BRIDGING THE FINANCING GAP - Vyze

BRIDGING THE FINANCING GAP:

Offering More Payment Options To Boost Retail Sales And Customer Loyalty

When making major life purchases, like houses or cars, consumers usually have access to financing. But what happens when consumers seek flexible financing options for other high-ticket items?

Are retailers prepared to help more customers boost their purchasing power, or will they sacrifice sales to competitors who do provide additional ways for consumers to unlock their buying potential?

While many businesses do offer financing to a segment of their customer base, few actively promote it, evidenced by the fact that financed purchases account for just a fraction of total sales today.

The reason? Some retailers may not realize that more customers could qualify for financing, while others don't know how to open up financing across all their sales channels. Recent research shows that offering financing to a broad demographic of consumers can do more than just close more sales. By closing the "financing gap," retailers can also significantly boost consumer loyalty, resulting in repeat business and reduced customer retention costs.

EMPOWERING PURCHASES

Across high-ticket retail sectors--furniture, electronics, appliances, home improvements, car parts, specialty goods, and jewelry--only 11%, within those categories, are currently financed, according to First Annapolis Consulting research commissioned by Vyze.1

Many of these sales come via a retailer's store card or other primary financing program. But per First Annapolis Consulting's analysis, these programs turn down over half of applicants hoping to purchase big-ticket items, like computers, furniture and refrigerators.2

Retailers who offer financing to a limited segment of their customers could be losing sales at an alarming rate, and they could even be losing customers permanently. In fact, 33% of customers who were denied financing by ecommerce merchants and retailers abandoned their purchase completely, while another 35% of customers either scaled back or delayed their purchase.3

33% OF CUSTOMERS WHO WERE DENIED FINANCING BY ECOMMERCE

MERCHANTS AND RETAILERS ABANDONED THEIR PURCHASE

COMPLETELY

ONLY 11% OF THE $1.7 TRILLION IN TOTAL SALES VOLUME , WITHIN THE PREVIOUSLY LISTED CATEGORIES, ARE CURRENTLY FINANCED,

ACCORDING TO FIRST ANNAPOLIS CONSULTING RESEARCH COMMISSIONED BY VYZE.1

STRENGTHENING CUSTOMER LOYALTY

Over the past 10 years, consumers' buying behavior and habits have evolved, becoming much more fluid and spanning across multiple touch points and devices. Today's consumers seek choice and control when making purchases -- not just in what they buy but also in how they pay. A 2015 survey of more than 2,000 consumers showed that 42% would be more likely to shop at a retailer that offers financing options for greater purchasing power beyond major credit cards.4

42% WOULD BE MORE LIKELY TO SHOP AT A

RETAILER THAT OFFERS FINANCING OPTIONS FOR

GREATER PURCHASING POWER BEYOND MAJOR

CREDIT CARDS.4

STRENGTHENING CUSTOMER LOYALTY (CONTINUED)

Furthermore, despite Millennials' (those 18-to-34-years old) reluctance to take out a major credit card,5 over half (55%) of Millennials noted that they'd be more likely to shop at a retailer that offers financing options.6 Older consumers--42% of those age 35 to 54, and 30% of those age 55 and older -- agreed with this statement, suggesting that retailers should focus more of their marketing and communication efforts toward Millennials while still encouraging customers of all age groups to participate.

When retailers do offer their customers a variety of financing options, they are likely to demonstrate increased loyalty. Nearly twothirds of past users of store financing come back and finance at least one additional purchase of $500 or more, and 33% do so three to five times.7

As most retailers know, loyal customers are valuable: it can be at least five times more costly to acquire a new customer than to retain an existing one. Raising customer retention rates can increase profits by 25% to 95%.8

NEARLY TWO-THIRDS OF PAST USERS OF STORE

FINANCING COME BACK AND FINANCE AT LEAST ONE

ADDITIONAL PURCHASE OF $500 OR MORE

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