Deciding How to Provide the Services Your Customers Need

Partnerships are the secret to providing the best possible products and services that your customer needs.

All too often, business leaders struggle to successfully delegate work. ‌The Harvard Business Review notes that executives tend to “hoard” work instead of dividing it among their colleagues and partners. It’s understandable — people tend to feel ownership over their work and they can be reluctant to hand it off to someone else. The truth is that partnerships are the secret to providing the best possible products and services for your customers. Entering into strong partnerships allows you to provide services that are too complex to build yourself. Strategic partnerships also free up your employees’ time so that they can focus on the work they do best, instead of trying to do it all.

Not sure where to begin? This article will explore reasons why you would partner and also how you would choose a partner. It looks at when it makes more sense to build up capabilities in-house, too. Keep reading to learn more.

Deciding When to Buy, Build, or Partner

‌Maybe you’ve already decided that your business would benefit from more partnerships. Now, you’re faced with answering the following questions:

  • When, exactly, should you do your work in-house?
  • When should you outsource your projects?
  • When is it a good idea to have your partners or vendors tackle some of your work? 

If you’re looking to expand your business technologically, you might also wonder: “Should I buy or build my technology?” Figuring out when to partner with another company and when to build services yourself can be difficult. Unfortunately, there is no easy answer to this question — it’s going to look a little bit different depending on your situation. However, some guidelines hold true in most cases and across different business environments.

Relying on Core Competencies: Does This Still Work?

‌The idea of “core competencies” is a classic theory in business management. The theory states that to succeed, every business should focus on the capabilities that make up its unique strategic advantage. For example: If you are running an ice cream parlor, you should focus on making the best ice cream possible, instead of trying to add on a salad bar.

The core competencies model is still relevant. However, it no longer fully applies to today’s businesses. Today, businesses face increased competition and must appeal to a broader market than ever before. Customers also expect near-instant service and regular updates on products, which has further changed the field for businesses. More and more, customers are also coming to expect a high level of personalization. All of this means that successful companies cannot rely only on their core competencies. They must go a few steps beyond, offering their customers a broader range of goods and services.

Building Core Competencies Beyond Current Capacity

In many cases, businesses can successfully build core competencies beyond their current capacity. For this to succeed, a business needs to carefully assess where its strengths lie and compare those strengths against what other companies in the same field are offering — and then make sure that they surpass the competition’s offerings. Businesses also need to turn their abilities into organization-wide strengths. In other words, the company’s success should not rest on the skills or knowledge of just one individual or team. Those abilities should be a standard for the entire organization.

It is worth noting that there is a built-in limit to how many core competencies any one business can develop. Of course, that limit varies depending on the size and make-up of each company. However, every business has its limits. That’s where partnerships come in.

Making Partnerships to Provide Added Value

Finding the best types of partnerships can take your business well beyond your core areas of competence. The business landscape has changed drastically in recent years. Today, customers expect a higher level of service, as well as a consistently high level of quality in every facet of a business offering. In order to succeed, businesses must be able to offer their customer a top-of-the-line experience, from start to finish. That level of service is really only possible when you build successful partnerships with other businesses.

The first step to building partnerships is evaluating which services your customers truly value. Which of those services does your business provide already? Which services do you have the capacity to provide, even if you don’t already do so? From there, you should be able to isolate the services that your business cannot provide on its own. Anything that you can’t offer your customers is a prime possibility for outsourcing through partnerships.

Choosing Partnerships With Customers in Mind

‌You may be wondering how to choose a partner for your business. Always remember that your goal is to make it possible to offer your customers the very best services and experiences possible. Below are a few qualities you should always look for in your partner.

Ease of Integration‌

Does this partner’s offering mesh well with your business? Can you integrate it seamlessly into your current offering? Remember that your goal is to provide a one-stop-shopping experience for your customers, in which you’re able to meet all of their needs seamlessly. You don’t want your customers to have a jarring experience or to feel like they have to keep jumping from one platform to another.

Ease of Customization

‌Look for offerings that are easy to customize to meet the specific needs of your business and its customers. You’ll want to make your partner’s offerings fit your business so well that they almost seem as though you created them yourself. The ideal partnership is one in which you feel thoroughly confident about all of the products and services that your partner provides. You should be able to stand behind them and offer them with pride to your customers. One sure way to achieve that is by making sure that you have a high level of built-in customization.

Concluding Thoughts on Partnerships

‌In today’s business landscape, partnerships are no longer an option — they are a near-necessity. Making sure that your customers are happy and well-served requires layers of service which no business can provide on its own. That’s why partnerships are so important. Of course, no business should enter into partnerships lightly. But with the right criteria, and a discerning eye, it’s easy to build successful and profitable connections that will help your business reach its maximum potential.

Choosing the Best Customer-Centric Financing Options for Your Company

Offering financing options to your customers allows them to plan for their purchase and take on the cost of your product a little at a time.

Studies show that most Americans aren’t in a position to take on a surprise $500 expense in an emergency. And if that’s the case, imagine how few consumers are likely to make impulse purchases at or near $500. Offering financing options to your customers allows them to plan for their purchase and take on the cost of your product a little at a time. And it works — evidence shows that offering to finance can increase customer spending. But with so many different consumer financing options on the table, how do you know which ones to offer?

The Most Common Financing Options

Financing is like a payment plan for your customers. Although you receive the money upfront, they only have to pay a little at a time. It’s a win-win scenario. There are two different ways to offer customer-centric financing options. One way is to collect your customers’ credit information yourself, lend them the money out of your business’s funds, and allow them to repay over time. However, this can be problematic because it forces you to lend money to your customers and chase that money down if it doesn’t get paid on time. You’ll also have to deal with the usury and debt collection laws in your state. You will also need your own in-house loan office to make this work.

