Ever entered a store, grabbed an item, looked at the price, and thought to yourself “I will come back for this later”? At that instant is when Buy Now Pay Later (BNPL) could swoop in to save the sale. Both businesses and customers win.
Money Management is sometimes difficult, especially when you are a small business owner. You may not want to add another type of payment method in your business. However, don’t get me wrong, BNPL is not just a payment method. It is a method to increase your sales and to create customer loyalty.
Here is what I have learned about how to use Buy Now Pay Later and why it might just be the catalyst your business needs.
What is BNPL (Buy Now Pay Later)?
BNPL is layaway but it is much more than that. Customers receive their product immediately and pay for it in smaller chunks over time. Services like Afterpay, Klarna, and Affirm are the key players in this space.
To a customer, it is access to what they want without having to pay for it up front. For owners, it is to fasten closing and make products feel like a freebie.
Why Should Small Businesses Use BNPL?
The fact is customers crave flexibility. As per a survey from Motley Fool Money, 53% of consumers prefer BNPL over credit cards because there’s no interest (in most cases), and hard credit checks are not conducted.
One of the biggest advantages of BNPL is that it takes away a lot of the intimidation factor surrounding completing a big ticket item. For example, consider a customer who is after one of your $200 products. There’s something about $50 every two weeks being easier to swallow than $200 out in one hit.
Implementing BNPL can also aid in reducing the instances of abandoned carts. According to ScienceDirect Customers adopting BNPL spend 6.42% more than those who do not.
How Does BNPL Work for Businesses?
Here’s how simple it is:
- You team up with a buy-now-pay-later provider (BNPL) like Affirm, Klarna or Afterpay.
- The provider allows integration with your website or point-of-sale system.
- At checkout, customers choose BNPL as their payment method.
- You receive your payment upfront (less the provider’s fee), and then the customer pays in installments.
It’s a win-win. You receive cash immediately, but the customer has time to pay.
Benefits of Using BNPL for Your Business
Increase Your Sales
This one’s a no-brainer. Flexible payment options will make it more likely for customers to purchase. Businesses that add BNPL see a 30% increase in average order value (AOV) according to Klarna.
Attract Younger Shoppers
For any brand going after the Millennials or Gen Z, BNPL is a must. Particularly these groups love BNPL as they usually are skeptical in regards to the credit score card.
Build Customer Loyalty
Your customers will return if you make buying easy. By offering BNPL, you show concern for their financial comfort.
Challenges to Consider
However, BNPL does not come without drawbacks.
Fees for Businesses
BNPL providers take a fraction of every single transaction. Typically, it is a percentage between 2% and 8%. You’ll need to decide if the increased sales offset these costs.
Customer Debt Concerns
Even though this BNPL is good for sales, it also leads some consumers to overconsume. So, train your buyers to spend sensibly.
Integration Challenges
Integrating BNPL on your website may feel daunting if you are not tech-savvy. A lot of providers will support this, but it’s something to be aware of.
How to Get Started?
- Choose the Right BNPL Provider
All BNPL providers are not the same. Find one that matches your business. Klarna and Afterpay are good for retail stores. For higher-ticket items, Affirm works a treat.
Research the fees and terms. While some providers charge a flat rate,others take a cut of the sale.
- Set Clear Terms
Ensure customers know what they are signing up for. Offer clear information on how BNPL works directly below a prominent display of the BNPL option.
For example, you could say:
“Pay in 4 installments of $25 with no interest using Klarna.”
- Promote It
When you add BNPL, promote it. Add banners to your website. Include it in your promotional emails. Put up a sign in your store.
Notify Customers With The Option Of Buy Now Pay Later.
Final Thoughts
Integrating BNPL into your business may seem like a leap, but one that’s needed. It is an investment in customers and your profits.
Keep in mind, your objective should not only be to increase the number of visits. This is to provide a great shopping experience for your customers. And when you make it easy for them — well, everybody wins.
Start small. Test it out. And discover just how much BNPL could change everything for your business.
Zone of Genius has a ton of info, tips, and resources for all you wonderful small business owners out there.
