Point-of-sale (POS) finance is expected to account for 1.5% of retail sales per year in the UK and is considered to be the fastest-growing payment method in the world today. If you’re looking to retain your customers and keep them loyal to your business, point-of-sale finance could be the solution.
In today’s world, customers expect to see a customer finance option at the checkout. Point-of-sale customer financing can allow your customers to spread the cost of their purchase over time, which can make higher-value items feel more affordable. In turn, this can encourage your customers to return to you in the future and improve their overall customer experience.
Here, we’ll explore how point-of-sale financing companies can transform your business’ customer retention efforts.
The role of point-of-sale financing in customer retention
Not only does POS finance encourage your customer to convert – it can also inspire them to come back to you in the future. Allowing your customers to spread the cost of their purchase into affordable repayments creates a level of trust between you and the consumer and prompts the customer to remember you.
With your customers paying in instalments, this encourages greater interaction with your brand and a higher chance of them remembering you for the right reasons, and choosing to return to you in the future.
While attracting new customers is important for business growth, the probability of selling to a new customer is only 5-20% compared to the 60-70% chance of selling to an existing customer. So meeting your customers’ needs and satisfying their expectations is key if you want them to return to your business in the future.
With this in mind, if you’re looking to improve customer retention and repeat business, POS finance could be the solution.
The evolving consumer landscape and financing expectations
Consumer expectations saw change during the Covid-19 pandemic, with shoppers wanting quick and flexible payment options to suit their changing lifestyles. Today, consumers no longer differentiate between online and in-store shopping, and expect a high-quality customer experience regardless.
Consumers are savvier than ever before – instead of relying on a shop assistant to advise them on what to buy, they read customer reviews, shop around for the best deal and expect a high level of customer service every time, which opens new possibilities for forward-thinking retailers to get ahead of their competitors.
With this in mind, the retail industry has never been more competitive. Consumers want to be rewarded for their loyalty with personalised incentives, and with this comes a desire for flexible payment options. Offering point-of-sale financing can offer your customers a way to pay that suits their needs and financial situation.
It can make high-value items more accessible, as they’ll be able to spread the cost into affordable repayments. Offering POS finance will not only satisfy your customers’ expectations, but encourage them to return to your business in the future and recommend you to their network.
The benefits of point-of-sale financing for businesses
Point-of-sale financing offers many benefits to both your business and your customers, including:
Competitive advantage: Offering POS finance can help your business stand out against competitors who don’t offer customer financing. This may encourage customers to choose you over other businesses.
Improved customer experience: POS finance can offer a seamless and quick checkout experience which will contribute towards a positive customer experience.
Customer financing also encourages interaction between your business and your customers, so they may feel closer to your brand as a result. This can improve customer loyalty and retention too.
Seamless integration: By partnering with an experienced customer finance provider like Duologi, you can set up POS finance for your business in no time.
A customer finance provider will do all the hard work for you so you can relax knowing everything will run smoothly for both your business and your customers.
Strong business image: Customers favour brands they see as trustworthy and well-established. Offering POS finance can give your customers a strong impression of your business.
Customer retention and loyalty: POS finance can encourage customers to return to your business in the future and recommend your product or service to their family and friends.
Understanding point-of-sale financing: key concepts and features
We understand that point-of-sale financing can be a lot to get your head around. Venturing into the unknown can feel daunting and you won’t want to cause a risk to your business and your livelihood.
Here, we’ll explore the key concepts and features of customer finance to help you get to grips with how it works and its benefits for your business.
Defining point-of-sale financing
If you’ve heard of the term point-of-sale financing, you may be wondering exactly what it entails and what it can do for your business and your customers.
Point-of-sale financing, otherwise known as POS finance, retail finance or checkout finance, is a payment option offered to customers at their time of purchase. In simple terms, POS finance allows the customer to spread the cost of an item or service into affordable instalments. Retailers partner with a third-party lender or provider like Duologi, who can help to integrate the customer finance service into the checkout process.
You’ll need to decide on a repayment term – you could offer three, six or 12 month terms, or longer for more costly purchases.
It’s important to note that the availability of credit will depend on the customer’s financial status and credit score.
