How much do you really know about the emerging world of Fintech? We’ll show you how companies such as Affirm can help you close more deals with your customers every day. “Now hold on a second” you’re likely thinking to yourself “What is ‘Fintech’, it sounds like it has something to do with fish”. Well, before we leave you dazed and confused, let’s start with a quick explanation.
Fintech and You, a Primer:
What exactly is Fintech? Fintech is a combination of the words “Finance” and “Technology.” Companies in this nascent field provide technological solutions to financial problems. In some cases, it involves tackling simple issues such as wire transfers, in other instances, it can deal with accounting. Today, we will be showcasing Affirm, which provides consumer loan financing, at the point of sale, on your site.
At this rate, you might be thinking to yourself “No! I refuse to give my customers options that are not from Visa, Mastercard, Discover, American Express or PayPal.” This a very archaic way of approaching modern eCommerce. Think about PayPal, odds are you’ve used it to make a purchase at some point in your life. Before you used it, an eCommerce merchant had to agree to integrate as a part of the checkout process on their eCommerce site. Today, PayPal is an option that no serious merchant would even consider neglecting.
Speaking of PayPal, the CEO of Affirm, Max Levchin, was both a founder of PayPal, and the company’s first CTO. This is a man who is both a starter and living legend and entrepreneur in the world of Fintech. For Max Levchin, consumer loan financing is a challenge he will have no difficulty in tackling, thanks to nearly three decades in Fintech.
So, just what role does Affirm play? More so, what do they have to do with closing sales? In a nutshell: Affirm provides shoppers with a consumer loan at the point of checkout for items are in their cart. Simple. Sweet and to the point. Affirm helps merchants sell more by providing their shoppers with alternative payment options.
By now you are likely asking yourself the following question: “For my shoppers, what is the difference between Affirm, using their own credit card, or even taking a loan from the bank?”
To answer this question; let’s analyze the purpose of a loan. Most loans are issued through banks, and can be used for a variety of purposes. They first need to be approved by the bank after a credit check, and this can take several days at a minimum – not including weekends and holidays! Plus, they include high-interest rates, and come with many stipulations regarding the repayment period. That is an addition to an abundance of hidden fees, and penalties for late payment. The whole process of taking a loan leaves consumers overwhelmed by the paperwork; as a result, they tend to miss the fine print. These days, consumers are wary of taking loans. Especially millennials, who are prone to racking up tens of thousands of dollars in student-loan debt.
Affirm, on the other hand, provides credit-conscience shoppers with a small loan, per-purchase. In other words, if a shopper wants to spend $1,000 on a laptop, but would rather avoid maxing out their available credit-line, they can use Affirm to break the purchase down into smaller predetermined payments with a predefined set APR as low as 0% at select merchants. Shoppers do not need to sign up for a special credit-card, and there are no hidden fees. Best of all, the loan request and approval is instant and done on the merchant’s’ site.
“Interesting,” you say to yourself as you suddenly realize you have yet to drink the coffee on your desk. “Tell me more,” you say gingerly.
How Does It Work, and Why Would My Shoppers Care to Use It?
This is an excellent question, and I’m glad you asked it. Let’s start by looking at the merchant side of the equation here. Merchant’s who add Affirm into their eCommerce site, simply need to ensure their visitors are aware of it’s presence.
On the shopper side of the equation, Affirm enters the picture when they come to the product page. Visitors are presented with the following message placed next to the items price – “Buy for As Low As (ALA)” followed by a small fraction of the products value. In other words, a laptop that would show a list price of $1,000, will have a small banner right next to it saying: “Buy for as low as $83 a month.” This decreases the likelihood of shoppers abandoning the site as a result of sticker shock. The pricing and APR are presented upfront, which makes the whole experience significantly more comfortable – especially for cash-strapped, younger shoppers. Existing Affirm users can simply click on the ALA option, login, and proceed to complete the checkout process.
But, for those shoppers who have not yet created a user account with Affirm: They need to be over the age of 18, provide their address, telephone number, email, and the last four digits of their SSN. Did you get that? Last four digits. Meaning no hard credit check. This is required in order for Affirm to run a “soft” credit check and verify who the shopper is. The process takes a few seconds to complete, and the shopper is notified upon approval of their loan. Next, they select the terms of the repayment period it. Affirm loans can be repaid over 3, 6, or 12 monthly installments. The cost per month, and over the whole period, is presented front and center for consumers to see.
Affirm streamlined their process so that it’s as easy to do from a desktop or laptop as it is to do on a smartphone or tablet and now, even in-store purchases!
…..And This Has What to Do With Closing Sales?
In 2016, 8% of shoppers surveyed did not complete a purchase because they were unable to pay via their preferred payment method. Ideally, merchants should be able to offer shoppers the option to pay with every method from Bitcoin to Western Union money order. By offering shoppers the ability to pay with Affirm, retailers can see a significant increase in conversions.
Email Campaign With Affirm ALA Offer
Speaking of conversions, how else can you use Affirm to increase your CVR? By including Affirms ALA financing offer in your cart-abandonment emails, you will see a large increase in recovered revenue.
For example, a mutual Datacrushers and Affirm client included the “ALA” (as low as) offer in their cart-abandonment emails. After three months, Affirm purchases accounted for:
- 18.5% of all new revenue.
- 29.6% of recovered revenue through the unique Datacrushers & Affirm integration!
Those are nice numbers, but what’s the litmus test for determining if Affirm is right for your eCommerce platform?
The Price is Right
Affirm really shines when shoppers make large purchases in excess of hundreds of dollars. It makes very little sense to finance something that can be purchased without a second thought such as under $150. When shoppers on average are making purchases in excess of $150+, Affirm can make a major difference in revenue.
Don’t Blindside Your Shoppers
No matter how many payment options you provide your shoppers, there is one last thing you absolutely cannot overlook – the checkout process. If the process itself contains many pages, and multiple, repetitive fields, there is a high chance of cart abandonment. Furthermore, if the design of the checkout page looks sketchy, shoppers will take note of that, and it will adversely influence their decision to complete a purchase on your website.
Simply put, shoppers should feel like they are in the year 2017, and not 1997, when going through checkout on your eCommerce site.
By allowing your shoppers to pick and choose the payment method most comfortable for them, you are really putting the ball in their court. Now they have to take a shot from the 3 point line – and they will, because they know they have options. The odds of them making the shot really comes down to how flexible those options are, the more flexibility – the greater the odds they make it. So go for it, get them onto the court, and watch as they make the shot.
Datacrushers is a revenue discovery platform and global leader in site-wide revenue and cart, search and browse abandonment recovery and acceleration. Founded in 2015, Datacrushers uses Machine Learning and A.I. along with NLP to identify and recover revenue loss, cart abandonment and discover new revenue sources across any site. The revenue discovery platform completes the deep ongoing analysis of eCommerce websites by monitoring the three main focal points of any site: The User, Site, and Product.
Unlike traditional “cart abandonment platforms,” Datacrushers does not require shoppers and customers to be logged-in to conduct both on and offsite campaigns. We use a wide range of data-driven and analytics based conversion tools to target the shopper at the right time with the most accurate and effective campaign to drive the sale.
Datacrushers is platform, language, and currency agnostic and requires only a few lines of code to get started therefore delivering an ultra-fast go-to-market with minimal set-up time and tech intervention.
Based out of Jerusalem, Israel, Datacrushers has clients worldwide including, The US, China, Russia, UK, Germany, and more.