The more popular option is to sign up with a third-party lender. You can evaluate countless lenders and decide on the one — or ones — you’re willing to use with your customers. Each loan company has its own policies on the minimum amount your customers have to spend, repayment schedules, interest rates, and any fees the company may charge your business.

Factors When Choosing the Best Options for Your Brand

With so many business financing options on the market, it can be difficult to narrow your choices down. Several factors should be considered when deciding.

Customer Demographics

If your customers are low-income, very young, or very old, they may not have good credit. In these cases, you’ll want to prioritize lenders that are willing to work with customers who have low credit scores. On the other hand, if you work with Fortune 500 companies, credit probably might not be an issue for you. In this case, you can work with lenders that have a high credit threshold.

product offerings

The next thing you’ll want to consider is what products you offer and what products customers will ask to finance. Some lenders have a minimum spending threshold. If they won’t lend to customers who spend under $1,000 and your products are all in the $500 range, your financing options won’t help customers who purchase fewer than two items. Look at the average amount of money customers spend with you at a time, and use that average to help determine what minimum your customers who finance should be held to (if any). Then, make your choice accordingly.

customer preference

If you have an established business, you may be able to survey your existing customers to see which lenders they have a good history with. Sometimes, customer preferences can help you to identify factors that you may not have otherwise considered.

Pros and Cons of Offering Multiple Financing Options

Of course, you can offer multiple financing choices to your customers. This may be important if you sell both; directly to consumers (B2C) and directly to businesses (B2B). But before you sign up for ten different financing options and let your customers decide which one they want to use, you’ll want to weigh the pros and cons of offering multiple options.

Offering One Financing Option

Pros

One upside to offering a single financing option is that your staff can become experts at that option and its rules. It’s also relatively easy to advertise one financing plan on your website, either at the checkout screen or beforehand. This helps reduce sticker shock by letting customers know they can choose to finance their purchases.

Cons

The biggest downside with offering one financing choice is that if a customer doesn’t get approved for financing, there’s no recourse to help them out.

Offering Multiple Financing Options

Pros

The advantage of offering multiple financing options is that it can benefit different types of buyers. Customers with good credit can use low-interest financing options, while those with low credit scores can still find a way to finance their purchases. This approach is also useful if you work with individual customers — who make relatively small purchases — as well as businesses that may put together larger orders. You can offer different financing options based on their estimated spending total.

Cons

The biggest drawback to this method is that it could lead to decision paralysis — which happens when people have too many choices, or the choices they have are too complicated. When this happens, people tend to procrastinate on making any decision. By offering multiple financing options, you could turn your customers away from using any financing at all. Another downside is that your customers may get declined for one financing option and then apply for another. While this could allow them to get approved with one of your suggested lenders, it also means multiple credit checks in a short period of time, which can have negative ramifications for your customers.

Skeps Turns Financing on Its Head

Choosing a good, customer-centric financing option to offer through your business can be a headache. But Skeps turns that process upside down. Working with the top lenders, Skeps can help your customers find the best lender for them with a single application and credit check. The only thing your brand needs to keep track of is how easy it is to work with Skeps.

To learn more about how we can eliminate decision paralysis for you and your customers, contact us today. 

Email Campaign Ideas To Improve Marketing Effectiveness

In this guide, we’ll go over five key email campaign ideas to help you improve your marketing effectiveness and drive sales.

Email campaigns are an important step in the sales funnel. They’re a relatively affordable way to stay in contact with loyal customers and reach out to prospective new ones you may have met at sales events. Email campaigns can also be targeted, which allows you to tailor your messages based on customer actions and send out the most relevant content at the best time. But to get the most out of email campaigns, your sales team needs to understand how to use this tool effectively. In this guide, we’ll go over five key email campaign ideas to help you improve your marketing effectiveness and drive sales.

Attract New Customers With Promotional Offers

From local fairs to trade shows, there are countless times when you have the opportunity to collect contact information from potential customers. What you do with that information once you have it spells the difference between successful business events that convert new customers and events that were a waste of time.

Sending emails that offer coupons and other promotions to interested parties is a good way to get customers’ toes in the door. It allows them to try your product at a fraction of the normal cost. If they like it, you can create customer loyalty and repeat business in this manner.

Improve Marketing Effectiveness With Quality Content

One of the best email campaign ideas is to offer value to your customers through quality content.

What does this mean? Consider who your target audience is and what problems you want to help them address. Then, send emails with quality information on related topics.

Consider a company that sells reusable notebooks. Its target audience includes people who like to take notes by hand but also care about the environment or don’t want to buy new notebooks every couple of weeks — possibly millennials or even Gen Xers. This company could send out content about: 

  1. Ways to help the environment
  2. Environmental causes worth supporting
  3. Tips for saving money in college

These types of content-driven emails provide tangible value to customers. As a result, your customers will start to see you as an expert in your area. When they receive emails that are relevant to them, they begin to feel like you understand their problems and concerns, and they believe you’re the right brand to solve those problems.

Increase Your Email Clicks With Pre-Approval Notifications

While many of your emails should be content-based, a portion should also be promotional, giving your customers a way to use their new brand loyalty.

Pre-approval notifications are one way you can convert people from “curious potential customers” to paying customers.

Consider those customers who may have looked at your website and shown interest in your products, but have been turned away by sticker shock. Maybe the price of your items isn’t what they expected, or maybe it’s just outside their current range.

The last thing you want is for these customers to decide your product is too elite for them and move on. Instead, you can send a notice of financing pre-approval to customers who have been browsing your inventory or who have added items to their cart but haven’t purchased.

While many companies are offering pre-approved financing, Skeps’ instant financing allows merchants to give more purchasing power to their customers and enhance their shopping experience like never before. Pre-approved financing gives customers a way to pay for products that may otherwise have been outside their price points. Pre-approved financing is one of the email campaign ideas that lets them know that you have an avenue to help them finance their project — an option that will help up to 76% of customers make a purchase.

