How to explain buy now, pay later to your customers

The buy now, pay later market has exploded in recent years, with consumers clamouring to pay for their products in regular, manageable chunks.

In the past, people used lay-by to make larger purchases responsibly. Now, BNPL products enable your customers to still pay in instalments, but instead of having to wait for the product they receive the product or service now and then pay later in slices.

And as more retailers come aboard, it’s important that they understand the responsibility that these kinds of services require.

Retailers should be careful about how they market this service, and who they offer it to. For example, advertisements encouraging young consumers to “treat” themselves while being “broke” are completely unethical. Not only does it put your customers in harm’s way, but it can do serious, lasting brand damage should you get on the wrong end of a PR crisis.

Instead, use your messaging to explain the financial benefits of BNPL services, and how they can be used responsibly. For example, talk about making the customer’s money work harder and go further. This negates the idea of spending beyond their means, and encourages a more mindful, long-term approach to spending. Instead of pushing customers to “buy now – quick!”, remind them that they can “pay in five slices”. This not only explains how the product works, but teaches customers how to think about it in a responsible way.

Ban the acronym

Explain BNPL products in a way that any customer can understand, no matter how basic their financial knowledge might be. Stay away from financial jargon, acronyms, or anything else that might build a barrier to comprehension.

There are ways of injecting a caring attitude into every customer transaction, such as making a courtesy call to elderly customers before their purchase is approved to ensure that they’ve fully understood how the system works, and to check that they haven’t felt pressured into a sale. 

[SUB HEAD] No pressure

The removal of pressure is an important point for any retailer looking to integrate BNPL into their business. Responsible financial products are all about fully educating the customer, and then leaving them to deliberate on whether it’s the right product for them. Any situation where a customer feels forced to make a decision is not a responsible one.

Every customer is different, and will have vastly different financial needs. Just because two customers fall into a similar demographic category, never assume that they have the same levels of financial acumen. By not using pressure in your marketing, those customers have the freedom to consider other ways of stretching their money.

Put people first

With every decision you make, ensure you’re putting people before profit. If you can look at everything you do with a customer-first lens, then it’s difficult to put a step wrong. When choosing a BNPL product to offer your customers, make sure your values are aligned. Consider the design of the provider’s product, and look out for important clues about their transparency, willingness to educate their consumers, and the kinds of messages their marketing is sending.

For example, does the provider’s app make it easy for customers to see exactly how much they owe, and when? Is it easy for customers to choose exactly when they pay for their products, to make their cashflow as frictionless as possible, or are repayment times fixed?

Research each provider’s attitude towards late fees, too. There are many BNPL products on the market that gain a significant profit from late payment fees. These are generally the providers who don’t care about putting the consumer first, because late fees leave customers feeling out of control of their spending. BNPL products should help consumers feel in control, not the other way around.

Ultimately, BNPL products are the lowest-cost way to pay for larger purchases over time. And for smaller purchases, BNPL products can spread out payments to benefit cashflow. If you can explain this to your customers in an effective, non-pressuring way, then you’re on the path towards BNPL success.

Libby Minogue is the chief revenue officer at flexigroup, the pioneer of BNPL in Australia, and the engine behind payment system humm.

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