated, Sezzle is essential to delivering “flexibility in the buying process” to customers and gives them a platform to extend their brand reach. This expansion also opens up an entirely new market of consumers. The market of Canadian online shoppers is growing at an unprecedented rate and is anticipated to increase by more than 25% by 2021, making this the opportune time to expand into this space. This rapid global expansion of the buy now, pay later space has proved very beneficial to those merchants that sell in multiple countries or use differing currencies. [note]If you have stores on Shopify Plus, learn how you can easily track your multi-currency sales with 100% accuracy.[/note] The US is brimming with merchants that sell their products worldwide, making it difficult when a payment platform only serves US shoppers. However, as the buy now, pay later space maintains its global growth, this problem will continue to diminish. Since its expansion in Canada, Sezzle has seen success with global merchants that now have the ability to sell to both US and Canadian consumers, in both American and Canadian currencies. For merchants looking to expand internationally, it will be important to note the aggressive growth that the buy now, pay later space has seen in recent years and the rapid growth that is expected to continue moving forward. As this alternative form of payment expands, so will its acceptance into international countries, making it an innovative move for every type of merchant. The best pay later solution for small businesses Buy now, pay later payment solutions are a proven way to reach new consumers, increase conversions, and tap into what Visa has called a trillion dollar market. The right payment solution can have a dramatic impact on your sales and customer lifetime value (CLV / LTV). As you consider which payment methods to use, think of the customer first. In the customer’s mind, the payment process is an extension of the store. A bad payment experience — whether it involves high interest rates or getting hit with hidden fees — equals a negative shopping experience. Therefore, it’s important to integrate payment options on your store that fit with the values and customer experience standards of your high-potential customers and buyer personas. This is a guest post by Kevin Wild of Sezzle, a payments disruptor that allows shoppers to budget their payments over time by splitting purchases into four interest-free installments over six weeks. By offering its ‘buy now pay later’ solution, Sezzle provides consumers with the financial freedom to buy what they want without having to fall back on high-interest credit cards.
Top 5 ecommerce benchmarks to track during the holidays [free ebook]
Historically, early-through-late December is one of the biggest sales seasons of the year for ecommerce businesses. We recently took a look at some of the more popular ecommerce metrics and created 20+ benchmarks specifically tailored to the current sales season. With our Benchmark your site tool, compare your site's engagement and conversion metrics with over 10,000 other websites this holiday season. [note]Want to know where you store stands during Black Friday Cyber Monday weekend? Check out our top 9 benchmarks to track during BFCM.[/note] To give insight on your product and digital marketing, we gathered the data from Google Analytics from different industry sectors. So why did we create the benchmarks? Let's take a quick look at last year's holiday sales. Holiday ecommerce sales in 2018 For ease's sake, let's define the holiday shopping period from November through the end of December. Last year, Digital Commerce 360 estimated shoppers spent $122.0 billion with online stores — a massive 17.4% jump from 2017. They also estimated total ecommerce sales grew ~5.6% over the same period, according to their holiday 2018 estimates report. From the same report, ecommerce represented nearly 17% of all holiday spending, up from 15.2% in 2017. Explaining the numbers Over the past decade as online shopping has become more of a preference for consumers (especially when it comes to gift-giving), shoppers have browsed more sites for gift ideas, deals, discounts and more. Shoppers are exercising their options (and taking advantage of stiff seasonal competition between stores), which often leads to increased spending volume across multiple stores — though this may cause stores to see a drop in average order value (AOV) per customer. Of course, stores tend to also increase their digital marketing spend during hot sales periods and peak shopping seasons, which leads to more online sales. What about this December? This past weekend alone (Black Friday Cyber Monday), Shopify reported record-breaking global sales numbers ~$2.9 billion. On the Shopify network alone — which now boasts over 1 million merchants — merchants across 175+ countries sold $2.9+ billion, up from last year’s $1.8+ billion. While the holiday shopping period (which is underway) does not necessarily stack up to BFCM weekend by sheer sales alone, it's a terrific chance for companies to finish out the year strong or get rid of extra inventory from BFCM. Since December will yield massive sales figures to round out 2019, it's crucial to track the metrics that matter to your store. If you don't know where you stand among the stores you compete with, what's the point? That's why we created a free ebook to help you stack up: Top 5 ecommerce benchmarks to track during the holidays. [subscribe heading="Download the top 5 benchmarks free" background_color="green" button_text="get the ebook" button_link="https://www.littledata.io/app/top-5-holiday-benchmarks"]
5 things every Shopify merchant needs to know about customer retention