The role of point-of-sale finance providers
As mentioned, when choosing to offer POS finance at the checkout, you’ll need to choose a provider or lender who will work as the middleman between your business and your customers. Not all POS finance providers are the same – each provider will offer different features and benefits, so you’ll need to find one that suits your business’ needs and values.
When choosing a finance provider, it’s a good idea to ask yourself the following:
- How quickly can the provider get my customer finance up and running?
- How easily can they integrate customer finance into our checkout process?
- What industries or markets do they operate in?
From there, you can decide on the right customer finance provider that will support the needs of your business and your customers.
Implementing a seamless point-of-sale financing process
So, you’ve decided that offering POS finance at the checkout may be just what your business needs to boost its growth and improve its customer experience.
Now you’ll need to know how to implement point-of-sale consumer financing into your checkout process:
Decide on a POS provider: There’s no one-size-fits-all when it comes to customer finance providers. Instead, you’ll need to choose a lending provider that best suits your business and understands its goals.
They need to offer payment plans that you think will suit your customers and also support the needs of your business. If you’re new to customer finance, you’ll want a provider who can talk you through your options in simple terms.
Choose the right finance model for your business: POS finance can be offered in different ways, so you’ll need to decide on a package that best suits your business.
You can choose 0% interest finance, or interest-bearing. You’ll also need to decide on the repayment term for your customers, often the bigger the purchase, the longer the customer will have to pay back – sometimes up to 60+ months.
Add POS finance to the checkout: POS finance should feel accessible and straightforward for your customers. Make sure the payment option is clearly displayed at the checkout and any registration forms that need to be completed all happen on the same page.
Looking to offer POS finance in-store? Make sure your cashiers understand the ins and outs of your offering so they can explain it to customers who may enquire.
Inform your customers of your new payment options: Your customers won’t make use of your new payment option if they don’t know it exists! Make sure you advertise your new payment options to your customers through your mailing list and social media so they can try it out for themselves.
By knowing about your POS finance, customers who previously abandoned their cart may go back to make their purchase.
Marketing your point-of-sale financing options to customers
Marketing your POS financing options to customers is an important step in ensuring the success of your financing options, increasing sales and giving your customers more buying power. Here are some ways to effectively market your financing options:
Visibility: Make sure your financing options are displayed visibly at the checkout and that customers can easily find and understand the terms and conditions.
Emphasise the benefits: Make sure the benefits of your financing options are clear to your customers, such as them being able to spread the cost of high-end items and take control of their finances.
Social media: Promote your financing options across your social media channels to drive engagement and connect with your customers. You could share the success stories from customers who have used your POS finance, and any promotions or offers you have.
Please note that there are rules in place for financial promotions and marketing. Duologi will work with you to either sign off on, or review the Financial Promotion (dependent on your regulatory status).
Success stories from businesses offering point-of-sale financing
Here are some success stories from other businesses and how offering point-of-sale finance at the checkout allowed their business to grow.
Diamond Shutters
Diamond Shutters specialise in quality, bespoke shutters for homes in Greater London. They brought Duologi on board in 2018 to offer their customers a flexible payment method of interest-free finance over six to 12 months. This allowed their customers to spread the cost of their shutters purchase into a payment plan that was affordable to them.
Initially, Diamond Shutters were worried that POS finance wouldn’t work for their business. While many retailers supply customers with their product or service on the same day, Diamond Shutters needed to account for a 9-11 week lead time between measurement of a customer’s windows, receipt of deposit and installation of their shutters.
With this in mind, Diamond Shutters didn’t want their customers to feel forced to make any repayments until they were completely satisfied with their installation and product.
To combat this, Duologi offered Diamond Shutters the option to ‘activate’ the repayment period once installation was complete, so the POS finance was tailored to the needs of their business. That way Diamond Shutters could offer a flexible payment option to suit both the needs of their business and their customers.
Gala Tent
Market leader Gala Tent specialise in top-quality marquees and pop-up gazebos. As you may expect, the business predominantly sells high-ticket items, and the business recognised a need to provide alternative financing options to help them grow. Gala Tent wanted to stand out from their competitors and offer their customers a range of financing options to allow them to spread the cost of their purchase and pay in a way that suits their needs.
They’ve been really satisfied with how Duologi has transformed their POS financing offering. Darren from Gala Tent said: “We’ve been delighted with Duologi. It’s been so easy dealing with them and they have impacted our business in a very positive way.”
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