Black Friday Cyber Monday (BFCM) has become a highly competitive retail landscape. The annual shopping event demands innovative strategies to drive sales and customer acquisition. Amongst the craze about AI and omnichannel, Buy Now, Pay Later (BNPL) has emerged as a powerful solution for retailers seeking to enhance the customer journey and boost conversions during this peak shopping period.
By offering a flexible payment option, BNPL can increase average order value, expand customer reach, and foster loyalty. As consumer preferences shift towards installment payments, retailers must strategically integrate the best Buy Now Pay Later strategies into their BFCM campaigns to gain a competitive advantage.
Understanding BNPL
What is Buy Now, Pay Later?
Buy Now, Pay Later (BNPL) is a payment method that allows consumers to purchase goods or services and pay for them in installments over time. Here's a breakdown of how it works:
Image source: WallStreetMojo
- Step 1 - Purchase: When a consumer makes a purchase, they can select BNPL as a payment option at checkout.
- Step 2 - Approval: The BNPL provider then conducts a quick credit check to determine eligibility. If approved, the purchase is authorized.
- Step 3 - Installments: Consumers typically make a small upfront payment, often around 25% of the total purchase amount. The remaining balance is divided into equal installments to be paid over a specific timeframe, usually weeks or months.
- Step 4 - Repayment: The BNPL provider collects installment payments from the consumer and transfers the total purchase amount to the merchant.
Image source: Precedence Research
Buy Now, Pay Later is blowing up! This method is expected to go from a $179.5 billion business in 2022 to a whopping $3268.26 billion by 2030. That's a crazy growth rate of 43.8% each year! The rapid expansion of Buy Now, Pay Later (BNPL) presents a golden opportunity for retailers to gain a competitive edge.
Benefits of BNPL for Consumers
Image source: demandsage
BNPL empowers consumers with financial flexibility and control. 45% of BNPL users agreed that offering interest-free installment plans allows them to spread the cost of purchases over time, making larger purchases more manageable. This can benefit big-ticket items like electronics, furniture, or travel expenses.
Image source: demandsage
Moreover, BNPL often provides a more straightforward and faster approval process than traditional credit cards. This can significantly appeal to younger consumers who may still need to establish credit histories. It is reported that millennial from 25 to 44 years old is the largest group of BNPL users with 50% using the solution, while baby boomers aged 55 and up are least likely to use BNPL - with only 19%.
Ultimately, BNPL offers a convenient and accessible way for younger consumers to manage their finances while enjoying the benefits of online shopping.
The Impact of BNPL on Customer Behavior and Purchase Decisions
One of the most notable impacts of BNPL is its potential to increase impulse purchases by up to 13%. By removing the immediate financial barrier, consumers are more likely to make unplanned purchases. The perception of paying later can make the cost of a product seem less significant, leading to a higher propensity to add items to the cart.
Image source: samcart
BNPL has the potential to significantly boost average order value (AOV) by as much as 40%, improve cart conversions by 30%, and increase shopping frequency by a whopping 36%! When consumers can spread payments over time, they are more inclined to purchase higher-priced items. This can be particularly effective for larger-ticket items like electronics, furniture, or travel.
The availability of BNPL is reshaping consumer preferences. Younger generations, in particular, have embraced BNPL as a preferred payment method due to its flexibility and alignment with their financial habits. This shift in consumer behavior is compelling retailers to adopt BNPL options to remain competitive.
By offering a convenient and flexible payment option, BNPL can enhance customer satisfaction and loyalty. A positive BNPL experience can encourage repeat purchases and significantly increase customer lifetime value.
Best Buy Now Pay Later Practices for BFCM 2024
To maximize the impact of BNPL during BFCM, retailers should consider implementing some of the best Buy Now Pay Later approaches:
Clear and Prominent BNPL Options
Image source: Farmacy
Display all supported Buy Now, Pay Later (BNPL) providers on the product and checkout page openly. You can incorporate BNPL companies' logos to enhance brand recognition and instill consumer trust. Additionally, provide transparent information regarding eligibility criteria for each BNPL option to facilitate a smooth customer journey.
Retailers are increasingly turning to BNPL services as a proven strategy to drive sales. The effectiveness of BNPL has led to a surge in available solutions for eCommerce stores of all shapes and sizes. Here are 6 top-rated BNPL providers available on Shopify to consider:
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Flexible Payment Plans
Image source: TAKA Jewellery
One of the best Buy Now Pay Later tips is offering various installment options, which is crucial to cater to diverse consumer preferences and financial situations.
By providing customers with flexibility, retailers can enhance customer satisfaction and increase conversion rates. Highlighting interest-free or low-interest plans can further incentivize purchases and differentiate the shopping experience.
Tailoring installment options to specific product categories or price points can also optimize sales. Ultimately, the goal is to empower customers to make informed decisions and responsibly manage their purchases.
Transparent Terms and Conditions
Image source: Boohoo
Building trust with customers is paramount when offering Buy Now, Pay Later (BNPL) options.
