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How Splitit Helps Retailers Make More Money By Offering Customers Installment Payments

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Fashion shoppersPhoto by rawpixel.com from Pexels

One of my favorite definitions of marketing comes from Sergio Zyman. He says its purpose is “to sell more stuff, to more people, more often, for more money, more efficiently.”

The digital payment solutions company Splitit, headquatered in NYC and just listed on the Australian Stock Exchange under SPT, has the “more money, more efficiently” part of the equation covered. And as more retailers sign up for the service and the word spreads, Splitit will help with the “more people” part too.

Splitit offers customers shopping online, via their mobile phones or in stores the option to split payments into interest-free, monthly installments using their existing credit or debit cards.

Unlike similar services, such as Afterpay or Sezzle, which offer installment payments too, Splitit doesn’t require the customer to setup an account or download an app like the other services do. Everything is handled behind the scenes between the retailer and Splitit, no separate intermediate step is required by the customer.

Limited neither by geography or direct customer interface, Gil Don, the company co-founder, describes Splitit as a conversion tool.

“We take the worry out for the consumer. They don’t have to think that the expense is too heavy,” he explains. With the option to split it into three, five, even 12 or 24 monthly payments, they are free to buy it now by eliminating the question whether they can afford it now.”

Aids conversion and helps retailers upsell

For consumers it is a cash-flow management tool. For online retailers, in particular, it fights shopping cart abandonment. For example, Splitit research found that about one-third of shoppers said they are more likely to make a purchase if offered monthly installment payments.

The latest SaleCycle research identifies shopping cart abandonment rates at retail as high as 76%, and mobile even higher at 81%. This is a particular pain point for ecommerce retailers, adding up to more than $4 trillion a year in lost sales. Giving people an easy option to split payments at checkout discourages customers from skipping out before checking out online.

But even more important than driving conversion, Splitit is a way for retailers to upsell customers and get them to choose the more expensive option. Don provides the example of someone considering a washing machine purchase.

“Say you are at the appliance store and look at two options, one for $1,000 and another for $2,000. Both are good, but the more expensive one is even better,” he says. “If you have the option to split payments into five installments, you are much more likely to buy the $2,000 one. It changes the point of purchase decision in the retailer’s favor.”

Splitit reports that 67% of shoppers said they would be more likely to make bigger purchases, such as large electronics or furniture, if they are able to pay in monthly installments. 

Trading up to luxury

The potential for retailers at the high end is even more profound. For the wealthy elite, being able to pay in installments is an added convenience that helps manage their cash flow.

James Allen jewelers, for example, offers the Splitit option for purchases over $10,000. “Someone who can afford to buy a $10,000 piece of jewelry probably has this amount available on his or her credit card,” Don says. “So it is simply an added customer service for the retailer.”

Customer service in jewelry storeGetty

But for less affluent consumers, being able to split payments into manageable pieces can make a more luxurious purchase affordable. With luxury retailers eager to attract the next-generation customers, Splitit can be a make or break option.

“If someone can afford to spend $1,000 a month on luxury goods, with installment plans they can afford a $3,000 purchase this month, if it is spread over time. This is the decision point which is especially good for luxury retailers,” Don adds.

Changes consumers’ behavior in favor of the retailer

Today Don reports that some 1,000 global merchants have signed with the service, though only about 400 are what he describes as active. That is because Splitit isn’t right for everybody. “We are focused on merchants, both online and in store, that we can really help,” Don explains.

For those whose average ticket is $100 or less, say a beauty retailer, its installment payment option may not be the best fit, though it now offers a deferred payment option better suited to those retailers. With deferred payment, it enables customers a trial period of up to 90 days before making the purchase in full.

The retailers that will benefit most from the Splitit option are those with strong traffic already, but that want the extra boost that offering Splitit’s flexible-payment option can give.

“We have identified 10 million retailers in the U.S. As much as I want all of these merchants to use our digital solutions, we think we are the best fit for retailers that are already growing and that we can help grow even faster,” Don says.

Today some 80% of Spliti’s merchants are ecommerce based with the remaining 20% brick-and-mortar retailers. But Main Street retailers are an obvious channel for dynamic growth, as it has created plugins for retailers that can seamlessly get them up and running on Splitit in a matter of hours. “The merchant pays a service fee, but it gives them an extra valued service for their customers,” he adds.

The big benefit to retailers large or small is the service aspect. It provides shoppers greater peace of mind and confidence to make the purchase now and permission to trade up to an even larger purchase. From the consumers’ perspective, they see the retailer looking out for their interests.

For merchants, Splitit takes the risk and the retailer gets the reward . “It changes consumer behavior in the retailer’s favor,” Don says, making it a win/win proposition for all.

Since coming online in 2016, Split has processed $67.3 million across 118,000 transactions through the end of fourth quarter 2018. It sees tremendous prospects for growth.

“We have been growing every year in triple digits, and we expect payment solutions will become the standard in just a few years,” Don explains. “Right now consumers are not all that aware of the solution, but once they start to demand it, more and more merchants will begin to offer this option.”

Likening Splitit’s early days to those of PayPal, Don sees his company’s global solution will become standard across the industry because it is good for both consumers and retailers alike.

“When PayPal started, people were skeptical that it would be successful, but then consumers said they didn’t want to share their credit card information with all different merchants. Now there is no online website that doesn’t have a PayPal button. One day it will be installments with Splitit,” Don confidently predicts.



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