4 MIN READ
6 Key E-commerce Metrics You Can Improve with Buy Now Pay Later
The PayBright Team
April 28, 2021
As you transition your store to the online world, younger shoppers will become the focus of your target audience and marketing efforts. Be they Millennials or Gen Z-ers, these unique audiences may have some money to invest in your business (dependent on their needs, of course) yet with a global pandemic still in full swing, they’re also watching their budget lines and actively trying to avoid accruing debt.
The truth is that consumers are looking to pay down their debt faster, while creating emergency saving funds. According to , the most common changes made by households during lockdowns include cutting back on discretionary spending (59%), and cancelling subscriptions and memberships (30%). Respondents are also looking to get out of debt and save, with 11% indicating they’re paying down debt faster, and 16% saying they’ve created an emergency savings cushion.
This state of affairs raises red flags for many the retailer or subscription service, those intent on meeting or exceeding their bottom line this year and next year, especially during a time when their businesses have been compromised by lockdowns, fewer customers, and more pandemic-specific restrictions.
So, can retailers continue to grow your loyalty from audiences that are fearful of spending money right now? One answer is to offer a buy now, pay later (BNPL) option.
BNPL Companies like PayBright and Affirm offer interest-free BNPL installments and other payment solutions that make it much easier for Millennial and Gen Z audiences to break up the cost of a purchase into easier-to-pay morsels that better suit their budgetary needs. It’s a solid alternative to credit card use and can help you gain trust with your customers. More and more, BNPL appeals to these audiences, whose budgets may not be as free-flowing as those that came before them.
Found at checkout at many of Canada’s top brands, these services empower shoppers to say “Yes!” to a purchase they may have otherwise abandoned. Merchants typically pay the provider a commission fee for every transaction, but they receive full payment for the purchase up-front, without having to take on the potential risks of consumer financing.
And, they’re not bad for metrics, either. Let’s look at some key ways business health and e-commerce metrics can be improved through BNPL services.
Reduce your cart abandonment rates.
Buyer’s guilt. Sticker shock. There are many reasons carts end up abandoned at checkout in your e-commerce store, but BNPL services have quickly become a significant factor in encouraging checkout completion. Thousands of Canadians merchants like Hudson’s Bay, SAIL, and Endy are becoming hip to this trend, and have subsequently begun offering installment payments at checkout, empowering customers to complete their purchases, big or small, and ultimately increase your conversion rates and lower cart abandonment numbers.
Boost your transaction value.
This is a basic metric for any business to measure — more sales = more money. Simply put, BNPL services can support shoppers in their pursuit to purchase more items more per order. This can not only help you increase your customer’s basket purchase size — it can provide a more comfortable purchasing experience for them, which ultimately boosts your merchant’s transaction value as well.
Get better at customer loyalty.
Offering BNPL services could open the door to customers who have yet to discover your store. In this way, you could think of offering installment payments as akin to special promotions or other incentives. The reality is, a contingent of customers are only doing business with retailers that offer these services, providing options that a) close the sale; b) establish or improve the consumer relationship; and c) solidify your store as the go-to source for their needs.
Improve your customer acquisition costs.
If BNPL services bring more pageviews and sales to your website, your customer acquisition costs will naturally go down. The amount paid for your online search ads and marketing will decrease as well. If you’re eventually turning more people into customers, you won’t have to spend as much time and money on paid amplification – your brand will organically speak for itself.
Strengthen your Customer Lifetime Value (CLV).
Getting repeat customers to come back time and time again can be tough. The trust earned from BNPL services can go a long way increasing your customer’s lifetime value (CLV) to your business. Of course, if someone buys something from you every two weeks, then their CLV will be higher. Giving people the flexibility to shop with you improves customer satisfaction, which could lead to word-of-mouth referrals and social media recommendations.
Increase your sales revenue.
The COVID-19 pandemic has made BNPL options more popular among online shoppers. According to , the pandemic's impact and BNPL's overall rise in popularity will lead the industry to rack up $680B in transaction volume worldwide in 2025. That forecasts a compound annual growth rate (CAGR) of 13.23%, from the $285B the industry was estimated to record in 2018.
With e-commerce sales climbing an estimated 44.4% year-over-year (YoY) in Q2 2020, the study also cites growth across the board. Get your share and partner with the right BNPL provider to enhance your metrics, fortify your business health, and give your customers a purchasing experience that increasingly works for them.
This article is provided for informational purposes only. It is not an exhaustive review of this topic. The content is not financial or investment advice. No professional relationship of any kind is formed between you and PayBright. While we have obtained or compiled this information from sources we believe to be reliable, we cannot and do not guarantee its accuracy. We recommend that you consult your personal finance professional before taking any action related to this information. PayBright is a provider of Buy Now, Pay Later (BNPL) solutions. BNPL providers offer plans with a variety of terms and conditions, including interest rates, fees, and penalties, and have different standards for qualifying for loans. Laws and regulations governing BNPL providers vary by jurisdiction. We recommend that you compare and contrast plans, read the fine print, and conduct detailed research into any BNPL provider before using their services.
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