*Editor’s Note: This article is a contribution from Lilas Kniho, marketing & growth manager at ViaBill.
With more shoppers looking to stretch their budget, customer financing is becoming an increasingly popular method of payment among millenials. These individuals are increasingly looking to find the best payment option to finance their purchases without hurting their credit score.
Millennials’ spending habits
When it comes to saving money, many millennials fall short. The majority of young people have less than $1,000 in their savings accounts, and many have nothing at all. Their spending habits could explain their lack of savings.
According to a report from Charles Schwab, millennials spend more on comfort items and conveniences than any other generation.
They also find themselves spending significant dollars on incidental costs like expensive coffees, clothes, and the latest upgrades on gadgets. Roughly one-third of millenials spend more on those items than their retirement plan.
Millennials also tend to spend more freely compared to other generations. Here’s a look at how they’re spending their money.
Millennials are bigger spenders than previous generations, especially when it comes to dining at fancy restaurants and buying expensive coffee. For example, 60 percent of millennials spend money on a cup of coffee that costs more than $4.00 while only 40 percent of people from Generation X and 29 percent of Baby Boomers do the same.
Compared to previous generations, millennials are more likely to purchase extras such as taxis, rideshares, and new electronic gadgets. In fact, a survey we conducted at ViaBill showed that 76 percent of millennials would spend their money on a new gadget and 69 percent admit to buying clothes they don’t need.
In addition, almost 75 percent of them were competing with their friends in terms of clothing, cars, phones, and other extras, while about half were using credit cards to pay for necessities like food and monthly bills.
Nevertheless, many merchants always seem to experience shopping cart abandonment. But why?
Why millennial shoppers abandon their shopping carts
More brands are focusing on their ecommerce platform regardless of their physical retail presence with the aim to increase their sales and create convenient shopping experiences to their shoppers. But, when it comes to clicking on that “Proceed to Checkout” button, anxiety can hit. Millennial shoppers are more conscious of the total amount they are about to spend and more careful about their budget.
Your customer is not ready to purchase
A significant number of shoppers are not ready to purchase their desired items right away due to pricing. In fact, 41 percent of shoppers are not ready to purchase and 24 percent want to save products for later consideration. This is mainly because they find the total price of their desired item too high to purchase, so they end up browsing rather than purchasing.
You have a complex checkout process
Do your customers need to click through five different pages to complete a purchase? Then it might make sense to reduce the number of pages they visit. The more you can simplify the process (e.g., reduce the number of clicks required), the better.
According to researchers, the average shopping cart abandonment rate of ecommerce websites is 65.23 percent, which means that shoppers didn’t complete the checkout process 65 times out of 100. The complexity of purchase leads to a bad customer experience, which pushes buyers away from your products, and eventually your business.
Some signs of a complex checkout process:
- Too many form fields
- A clunky UI, especially on mobile
- Unclear calls to actions and copywriting
- Requiring potential customers to set up an account with your site
You are asking for too much information
The top values online shoppers prioritize today are convenience and seamlessness. Twenty-one percent of shoppers end-up leaving their shopping cart because they are being asked to enter too much information that they sometimes find unnecessary.
You are not offering multiple payment options
When designing your ecommerce checkout pages, you don’t want anything to come between your customers and satisfying, frictionless shopping experience.
However, if you only offer a single payment option or very few payment choices, you’re potentially leaving money on the table. Offering more payment options eliminates obstacles to purchase, and makes it less likely a prospective customer will abandon your shopping cart.
While it can be a hassle to offer more payment choices, it’s the right thing to do for your business — as you’re giving your customers what they want.
Flexible and convenient financing solutions
Now we know millenials love to shop online and the importance of having an online store is clear. But with technology evolving every day, merchants are always on the lookout for the best possible solutions they can offer to customers with their online store. Today, all sizes and types of brands are more aware of how customer financing can boost their business and how it attracts a larger audience of shoppers.
Traditionally, installment plans offer consumers the ability to manage their debt by agreeing to substantially equal payments each month for a set period of time, in contrast to traditional credit card financing where the minimum payment and interest charges may be difficult to predict. This was generally for people who wanted to buy an oven or a refrigerator without having the necessary credit available at the checkout.
Today, many types of shoppers especially millennials are looking into seamless financing solutions to buy the things they love. Customer financing is one of them and one of the most popular payment solutions today. It gives shoppers the opportunity to buy now and pay in easy monthly installments without interest.
It’s as easy as it gets, the whole process happens online. Shoppers are able to finance their payments all while binge-watching their favorite TV show. Their approval process happens instantly, online and no credit check is required. On the contrary, when you try to open a bank account, the approval process takes days or even weeks.
Many millennial shoppers prefer to split their payments rather than pay the full amount at checkout. Financing options help people gain access to the items they desire when they can’t afford to pay the full amount for them today and allows people to buy more items at a smaller price.
Customer financing provides a better checkout experience, Shoppers have the chance to continue with a third-party to complete the payment. Similar to a credit card, the merchant receives full payment up front and the customer receives their items right away, but the payment happens over time. As millennials continue to seek convenient shopping options, they also expect the experience to be seamless.
Empower your shoppers to buy without reservations
Customer financing plans are changing the way people shop online by offering payment solutions that empower customers with freedom of choice which equally benefits the merchants. The mission is to make online purchasing as simple, transparent and flexible as possible.
A success story
Giving power to shoppers builds trust for any brand, a flexible finance option will fulfill shoppers’ desires with zero percent interest and no regrets. This also helps the small scale brand or startups who started with an ecommerce platform to increase their conversion rate, average order value, and basket size. A win-win option for both ends.
For example, in June 2019, a company called Divine Creation Clothing partnered with a customer financing solution. At the end of June 25, 118 customers purchased from the Divine Creations Clothing’s online store, and 138 total transactions were made using that solution. And this accounted for 35% of their monthly sales.
Shoppers are the major component for any business, offering them targeted, compelling finance options throughout the journey with a flexible payment solution can be beneficial for merchants.
Learn more about why shoppers abandon carts and how abandoned cart emails can help you recover potentially lost revenue.Back to Blog Home