Increase Repeat Purchases With Limited-Time Offers

Limited-time offers are a great way to drive sales during a specific period of time. The key is to know how to use these offers.

Give a Clear Time Frame

Customers are so used to seeing words like “Act Now” or “For a Short Time Only” that they have learned to tune them out. You want to give specific dates delineating when your offer is good for. This gives customers the drive to look at your offer instead of telling themselves they’ll get to it later.

Feature Something Specific

There’s a time and place for putting your entire product catalog on sale (Black Friday, for example). But limited-time offer email campaigns can also be a great way to feature newly launched products or promote a product that’s been getting overlooked. Featuring something specific also prevents customers from dealing with choice paralysis: They know exactly what your offer is good for and can simply decide they want that product or they don’t.

If you’re not going to feature a specific item, be very clear about which items in your store are on sale. It can be frustrating for customers to feel like everything is on sale except the item they happened to pick. Avoid that by making it crystal clear what your sale is good for.

Consider Using a Coupon Code

Instead of making certain products on sale for everyone who visits your store, consider using a coupon code and making those offers exclusive to people who opt in to your emails. This gives loyal customers a reason to continue opening your sales emails: They know they’re the first to receive promotions, ahead of your other customers.

If all sales are just available on your website, on the other hand, it’s easy for your email subscribers to begin ignoring the messages you send.

Drive Customer Loyalty With Reward and Referral Programs

Once you have customers and they’ve bought a few items, you can use reward and referral programs to keep them coming back.

Reward programs simply reward customers who have spent a certain amount of money or purchased a certain number of items.

Referral programs offer a discount to customers who refer a friend or family member to your company — but only if that referral leads to a sale. It can be a great way to get people talking about your brand.

Get Value From Your Email Marketing Campaigns

These are a few email campaign ideas that can be a great way to boost sales and improve relationships with your customers. We can help! Skeps offers a tool you can use to create pre-approval offers for your customers. Contact us today to learn more.

Growing B2B Sales Is Easy

B2B sales are complex, and closing a sale is not necessarily fast or easy. Here are five go-to tips for increasing your B2B sales.

Growing B2B sales is a complex process, and closing a sale is not necessarily fast. Your client is likely to need assurance on multiple fronts — from pricing and purchase terms, to return policies, and the ease of working with your sales and service teams. There is opportunity in that since you’ll have several points of contact with your prospects — but there is a risk, too. If your customer feels disappointed at any stage of the decision-making process, you are in trouble.

Making More B2B Sales

Although your clients are faced with a multi-faceted decision-making process, you still have plenty of options to ensure that the sales process moves at a good clip. Technology can speed the buying process up and get you and your clients into motion together faster. Here are five go-to tips for increasing your B2B sales.

1. Understand the Buying Environment

One important point to keep in mind is that your clients are operating in the same economic and work climate that you are. If digital and remote buying is having a moment, then your sales process should support those needs effectively. This may mean you need to pivot quickly with new technology infrastructure and selling strategies.

Also, understand that managing costs may not always be the top priority for clients depending on the company’s current plans or the overall business environment. In 2021, for example, only an estimated 38% of businesses appear to have prioritized cost reductions.‌

‌2. Know Your Customers

The range of clients you could be serving is large — from small businesses to government agencies or even consumer-like sole proprietors. Starting with a baseline level of information about your buyer will help you make the right pitch. You will be even better off if you can use analytics to grasp customer trends and forecast buying needs.

According to Forrester, 57% of B2B sales leaders plan to invest more in AI and automation tools this year in order to help understand their clients. Take a cue from the research and land among them.

3. Simplify the financing process

In the same way that banks can offer pre-approval to consumers looking to buy a home, B2B marketers can offer a pre-approved line of credit as a service for B2B prospects. That way, your customer will know that financing is available should they choose to make a purchase from you.

It is also possible to centralize the financing for multiple business needs — such as net terms, lines of credit, or even leasing — in one place. Doing this significantly reduces the steps involved in helping your client be able to purchase what they need from you and quickly be on their way.

4. Create Self-Service Opportunities

Self-service is not just for the retail counter. According to Digital Commerce 360, B2B buyers have come to crave an “Amazon-like” experience.

As a B2B marketer, you should look for ways to make it easier for your clients to understand the financial commitment they’ll need to make in order to work with you. You should also make it easier for them to execute new sales orders on their own as much as possible. Along these lines, you can:‌‌

  1. ‌Place pre-approval messaging in emails
  2. ‌Offer financing at checkout
  3. ‌Feature “pay as low as” messaging on your website

5. Maintain a Long-Term Mindset

As technology helps clients move faster and more independently, customer experience needs to be front and center for B2B marketers. There is a lot to be said for shifting your focus from monthly sales goals to client satisfaction and retention rates. These competitive advantages cannot be taken from you.

The only given in sales is that nothing is a given — so plan your processes and train your teams accordingly. Your clients’ businesses are likely to be changing rapidly in the current business climate. Yours should be, too.‌

Convert More Leads, Grow More Sales

There is no need to rely on simply having a great sales team to boost your B2B sales. Tools like AI and automation as well as financing opportunities can give your business the edge it needs to turn leads into conversions. Put your focus on customer experience and satisfaction, and the sales will naturally follow.

Increase Sales and Still Maintain Margins

Finding the right balance between giving your customers more freedom and keeping your costs low is a fine line to walk.

As a business, you have two goals: increasing sales and lowering costs. Providing your customers with financing options can definitely help you close more deals, but it can be costly. In the process, you’ve probably wondered “Why are point-of-sale financing options so expensive?” Finding the right balance between giving your customers more freedom and keeping your costs low is a fine line to walk. 