Every brand using Shopify needs to focus on customer retention if they want to thrive, not survive, long-term. It’s not enough to only acquire customers or simply engage with customers. Without retention marketing strategies to turn one-time shoppers into loyal, repeat customers, you’re missing out on the most valuable customers your Shopify business could have. Here’s why: Retained customers have a higher AOV It’s no secret: customers that spend more are better for your business. But did you know that with every purchase they make, your most loyal customers spend more each time? Research by RJ Metrics showed that of your loyal customers, your top 10% spend over 3 times more per order than the bottom 90% of your business. If that seems crazy, this is even crazier: your top 1% loyal spenders spend 5x more than your bottom 99%. Your most loyal and retained customers don’t just love you, they love buying from you! Retained customers are more likely to convert So if your repeat Shopify customers make more valuable purchases, it probably takes more effort on your end to make those more valuable purchases, right? Wrong! With customer retention strategies in place, your retained customers are actually more likely to convert than first time buyers. To accurately track both first time purchases and repeat purchases (and all the events that lead up to the purchase), Littledata's ReCharge connection is the perfect integration for Shopify stores, particularly subscription stores. [subscribe] Customers that have purchased from you only two times previously arenine times more likely to convert when they land on your store. Even if you’re operating with a small average order value (AOV), you can make huge strides with your bottom line with the right retention strategies in place. Repeat customers have already been through your customer journey (i.e. from discovery through consideration through purchase and post checkout). This means they know and understand your total brand experience. If you’ve done your part to make the customer experience exceptional, customers will be more motivated to add more products to their carts in the future (and re-live their positive shopping experience from before). Retained customers can’t help but talk about your brand Your user-generated content and other social proof can have a profound and lasting impact on your Shopify store’s traffic, conversion rates, and profits. Customers that share their purchases and leave reviews will influence the buying habits of everyone who sees the content they create. The more often customers shop with you, the more likely they are to refer their friends to a store, and with the power of a referral program, you can help motivate your most loyal brand advocates to spread the word about your products. By giving both types of advocates a reward for referring (and giving their friends a reward for accepting the referral) you turn your brand advocates into a self-powered marketing machine that churns out more loyal and retained customers exponentially. Win-win. Retained customers come back during your most profitable seasons As soon as BFCM campaigns come to a stop and the ROI is being analyzed, many Shopify businesses (particularly Shopify Plus stores) already begin planning for next year. For your repeat customers, you never have to wonder if they’re going to come back during your busiest sales season. While most shoppers will spend an extra 17% more during the holiday season, your retained customers will spend 25% more all on their own! While you might want to make sure you’re making the most of Black Friday Cyber Monday, your efforts should be focused on your top customers and making sure they remember that buying from your store is a top option. Retained customers are more likely to return At the beginning of this article, we mentioned that retained customers are more likely to convert. However, before they convert, they have to first find their way back to your store. Luckily, the odds of a customer making a purchase gets better and better with each sequential purchase they make. After one sale, a customer has a 27% chance of converting again, but after a second and third sale, their chances increase to a staggering 54% chance of returning. Tracking customer retention is...simple? Tracking customer retention may seem like a daunting and time-intensive task. Luckily, many of the key metrics that measure ecommerce success and retention are things you’re already keeping an eye on. No matter how intensely you focus on retention, perhaps the two most important metrics to track are: Repeat purchase rate (RPR) - the percentage of your current customer base that has purchased for a second time. This metric is a solid indicator of the value you’re providing to your customers. Average order value (AOV) - the average dollar amount spent each time a customer places an order on your store. To calculate AOV, simply divide total revenue by a given number of orders. As your customers become more engaged with your brand and move from being simply acquired to retained, these metrics should give you a square idea of the affect more retained customers are having on your bottom line (and your customer lifetime value). Two other significant metrics are referral traffic and customer churn rates. Referral traffic - this is easy to see with a Google Analytics integration and easy-to-use loyalty and retention software. Referral traffic will help you know whether you need to hone your referral messaging or change the value of a referral offer. Churn rate - for subscription stores especially, Shopify merchants live and die by churn. This is the rate at which customers stop subscribing to your store (aka the rate of “come and go”). Churn is the flip side of your repeat purchase rate since it tells you how many of your customers shopped with you once but didn’t bother coming back. Knowing this number will help you accurately measure the success of your combined retention strategies. Retained customers are your best customers Even after landing sales, your work isn’t done. The more time and effort you invest in engaging with your existing customer base and motivating them to be loyal to your store, the easier it will be to bring them back and push them to make a repeat purchase. Start building the brand loyalty that will make your Shopify store a success story. This is a guest post by Tim Peckover, the Growth and Content Marketer at Smile.io who lives for a good book, strong cup of coffee, and building community. Smile.io provides easy-to-use loyalty programs to help businesses transform one-time sales into repeat, loyal customers.
