Despite the Ill Wind of COVID-19, Innovation Opportunities Abound for Consumer Financing

Written by Chris Kirk

January 27, 2021

As we look back on 2020, I’m sure a LOT comes to mind! And while many of us may think of 2020 as incredibly challenging, it definitely presented us with at least a few lessons.

From my perspective of working closely with retailers, banks, lending institutions, service providers and manufacturers, the thing I found most amazing was how quickly, and oftentimes nimbly, we adapted to the many challenges with which we were presented. Just take a moment and think about how quickly we’ve acclimated in the different areas of our lives.

This time last year, Zoom and Teams meetings felt uncomfortable. Now, it almost feels bizarre when you can’t see and socialize with a colleague during online meetings.

As we’ve rapidly grown accustomed to having real food (not just pizza and Chinese) delivered to our doorsteps, “ghost kitchens” (restaurants with no option for seating or waitstaff) are popping up everywhere.

The retail channel has also seen major changes. For example, online sales for major household purchases have exploded over the past year. While previously it might have seemed unfathomable to think about making a $1,000+ online purchase without first seeing and touching the product in person, our digital partner Retailer Web Services reports that dealers in the major appliance, consumer electronic, and furniture and bedding spaces using their platform have seen a +200% increase in web traffic and a +400% increase in online orders.

Consumers have also grown accustomed to the contactless experience of ordering online and having their purchases delivered or picked up curbside. And if that’s not available, they want to get in and out of stores as quickly as possible. As such, time with your highly trained sales reps is limited. This makes promoting your consumer finance offering immeasurably more difficult and nearly eradicates the unique opportunity to drastically raise your average ticket. And by “drastic,” I’m talking roughly three times that of a standard credit card transaction.

So how can you best overcome these constraints to protect your average ticket total? By bringing consumer financing front and center.

As you can imagine, it starts with a website (which, incidentally, is where nearly 90% of your customers start their purchasing journey). But not just any website – your website. To be successful, though, you have to promote your financing throughout your entire site, not just in the cart. Customers need to know that financing is an option from the very beginning. So, on the product page, make sure they know about the “low monthly payments” that are available or include a payment calculator that’s easy and accessible to use. You can also offer additional or longer terms for larger carts to entice them to add more products. And don’t forget to recommend that they check out with your store-branded card – or apply for a new line of credit if they don’t already have one.

Another great tool is the paperless credit application, which isn’t just highly efficient but is also more secure than its paper equivalent. Here are a few tips to help you implement this innovative new financing approach in your store:

  • Check with your consumer finance provider to see if they offer apps for your in-store tablets. These can be carried by your sales reps or remain stationery in a kiosk setting.
  • Investigate “Text to Apply” programs. Customers just text “Apply” to a five-digit number and, voilà! – a credit app appears on their phone! No salesperson required, no embarrassing decline. Since adding the program earlier this year, some Nationwide Marketing Group members have reported that credit applications received via text are now accounting for more than 20% of their total credit applications.
  • Remember QR codes from 10 years ago (or from the restaurant menu you recently accessed)? They can also link to your credit application online – which your customers can then complete on their own device. QR codes can also be easily added to digital (or paper) price tags or on POP material throughout your store. NOTE: be sure to discuss this option with your provider before implementing to see if it could affect your approval rates – due to fraud, online applications are often graded more strictly than an in-store application.

These changes won’t just help you maintain your retail credit penetration rate – implementing them will most likely improve it! I used to roll my eyes when my father always said, “‘Tis an ill wind that blows no good at all.” Maybe, just maybe, he was right…. Again.

This article was first published in the January 2021 issue of Retail Observer.


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