‌That doesn’t have to be the case, though. There are low-cost financing options that don’t make money off of your business. You can provide pay-over-time choices that both serve your customers and keep costs down if you’re careful. Here are five strategies you can use to make your customers happy with point-of-sale (POS) financing solutions while keeping costs to a minimum. 

1. Offer Financing Only on Select Items

One easy way to keep your costs low is to provide customer financing on high-value items only. Sticker shock is much more likely to hit people when they’re looking at expensive items. By offering a pay-over-time option on these goods, you can close more sales on the products that provide you the most profit. 

Meanwhile, you can choose not to offer financing on less expensive goods. Splitting a $10 payment into several monthly installments won’t make as much difference as breaking down $1,000. Meanwhile, you won’t bear the costs of many smaller financing deals, so you can manage the cost of financing more easily.

Choose a solution that allows you to select exactly which products are eligible for financing, so you never need to worry about skyrocketing fees. This strategy results in lower costs for your business and more high-value sales. 

2. Provide Special Terms Only on Select Items

Just like you can pick and choose the items for which you want to offer financing, you can select a few things for which you provide special financing terms. If you have a specific, high-value product that’s linked to continuing sales over time, you might choose to offer 0% same-as-cash financing on it, to close more deals.  It’s an easy way to manage the cost of offering terms in the first place.

While this may raise costs on sales of that item, in return, you get more sales in the future. A great example would be an air purifier that needs monthly filter changes. If you sell the air purifier with 0% financing, your costs go up on that appliance. However, you are likely to make back those costs and more on the monthly filter purchases the customer will make. Look for a financing solution that makes it easy to be precisely this selective throughout your product catalog.

3. Connect with Co-Brand Cards

If you want to directly offset the cost of financing, you can also connect with co-branded cards. These cards are hybrids of store cards and rewards cards. By working with your financing provider, you can access these co-branded cards and potentially take advantage of cost-saving opportunities.

Many co-brand card providers will offer you a “spiff,” or a small bonus for every customer who signs up for the card through your website. If customers use the co-brand card to make their purchases, you also save on the financing costs. This gives you and your customers alike a selection of low-cost financing options that make sales more likely.  

4. Charge Marketing Fees

Just because products are your primary focus doesn’t mean you should turn down other opportunities to increase your cash flow. Many companies are willing and able to pay if you offer the chance to market on your website. 

For example, you can charge marketing fees for your financing company to put their banners on your site. That can quickly make up for any costs associated with the financing itself. You can also work with other companies that are related to your own but not in competition to cross-market their products and bring in fees or percentages of sales.

5. Minimize Maintenance Costs

Finally, the simplest way to cut costs is to reduce overlap between your vendors. Using different providers to offer the same service to B2C and B2B markets is unnecessary. By choosing the right solutions, you can make sure each provider covers as many needs as possible. 

A solution that offers multiple loan providers all in one place allows you to skip the need to find unique POS financing solutions for different markets. Instead, you can reduce your tech maintenance costs by consolidating to a single service that meets the needs of all your customers at once.

Save Money and Increase Offerings Today

Sometimes, you can keep your margins stable and increase sales — it just takes some strategic planning. With the right tools, like Skeps, you can give your customers everything they want without breaking the bank. Take the next step for your business today with the low-cost financing options that make a difference.

Customer Experience Must Be A Priority For B2B Companies

As technology makes it easier to get things done quickly, B2B companies are setting their sights on improving their customer experience.

We want to trust the companies we buy goods and services from — don’t we? And, customer experience does play a vital role here. Whether we’re shopping in a grocery store, a clothing boutique, or an auto dealership, we tend to be looking for more than price and quality. We want to know what kind of company we are about to do business with. The same need applies to our professional relationships. A business-to-business (B2B) customer, or a company representative buying from another company, tends to come through the door with plenty of questions. Are the prices and policies comfortable? Will the solutions fit my business? How is the service?

Customer Experience Lag for B2B Companies

For businesses whose customers are other businesses, customer satisfaction often falls short compared to companies that sell directly to consumers. According to McKinsey & Company, business-to-consumer (B2C) companies typically see a satisfaction score between 65% and 85%, but B2B companies average satisfaction rates lower than 50%.

Technology’s Role in Raising Expectations

A growing number of business buyers are becoming more aware of this customer experience gap as life gets easier for them as consumers. McKinsey notes that, due to digitization and ever-increasing smartphone usage, a new standard for fast, seamless customer service is taking hold across the board. According to its analysis, “Real-time responsiveness and easy-to-use apps for daily banking chores or ordering groceries are setting a high bar for speed and ease of doing business in B2C industries, and these expectations are migrating to B2B.”

The Complex Challenges B2B Clients Face

Although B2B clients are coming to the table with increased expectations as technology evolves in the B2C space, the reality is that B2B companies face a few key obstacles.

A Focus on Sales Targets

According to a recent study of B2B businesses from Kellogg School of Management at Northwestern University, most B2B companies only measure whether they’re reaching their own sales forecasts or margin targets.

Lack of tools and resources

According to the Kellogg study, most B2B leaders identify customer experience as a top priority but often lack the feedback tools, metrics, and processes to prioritize the customer experience.

Multiple Stakeholders

For the B2B customer, launching a product or service means tending to countless details, including price, quality, logistics, lead time, and service needs as they emerge. It may also mean working in tandem with multiple stakeholders or vendors. Providing a seamless customer experience for each person in the chain of command can be challenging to pull off.

A Chicken-or-Egg Question

Nick Caffentzis, a fellow and adjunct professor in Kellogg’s Markets and Customers Initiative, points out that B2B companies face an important choice. Should they develop products that they believe solve their clients’ problems or work to understand customer issues and then develop supportive products? Caffentzis has found that B2B companies are most successful with the latter approach, noting that customers are less likely to adopt pre-built solutions.