How to create customer loyalty strategies for each customer segment
Understanding and leveraging customer data to provide a curated service is the key to ecommerce success. One study found that 53% of customers would give up personal data for a personalised shopping experience. This starts by diving into what makes your target customer tick – the types of products they like, their average spend and previous purchases. When merchants use this information well, more customers will come to trust your brand, enjoy engaging with your brand, purchase from you more and tell others about you (brand advocacy). Beyond purchasing behaviour and demographics, channeling your customers into a loyalty program allows you to categorise them into three distinct customer segments: Loyal: Customers who purchase from you often and have a high customer lifetime value (CLV) At-risk: Those who have shopped with you before but haven’t made a purchase within an expected timeframe – this could be weeks or months depending on your business Lapsed: If they haven't made a purchase in a certain number of days, weeks or months, they qualify as lapsed In this post, we’ll look at the ways to leverage loyalty data. In other words, you’ll learn to target customers with appropriate content at the right time to improve the customer lifetime value of your store visitors. Loyal customers Quite simply, loyal customers are your best and most ideal customer type. They typically spend more and are worth up to ten times the value of their first purchase. They’ll also tell others about their positive experience with you through referrals and online reviews. This is especially significant since customers acquired through referrals tend to spend 200% more than the average customer. Once you have identified your loyal customer base, you can encourage these customers to repurchase in a variety of ways. First, you can nudge them to refer friends to earn points. This proves that you’re willing to reward them even if they don’t purchase. Meanwhile, you’ll acquire new customers with 16-45% more loyalty as a result. You can also offer a free gift on their birthday to show that you value them not just as a buyer, but as a person. Wildish, an outdoors and adventure apparel company, have orchestrated a brilliant referral strategy. They offer referred friends 20% off their first purchase, plus a chance for the existing customer to earn 500 “coins” (loyalty points) if the referred friend spends over $20 (an amount that’s both reasonable and achievable). At-risk customers At-risk customers might have purchased from you in the past, but it’s been a while since they’ve returned. Your job is to draw them back and remind them why they bought from your store in the first place. To start, try sending loyalty emails between purchases to keep your brand top-of-mind. Let your email recipients know how many loyalty points they have accumulated and have ready to spend. You can also tailor these emails based on product interests or past browsing and shopping behaviour — you can find all this info within Google Analytics. [subscribe] Beauty Bakerie sends a loyalty email to their customers when their points are about to expire, nudging those customers to return and re-spend: Alternatively, you can surprise and delight these customers by helping them scale the ranks of your loyalty program. By moving at-risk customers up a tier, you can offer them more exclusive access to your experiential rewards and product offers. Gym Direct does this well by pushing customers on an upward trajectory to unlock more benefits. This way, customers want to return to your brand and re-engage with the new perks they’ve unlocked. These perks can include tutorials, free gifts or access to an exclusive community. Lapsed customers If someone hasn’t purchased from you in a while, it doesn’t mean they are lost causes. They might just need a pull in the right direction. Re-engage lapsed customers by showing them why you’re set apart from competing stores. Make them feel like they’re discovering you for the first time. One way to do this is by notifying them via email of the recent changes you’ve made to your loyalty program. Annmarie Skin Care uses loyalty emails to remind customers of their focus on environmental initiatives, connecting to these shoppers on an emotional level that goes beyond the product. Customers are reminded why shopping with Annmarie Skin Care was important to them in the first place — this means they’re more likely to return to purchase: Alternatively, surprise these lapsed customers into returning by offering access to one-off double points events (as long as they’re a member of your loyalty program). For example, Nashua Nutrition has run one-day-only double points events to encourage loyalty members to earn more loyalty points by spending within a certain timeframe: It boils down to data Ultimately, retaining your existing customer base through data analysis and creating a personalised shopping experience is key to long-term ecommerce success. This all starts by monitoring your shoppers in Google Analytics, optimising your product pages and understanding your customer segments to retarget with ease and design loyalty programs that convert. To learn more strategies for improving your customer lifetime value and customer retention, check out the LoyaltyLion Academy. This is a guest post by the team at LoyaltyLion, a data-driven loyalty and engagement platform trusted by thousands of ecommerce brands worldwide. Merchants use LoyaltyLion when they want a fully customised loyalty program that is proven to increase customer engagement, retention and spend. Stores using LoyaltyLion typically generate at least $15 for every $1 they spend on the platform.
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