Because the payments process is a critical part of the customer journey, delivering a simple payment experience that is more like a service than a transaction can be a key differentiator.
Today’s e-commerce shoppers are empowered. They demand highly satisfying personalized experiences and the ability to shop anytime, anywhere and from any device. If an online retailer doesn’t meet these demands, shoppers will likely move on to one that does.
“Experience is the new loyalty,” says Sebastian Siemiatkowski, CEO of Klarna, a global e-commerce payment provider. “It’s one of the key drivers for consumers to return to a retailer’s site or app.”
Retailers must be able to keep their customers engaged in new and unexpected ways in order to attract and maintain customers, he says. “Loyalty is no longer a single points program,” Siemiatkowski says. “It’s about offering a holistic product with a distinct marketing and business strategy that transforms a product into an experience, to turn customers into repeat and engaged visitors. Retailers have an opportunity to distinguish themselves by providing personalized services in different ways.”
Because the payments process is a critical part of the customer journey, delivering a simple payment experience that is more like a service than a transaction can be a key differentiator. For example, a tool such as Klarna’s Pay Later service enables an apparel retailer to allow a shopper to try on an item at home before it charges her for the item.
“No money leaves her account until she decides to keep the item,” Siemiatkowski says. “That means a shopper no longer has to ask, ‘Where’s my refund?’ She can receive the item and return it if it is not suitable within 30 days without ever handing over her money.”
That type of service can help a retailer differentiate itself from its competition, he says. A merchant can offer the service in addition to, or instead of, augmented and virtual reality tools that many consumers may not be interested in using.
Those types of services can transform the payment transaction into a retail service experience for the customer, Siemiatkowski says. The approach is working well for shoe retailer Ego Shoes. By implementing Pay Later, Ego can offer shoppers an in-store-like experience by letting them try on shoes in their home before making a payment. Since it began offering the service, its average basket size has increased by 22%. And promoting Pay Later within its Facebook ads has helped produce a fivefold increase to its return on ad spend.
“We have experienced a significantly better level of repeat purchases because of Klarna and we can measure a healthy increase in basket size,” says Usman Riaz, Ego’s founder. “When you think that our customers can try on a number of purchases at home, only keep the ones they love and then have 30 days to pay later, it’s no wonder Klarna is proving such a winner.”
Consumers’ demands for greater personalization, high service levels and frictionless experiences will only continue to grow, Siemiatkowski says. “We are in a new era of ‘omni-shopping’, where the distinction between online and offline commerce experiences for customers has blurred,” he says. “Consumers today expect flexibility, transparency and payment experiences customized to their individual needs, but they also want them to be consistent with the in-store experience.”