The Need for a Multi-Dimensional Solution

A B2B customer’s range of needs and challenges, as well as multiple stakeholders, creates opportunities for B2B companies that can problem-solve alongside their clients.

Offer Custom B2B Solutions

The Kellogg study evaluated 20 businesses in the medical technology industry about their new business launches. The most successful among them sought to understand their clients’ most urgent needs from day one. When a B2B relationship starts that way, the study found, customers were more likely to commit to a solution, and product designs were more likely to gain consensus among stakeholders.

Invest in Customer Outcomes

Before a customer commits to a solution, agree about what success will look like. Knowing the terms of success will arm your sales team with a strong value proposition to sell and will give the client a critical measuring stick for their work with you.

Invest in Yourself, Too

The Kellogg study notes that B2B companies looking to improve their customer experience may need to: ‌

  1. More accurately capture customer usage information
  2. ‌Find a consistent way to collect customer feedback
  3. ‌Invest in infrastructure improvements
  4. ‌Change training processes‌

Start With the End in Mind and Play Your Role

As technology makes it easier to get things done quickly and efficiently, B2B companies that set their sights on improving their customer experience will have a clear advantage.

B2B companies looking to up their customer experience game should start with the end moment in mind. Approach customers with a blank slate, immerse yourself in grasping their challenges, and work to deliver a thoughtful and comprehensive customer experience at each stage of the product development cycle.

Increase Your Online Sales in 5 Steps

Increase Online Sales – Online sales are the new norm. If your business isn’t taking advantage of online sales, you are doing yourself a massive disservice.

Online sales are quickly becoming the new norm. In 2020, consumers spent a whopping $861.12 billion with online U.S. merchants, which is a 44% increase from the year prior. It’s the country’s highest annual e-commerce growth in decades, but this has been the trajectory of sales for some time.

Suffice it to say, if your business is not taking advantage of online sales, you are doing yourself a massive disservice. And if you do have online options available, it is critical to stay abreast of the latest technology if you want to steadily improve sales. Here’s how.‌

How to increase online sales

One sure-fire way to increase online sales when you sell big-ticket or high-cost items is by offering financing. In just five simple steps, you can get started boosting your profits.

1. Determine Whether Or Not You Should Offer Financing

The first step is to figure out if your customers would find financing helpful. Consumer financing refers to when a business allows customers to pay in installments for a good or service they aren’t able to pay for up front. They typically go about this with the help of a professional financing company.

Offering financing options is often beneficial for the customer and business alike. For customers, it means they can purchase goods or services they otherwise would not be able to afford. For businesses, financing carries the following benefits:

  1. Increased conversions from browsers to buyers
  2. Increased customer loyalty
  3. Upfront payments from financing platforms
  4. Improved cash flow
  5. Reduced cart abandonment rates
  6. A leg-up on competitors

Examining your products’ price points and looking at your conversion rates can help you decide if offering financing is right for your business. If waiting around for sales to roll in is causing an issue with cash flow, for example, financing might be the perfect solution.

2. Consider Financing Options To Increase Sales

After you have decided to begin offering financing, you need to put in a bit of research. Financing setups are not one-size-fits-all solutions — there are numerous options to choose from.‌

In-house Consumer Financing

One option is to set up your own financing arrangement. Your business would extend credit to customers, giving them the good or service based on the promise they will pay you for it over time. However, this has its setbacks. For one, it will not fix any of your cash flow issues. Secondly, it is significantly more complicated and risky than other alternatives.‌

Financing Platforms

When partnering with a third-party financing company, they handle point-of-sale financing so you do not have to. The financing company then pays you for the sale right away.

If you choose to go with a third-party financing company, there is no need for your company to hire additional staff. The company will also ensure your sales stay in full legal compliance so you do not have to worry about the details.‌

3. Decide How To Show Off Your Financing Program

The next step is to decide where this information should be displayed on your website. Options include:

  1. In banners
  2. At checkout
  3. Product detail page
  4. On the financing page

It’s important to present your financing program with care, as not all customers will qualify. In your promotional copy, make sure you mention that approval is not guaranteed. You may also want to consider including the following information:

  1. ‌What options are available
  2. How long customers have to pay in full
  3. Who your financing provider is
  4. Any financing benefits your company offers

4. Promote Your Financing Plan

If you have decided to offer financing, your customers will want to know. Many have likely been putting off making a purchase from you because they did not have the funds. Now is their chance to take advantage of what you have to offer.

Decide where and how you want to share the news. You could make a temporary banner on your website, write up an email newsletter piece, or share an announcement on your social channels. Better yet, you can do all three.

5. Measure Your Results

Decide early on how you plan to measure the results of your financing program. You can compare your added cash flow against the cut your provider takes, for instance.

Whether you measure success by overall increased sales or boosted profits, make sure you’ve landed on a program that is meeting your business’s needs and helping it grow.

Boost your cash flow with financing

Most big companies offer financing as a way of keeping a consistent cash flow and steady sales. Even if you are only a small operation, however, financing can still be a great way to increase your sales and give you the cash you need to keep your business running.

Financing is also great for your customers, allowing them to take advantage of what you have to offer without worrying about having access to the funds they need up front.

If you decide financing is right for your business, you will find a win-win solution for everyone.

FinTech Dictionary Of Terms And Acronyms

The complete FinTech Dictionary of Terms and Acronyms – To help you understand the FinTech industry and its jargons a little better.

People wonder exactly what ‘FinTech’ dictionary meaning is. FinTech is a short form for ‘financial technology’ – something that has actually been around for a very long time. Simply put, FinTech refers to the technology that is driving innovation in the financial services industry. The term has become far more widely used in the last five years, with new terminology associated with FinTech also springing up.

New buzzwords, jargon and acronyms are commonplace when talking about the industry, and so we hope to explain, in clear terms, exactly what some of them mean in this exhaustive FinTech Dictionary.

