May 24, 20196 min read

Increase Order Value by 25 Percent with These 3 Simple Steps.

Kristian Borglund headshot

by Kristian Borglund

Your customer can’t decide between 2 products in your store. Are they going to pick the higher-priced item or the lower-priced one? With these 3 on-site messages, you’ll increase the chances of the customer buying the product they truly want rather than looking at price alone. Tech brand Lenovo saw a 25 percent higher average order value when putting these strategies to work.

Do you want to boost sales with Klarna’s on-site messaging?
Learn more and add it to your store here. 

We all know that happy customers are returning customers, and this should be your goal as a retailer. So what happens when the product that will bring them the greatest satisfaction has a higher price tag than another product that will simply meet their basic needs?

Many people have a self-imposed spending limit in their head, based on how much they believe they can afford. Consequently, they may not buy the product they actually want  – the one that will truly delight them – but instead, they settle for one that merely satisfies their needs. To compensate for that slight disappointment, they may feel the urge to buy something else later, at another store.

In other words, the perception of not being able to afford something can lead people to overspend down the road. It’s bad for them, and it hurts your sales figures.

So what can you do about this? It comes down to affordability.

How much purchase power does the customer believe they have?

Help your customer understand their purchase power upfront

The key to empowering your customer during a purchase is to let them see if they can afford it, upfront.

One mistake merchants tend to make is to offer flexible financing during the checkout process, thereby missing two points.

1. When the shopper begins the checkout journey, the decision to buy has already been made. The shopper may have chosen the lower-priced product (A) over the higher-priced and more appealing product (B) because B “is too expensive”. Finding out about financing during checkout doesn’t make much difference, because the shopper has already made up their mind about what to buy.

2. There are other potential buyers of product B (or equivalents) who don’t even make it to the checkout. Either they give up on buying product B for now, because of the price, or search for something at a better price elsewhere.

These customers might make a different decision if they knew their true purchase power up-front.

The solution is to implement on-site messages specifically designed to help your customers get the best shopping experience possible (as well as to increase your revenue).

Message #1: Check your credit eligibility (this service is not yet available in all markets)

A simple link on the product page that starts a quick process for checking credit eligibility:

After clicking the link “Prequalify”, customers are shown their eligibility and their options for splitting the payment into instalments. The results are instant.

This way customers don’t get stuck focusing on how much they can afford now, but rather how much they can afford over a longer period of time.

“The wording needs to be different according to the regulations in each market. ‘Prequalify’ is used in the US, and in the UK it’s ‘pre-approved’. As this feature rolls out in the Klarna app, we will use the wording ‘Test your purchase power’,” says Christopher Wendels, Senior Product Manager at Klarna.

So far, we offer this in the US and the UK, with more countries later this year.

Message #2: Dynamic credit with the product

Do you let your customer pay everything upfront, or in instalments?

For many customers, the message above – to pay in 4 instalments of $100 – is much more appealing than the usual $400 price tag.

Advertising instalments rather than the full price gives customers insight into how much they will pay each time; without any hidden costs or unwelcome surprises.

However, the challenge for many merchants – maybe for you too – is how to calculate a monthly payment amount given a specific promotional offer, or to advertise credit in a compliant way. Klarna can dynamically offer different financing options and payment methods depending on the amount the customer is considering spending. Promotions are kept up to date and legally compliant across all markets.

Message #3: Early identification and customised credit offers

Amazon does it.

The local coffee shop does it.

You should do it too.

We’re talking about greeting your visitors by name. If your store is connected to Klarna, you can turn on this functionality and make 60 million+ users feel at home as soon as they enter your store, without the need to log in, sign up, or register.

Furthermore, let them know their favourite way to pay is available in your store.

“The message is personalised. One customer is greeted with the message that they have the option to pay over time, while others may see they can use bank transfer, Visa or their Klarna account to pay later.”

This all enhances the positive emotional experience associated with shopping at your store, and encourages them to go for the product they really want.

On-site messaging is proven to make a difference

One of the companies using on-site messages to boost online sales and average order value is Lenovo (note that these messages are only visible to visitors from the US, due to legal reasons).

The $45 billion company ran an A/B test for three weeks to measure the impact on a test group of customers shown dynamic on-site messaging about instant financing compared to a control group of customers who weren’t. The results?

Those in the test group had a 25 percent higher average order value than the control group. The implementation of the messaging also led to a nearly 40 percent increase in the proportion of Lenovo sales completed through Klarna, confirming the incremental value this solution delivers to merchants.

By clearly conveying how affordable a product can be, customers are more empowered to make a purchase.

Do you want to boost sales with Klarna’s on-site messaging?
Learn more and add it to your store here.