Communicate all fees, including late payment charges, interest rates (if applicable), and other associated costs. Detailing eligibility criteria upfront ensures transparency and effectively manages customer expectations.
By providing comprehensive information, retailers can foster a sense of trust and confidence, encouraging customers to utilize BNPL services.
Seamless Checkout Experience
Image source: Boohoo
A frictionless checkout process is essential for implementing the best Buy Now Pay Later payment method.
Integrate BNPL options seamlessly into the checkout flow to avoid interrupting the customer journey. Minimize steps and fields required to complete a BNPL purchase.
By streamlining the checkout experience, retailers can reduce cart abandonment rates and increase conversion.
Targeted BNPL Promotions
A countdown timer adds a sense of urgency so your customers are motivated to complete their orders. (Image source: FoxKit)
Remember to offer exclusive discounts, rewards, or early access to products for customers who choose BNPL as their payment method. Implement limited-time offers or time-sensitive promotions to create a sense of urgency and encourage immediate purchases.
Segmenting customers based on purchase history and demographics allows for tailored BNPL incentives to enhance the overall customer experience and drive sales.
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Best Buy Now Pay Later Examples
Before diving into setting up one for your store, it's essential to examine the best Buy Now Pay Later applications from previous Black Friday Cyber Monday (BFCM) campaigns, so you can learn a thing or twoand optimize your own BNPL offerings.
Charlotte Tilbury
Image source: Charlotte Tilbury
Charlotte Tilbury has chosen Klarna to create a seamless and compelling BNPL experience for their customers.
By prominently displaying the Klarna solution directly below the product price, they've made it instantly clear to customers that they can break down their purchase into 3 interest-free installments.
This strategic placement maximizes visibility and encourages impulse buying, as customers are immediately presented with a flexible payment option.
SKIMS
Image source: SKIMS
In the US market, the shapewear brand SKIMS offers 2 BNPL solutions: Klarna and Afterpay.
Each is referenced in product pages underneath the ‘Select A Size' button. These 2 BNPL companies offer slightly different terms and conditions, but both allow online shoppers to split their order into 4 payments of $9.
The BNPL option empowers online fashion stores to attract younger consumers seeking stylish but affordable clothing items without facing financial burdens.
Canyon Bikes
Image source: Canyon Bicycles
Canyon Bicycles are a significant investment. Even entry-level models carry a substantial price tag, while high-end bikes can cost as much as a used car.
However, the brand takes quite a relaxed approach. They don't shout about Splitit, their BNPL partner. Instead, they casually mention that you can split the cost into smaller payments right underneath the product description.
Pricey sports gear is amongst the list of expensive items that can cost an arm and a leg if they require 100% upfront cash payment. Installment or BNPL is a great solution for both the sellers and the buyers. More sold items means more sales, without breaking anyone’s bank.
Casper
Image source: Casper
Unlike Canyon, Casper proudly display their partnership with Affirm on the website homepage.
A significant section screams "Buy Now, Pay Later". This tactic is consistent throughout the site, from the category to product pages. Mattresses are typically high-ticket items, so Casper is making it clear to customers that they can afford a Casper mattress without financial strain. This approach aligns with the company's goal of making sleep accessible to everyone.
Interestingly, the Casper x Affirm collaboration makes consumers extremely flexible payments, such that they can pay over 3, 6, 12, and even 24 months based on their financial situation.
Tips for Maximizing BNPL Impact
To fully leverage the potential of BNPL during BFCM, brands can apply the following approaches:
Image source: Statista
Partner with Reputable BNPL Companies: Selecting the right BNPL partner is key when implementing the best Buy Now Pay Later plan. Prioritize BNPL companies with a strong reputation, robust fraud prevention measures, and a seamless customer experience like PayPal, Klarna, or Affirm. A reliable BNPL partner will enhance your brand's trustworthiness and reduce the risk of chargebacks.
Leverage Customer Data to Personalize BNPL Offers: By using the power of customer data, retailers can create highly personalized BNPL offers. Analyzing purchase history, demographics, and browsing behaviors provides valuable insights into customer preferences and financial capabilities. For instance, a customer with a strong purchase history and excellent payment record might qualify for higher credit limits and longer repayment terms. Similarly, a customer with a flimsy purchase history could be offered a lower credit limit and shorter repayment terms.
Foxify's analytics and reports allow you to review your pages' activities and get insight into your visitors for any date range. (Image source: Foxify)
Monitor and Analyze BNPL Performance: Track critical metrics such as conversion rates, average order value, and customer satisfaction to measure the effectiveness of your BNPL strategy. Identify trends and patterns to optimize your approach.
The BNPL landscape is constantly evolving. Review your BNPL strategy regularly and adjust based on performance data and customer feedback. Stay informed about industry trends and consumer preferences to stay ahead of the competition.
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Final Thoughts
Buy Now, Pay Later (BNPL) is a game-changer for Black Friday. It's like giving your customers a superhero cape to help them purchase more of what they like. If you play your cards right with the best Buy Now Pay Later strategies, you can boost your sales significantly and make your customers happy.
Want to give it a shot? Let's make this BFCM your best one yet!