Banking and Payments

A2A (Account-to-Account): Payments that involve the transfer of funds between two accounts owned by a single party.

Accounts Payable (AP): Amounts due to vendors or suppliers for goods or services received.

Accounts Receivable (AR): Amounts owed for goods or services delivered that have not yet been paid for.

ACH (Automated Clearing House): An electronic network that coordinates automated money transfers and electronic payments. It is a way to move money between banks without using wire transfers, paper checks, card networks, or cash.

ACH Authorization: A payment authorization that gives the lender permission to electronically take money from your bank, prepaid card account, or credit union when your payment is due.

ACH Credit: A transaction pushing funds into an account.

ACH Debit: A transaction pulling funds from an account.

ACH Return: A credit or debit entry initiated by an RDFI or Receiving Depository Financial Institution or ACH Operator that returns a previously originated credit or debit entry to the ODFI or Originating Depository Financial Institution within the time frames established by NACHA or National Automated Clearing House Association rules.

ACH Reversal: An entry, (credit or debit entry) that reverses an erroneous entry. It must be made available to the RDFI within five banking days following the settlement date of the erroneous entry.

Address Verification Service (AVS): A security system that works to verify that the billing address entered by the customer is the same as the one associated with the cardholder’s credit card account.

B2B (Business-to-Business): A model where a transaction or business is conducted between one business and another, such as a manufacturer and retailer.

B2B2B (Business-to-Business-to-Business): A model where a business indirectly sells to another business through a middleman, such as a manufacturer sells to a wholesaler who then sells to a retailer.

B2B2C (Business-to-Business-to-Consumer): This is an indirect distribution – it is a model where a business accesses the consumer market through another business, such as IT services to bank to bank’s customers.

B2C (Business-to-Consumer): Also known as direct-to-consumer – it is a model where a business sells products or services to customers without a middleman.

Bank Identification Number (BIN):  The term bank identification number (BIN) refers to the initial four to six numbers that appear on a payment card. This number identifies the institution that issues the card and is key in the process of matching transactions to the issuer of the charge card. It may also be referred to as an Issuer Identification Number (IIN).

C2B (Consumer-to-Business): A model where consumers provide a product or service to businesses. This is a rapidly growing model and often takes the form of brand sponsorships on social media.

C2C (Consumer-to-Consumer): A model where payments take place between two different consumer accounts for goods or services. This is done often through an online marketplace like eBay, Etsy, or Craigslist.

Closed Loop Payment System: A system that operates without intermediaries, where the end parties have a direct relationship with the payments system.

Credit Bureau: A company that collects, researches, and maintains credit information, and sells that data to lenders, creditors, and consumers in the form of credit reports. The most recognizable credit bureaus are Equifax, Experian, and TransUnion.

Credit Score: A three-digit number that represents how likely a person is to pay back a loan based on their payment history. A higher score is better.

Digital Wallet: A software application used with a mobile payment system to facilitate electronic payments for online transactions as well as purchases at physical stores.

Funding Source: Any financial institution, bank, or other funding entity providing liquidity to accommodate various payment flows.

Good Funds: Funds considered equivalent to cash and guaranteed to be available upon demand.

Issuer/Issuing Bank: Any financial institution (a bank or credit union), which offers a payment card (credit or debit cards) directly to consumers (or organizations) and is liable for the use of the card. This financial institution is also responsible for the billing and collecting of funds for purchases that were made using that card.

Ledger: A book in which the monetary transactions of a business are published in the form of debits and credits.

Merchant: A retailer, or any other person, firm, or corporation that agrees to accept credit cards, debit cards, or both.

Origination: The process by which a consumer applies for a new loan, and the lender or card issuer processes that application.

Originator (ACH): The entity that starts an ACH payment transaction. The Originator is the consumer, business, or government organization that initiates the payment process and is authorized to do so.

P2P (Peer-to-Peer): A decentralized platform where two individuals interact directly with each other, without intermediation by a third party. Instead, the buyer and the seller transact directly with each other via the P2P service.

Personal Identification Number (PIN): A confidential individual code used by a cardholder to authenticate card ownership for ATM.

Point-of-Sale (POS): The specific time and place where a retail transaction is completed.

Same Day ACH: Delivery of available funds within the same business day.

Settlement: The movement of funds from one financial institution to another, which ultimately completes a transaction.

Underwriter: A party that evaluates and assumes another party’s risk for a fee.

Sales

CRM (Customer Relationship Management): One of the many different approaches that allows a company to manage and analyze its own interactions with its customers.

Horizontal Market: A non-specialized market that covers a wide range of industries.

LOI (Letter of Intent): A document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal.

Software and technology

API (Application Programming Interface): A computing interface which defines interactions between multiple software intermediaries.

BaaS (Banking as a Service): The supplying of complete banking processes that allows brands to easily embed financial services into their products without having to worry about building banking infrastructure or obtaining a license.

Encryption: The technique of scrambling sensitive data automatically in a terminal or computer before transmission for security purposes using an algorithm and key.

POP (Point-of-Purchase): occurs when a consumer check is received at a point of sale and converted into ACH immediately.

POS (Point-of-Sale): occurs when a consumer initiates a payment, typically via card, at a point of sale.

SaaS (Software as a Service): A software licensing and delivery model in which software is licensed on a subscription basis and centrally hosted.

FinTech has been a buzzword in the world of finance, and the market is maturing. In case you want to know how the FinTech industry is evolving, have a look at this infographic.

(Disclaimer: This (FinTech Dictionary) will be updated periodically. In case you want us to add new terms and definitions, please reach out to me at swati@skeps.com.)

Exploring The Rise Of POS Financing — Part 2

In continuation of our last article about point-of-sale financing, this one explores the growth of ‘buy now, pay later’ over the years.

In continuation of our last article about POS financing, this one explores the growth of ‘buy now, pay later’ over the years.

This blog is the second in a series about point-of-sale (POS) financing, discussing how ‘buy now, pay later’ (BNPL) has grown in popularity, why it impacts credit cards, and whether the industry is in a position for continued traction. Read part one here.

In our previous blog, we outlined the journey of POS financing from layaway to credit cards. Back in the day, it was common practice to walk into a store and put items on layaway. People used to put down a deposit, make payments over time, and collect their items after making all the payments.

“It was hardly an exaggeration to say that the American standard of living was bought on the installment plan.” – Daniel Boorstin, historian

From pay first to pay later

The four words ‘buy now, pay later’ are pretty self-explanatory, but for those who are still wondering what it is, let us briefly explain.

Buy now, pay later is a checkout process, which allows consumers to spread out their payments on a purchase over weeks or months. The merchant receives the amount in much the same way as a credit card. The checkout provider arranges the payment to the merchant and a loan to the consumer.

So, what is the benefit? Not having to shell out a lump sum amount.

How cool can it be to receive items worth $500 as soon as the order is placed and pay the amount as per your convenience? Besides, for the merchant, it increases the incentive for a customer to make the purchase by providing options.

By spreading the cost over months, consumers have efficient access to credit – they can manage their finances effectively without having to compromise the instant gratification of making immediate purchases.

So, is BNPL new?

The answer is “No” – BNPL has been with us for decades and is not a new concept, notes Mark A. Cohen, director of retail studies at the Columbia University Graduate School of Business, underscoring that the practice has been the underlying basis of consumer credit since World War II.

Buy now, pay later takes on credit cards

In the early 2000s, when we were spending a lot of money online, and e-commerce growth rates were swelling, there existed one problem: where was the layaway? Suddenly, the world could buy just about anything using credit cards. But that anything came at a price: exorbitant interest rates on credit cards.

Still, we enjoyed shopping online, so we endured it. But, in 2005 came Klarna1 – a Swedish company that promised the ability to buy now and pay later option with zero or very little interest.

In the United States, there was Paypal Credit and Affirm growing as one of the preferred BNPL payment options. Down under in Australia, Afterpay and zipPay were taking the e-commerce industry by storm. Each of these businesses offered their own terms and conditions and had different methods of spreading the costs. We will discuss the business models of each of these in one of our forthcoming articles.

A generation that has never embraced debt like their predecessors were drawn towards BNPL services. The reason being – its ability to enforce spending discipline, attracting a budget-conscious customer. Also, Millennials did not want to live off credit cards, but often they couldn’t or didn’t want to put off big-ticket purchases.

Since that time, BNPL has enjoyed astronomical growth in popularity. It is so popular, in fact, that the market is set to grow massively, potentially doubling its market share by 20232. In the US, it represents a more than $1.8 trillion opportunity, according to Accenture3.

BNPL is a win-win – customers get the instant gratification of a purchase without paying high interest rates, and retailers get more customers on account. These ‘best of both worlds’ benefits are satisfying the demand for a seamless checkout and driving the increase in consumer adoption.

Satiating the thirst for seamless checkouts 

BNPL companies have pushed consumers through a checkout integration with a credit-checking process that allows them to be approved for the installments. Once the consumer pays via a BNPL option, the retailer is paid upfront and eliminates its exposure to associated risks with the repayments.

It is not hard to see why BNPL is so successful. It brings payments forward, enables you to shop, and spread the cost of a big purchase into smaller and manageable payments. It also reduces the barriers to shopping as it does not require you to part away with hard-earned money at the point of sale. The simplicity of frictionless shopping has generated loyal customers.

With billion dollars in loan volume and countless brands offering BNPL, the option is clearly gaining traction. Not only is it helping brands increase sales, but is also helping already–indebted consumers get a better night’s sleep.

This space is now growing and is showing a far greater success rate for retailers. According to a study, 38% of consumers are now using BNPL solutions. While these payment products do sometimes charge interest, these can be cheaper than credit card APRs (Annual Percentage Rate). Meaning the cost is perceived by consumers as being manageable due to installment payments.

More to the point, pay later solutions are also just great for managing cashflow and avoiding overspending — the benefits that made layaway so popular in the past. They further allow consumers to take their purchases home straight away, giving them instant gratification, but without the associated costs.

And this benefit to consumers is being recognized by retailers as well – 16% of the retailers plan to start4 accepting them in the next two years. With increased adoption by retailers, pay later solutions are becoming the layaway replacement the modern consumer needs.

1 Klarna: 15 years of making shopping Smooth 
2Forbes: Buy Now, Pay Later Schemes To Double Their Market Share By 2023 
3Accenture: Banks Risk Losing US$280 Billion in Payments Revenue by 2025 
4Paysafe: Lost in Transaction 2018

Exploring The Rise Of POS Financing — Part 1

This blog is the first in a series about point-of-sale financing, discussing its history and how it has grown in popularity.

This blog is the first in a series about point-of-sale or pos financing, discussing its history and how has it grown in popularity.

So a lot of stories have been doing the rounds recently about the partnership between Shopify and Affirm and, we have also written about this deal in our previous article

This much-talked-about deal from the POS financing space got us intrigued, and we thought of looking through the pages of history to explore the hows, whys, and whats of the POS financing world. 

First things first — let’s find out how did it all start. 

So the story goes this way.

Point-of-sale financing timeline

The 1920s – ‘30s – Layaway path to financing

POS financing dates to the period of The Great Depression1 when layaway plans were a staple of installment lending. Unemployment had hit unprecedented highs, peaking at 24.75% in 19332. Money was scarce. Also, consumers could barely afford everyday necessities, let alone big-ticket items. Retailers, aware of this cash crunch, came up with a revolutionary idea. 

Imagine reserving an item, paying it off over a number of months, and collecting it once you had settled the purchase price in full? 

The idea caught on, and layaway was born. Layaway was born out of necessity, but it quickly grew in popularity and with good reasons. 

Layaway was a win-win for retailers. It allowed customers to make payments in installments and pick up the items when they completed paying the purchase amount in full. Also, if someone stopped making payments, they could easily add the item back to their active stock list. It was a low-risk transaction for the retailer. 

From a consumer perspective, layaway made it easier to purchase luxurious items. Consumers no longer had to shell out $100 (equivalent to about $1,494.03 in 2020 money) all at one time. Instead, they could spread the cost through monthly installments. Also, while there wasn’t a deposit or a service fee so, no interest was charged in the process and, if customers couldn’t keep up with payments, they could often get their money back less a small fee that covered storage costs.

The 1960s – Layaway becomes all-pervasive

Credit was mainly provided by nonbank lenders or finance companies, which were earlier financing purchases of income-earning durable goods. But then automobile companies like General Motors established divisions and subsidiaries designed to finance purchases of their durable goods.

By the 1960s and 70s3, it was par for the course for consumers, whether it was for a big purchase such as a new home appliance, seasonal expenses like Christmas presents, or even some day-to-day items. From Walmart to Sears, T.J. Maxx, Marshalls, and Burlington Coat Factory, layaway quickly became available anywhere and everywhere.

However, the problem with layaway is that while it does a good job of providing for financial control, it lacks that all-important element of instant gratification that generally comes from shopping. That’s how credit cards got their advantage. That feeling of satisfaction of having the product in one’s hand came with cards.

The 1980s – Credit cards take the reigns

However, since the late ’80s, layaway largely fell out of fashion with the emerging ubiquity of credit cards4. As Americans started adopting credit cards, layaway plans started to decline, and its utility started to seem non-existent.

The most obvious reason fueling this decline was the ability of a credit card to allow customers to take their items on the same day. They were allowed to pay for the purchased merchandise over an agreed duration of time. Also, the costs to maintain layaway plans were eating up any potential benefits.

The first credit card5, called Charg-It card, was launched in the US in 1946. But it was in the 1980s that credit card usage exploded. In the interim, IBM engineer Forrest Parry invented the magstripe, which made a payment as simple as swiping your card. Also, banks started removing annual fees and introducing 0% introductory interest rates and rewards in a bid to attract more users.

By contrast, layaway’s popularity went downhill. Despite purchases being expensive with the credit cards because of the interest rate, consumers were allured with this instant gratification, which far outweighed the added cost. As a result, layaway disappeared6 during the 1990s and early 2000s.

2008 – Layaway makes a comeback

If the Great Depression gave birth to layaway, the 2008 financial crisis kickstarted its resurgence.

So why did layaway return7?

Market conditions were tight. Credit became scarce as more customers defaulted on their financial obligations. Who doesn’t remember the great fall of Lehman Brothers Holdings and the likes becoming bankrupt? With the trembling economy and rising unemployment, there was way too much risk in signing up for debt.

As they say, desperate times call for desperate measures, so, at that time, a lot of retailers resumed offering layaway services. We saw it making a comeback8 at stores like Sears (2008), Toys “R” Us (2009), and Walmart (2011) due to the customers’ growing financial difficulties and the need to increase dwindling revenues to counter the debt crisis.

On the one hand, retail sales during the 2008 Christmas shopping season hit 35-year lows, and on the other hand, Kmart bucked the trend, registering better than expected results largely due to its 600,000 layaway customers. Kmart’s success encouraged other merchants to bring layaway back.

Walmart, which closed its layaway plans in 2006, re-started it in 2011 and, ten years later, a survey found that 33% of shoppers planned to use layaway to spread the cost of the Christmas season.

During the holiday season in 2012, many other retailers resumed their layaway services. Kmart9, which has been continuously providing layaway in the United States for over 40 years, at one time, it was the only major national discount retailer offering the service. Many retailers such as Walmart, K-mart, Sears, and FlexPay are still offering these services. While layaway may be enjoying an uptick in popularity, there are also bigger forces at play.

Buy-now-pay-later (BNPL) – The new layaway version

Layaway appeals to a very specific type of consumer, observes Terry Rolocek, head of Shop Your Way Financial Services at Sears Holdings Corporation.

One of its distinctive features is the manner in which it enforces spending discipline, which attracts a budget-conscious customer.

But it’s not just about the consumers who are looking for affordable ways to buy stuff. Clearly, there’s a growing appetite for cheaper financing across the board and it’s an appetite that may be satisfied without forgoing the thrill of instant gratification.

Layaway models have made a resurgence, but with a big difference.

The retailer gets paid right away, and the shopper gets their purchase right away. You may ask, “But, how is that any different from a credit card?”. That’s a valid question.

What happens with credit cards is, people buy stuff on their credit cards, and only later do they worry about how they are going to pay for it. But, now that the consumer preference and convenience is given the utmost importance, the layaway option seems to have made a comeback with the new-and-improved model by the name of ‘buy-now-pay-later’ payment options.

With BNPL, begins a new chapter in the history of POS financing. We will discuss this payment option, how it has grown in popularity, and whether the industry is positioned for continued traction in our next article.

1 Econlib.org – Great Depression
2 u.s.history.com – Unemployment Statistics during the Great Depression
3 pbs.org – Nancy Koehn Interview
4 Time.com – Now You Know: What Was the First Credit Card?
5 Washington Post – The day credit card was born
6 Fee.org – Layaway: Live after Death – Foundation for Economic Education
7 Kiplinger.com – The return of layaway
8 New York Times – Wal-Mart to bring back layaway for holidays
9 CNBC – Layaway Isn’t Just for the Holidays Anymore: Kmart Exec