Author: Kivo Daily Staff

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Navigating the complex landscape of business growth strategies is no small feat for the contemporary entrepreneur. However, with the right tools and insights, one can transform these challenges into opportunities for significant growth. 

Among these tools, point-of-sale (POS) consumer financing is emerging as a key driver of increased average order value (AOV), impacting the bottom line. 

Harnessing the power of POS consumer financing can elevate your business, propelling it into a new realm of customer engagement and revenue generation. 

Consider the evolving retail landscape: global retail sales are projected to reach an astonishing $29.3 trillion in 2023. Amidst this growing market, how can your business secure a larger slice of the pie? By embracing the potential of POS consumer financing. 

By introducing flexible, manageable payment options at the point of sale, you empower your customers to distribute their payments over time. This model naturally encourages larger purchases, leading to a significant boost in your AOV. In fact, businesses that have adopted this strategy have reported a remarkable 32% increase in sales. 

The following sections explore five critical strategies for maximizing AOV through POS consumer financing. Let’s explore this potential together, transforming your business one step at a time.

What is POS Consumer Financing?

POS consumer financing is a flexible payment solution that can be seamlessly integrated into your business model. 

You may wonder, “What exactly is POS consumer financing, and how does it function?” In essence, it’s a system that allows customers to purchase goods or services from a business using short-term loans. 

Here’s how it works:

• A customer selects the product or service they desire.
• When they reach the payment stage, instead of paying the full cost upfront, they are offered the option to finance their purchase. This financing option can be provided by a third-party lender or your own business, depending on your capabilities and preferences.
• If the customer opts for financing, they will apply for a loan, line of credit, or another form of financing.
• If the consumer is approved, they can purchase the goods or services on the spot and commit to repaying the loan over a defined period, usually in monthly installments.

A survey by Citizens Bank revealed that 76% of consumers are more likely to make a purchase if a simple and straightforward payment plan is offered.

How Consumer Financing Benefits Businesses?

Embracing POS consumer financing can deliver a wealth of benefits for businesses, opening avenues for growth and development that extend far beyond immediate financial gains. 

Here are some key advantages of integrating customer financing options into your business model:

• Improves Sales: By offering manageable payment plans, you enable customers to make purchases they might otherwise postpone or disregard due to upfront costs. This leads to an increase in sales volume and, consequently, revenue. Providing buy now, pay later (BNPL) options increased sales by 20% to 30% and significantly raised the average purchase amount by 50%.
• Enhances Brand Recognition: Offering financing options positions your business as customer-centric and innovative, distinguishing your brand in the marketplace. This added value can significantly improve your brand recognition.
• Strengthens Customer Loyalty: When customers perceive that you’re actively providing solutions to manage their financial concerns, they will likely return for future purchases. This leads to increased customer loyalty and repeat business.
• Adds Competitive Advantage: In a highly competitive marketplace, POS consumer financing can give your business an edge by offering added value and convenience to your customers.
• Expands Customer Base: POS financing options can attract a broader range of customers, including those who prefer or need to manage their spending via structured payment plans. 47% of consumers chose to shop with a retailer because they offered BNPL financing through a well-known provider.
• Increases Average Order Value (AOV): With the availability of finance options, customers may be more willing to upgrade their purchases or add more items to their cart, increasing the AOV. 70% of customers spent more when a BNPL option was available.
• Decreases Cart Abandonment Rates: By providing an immediate and accessible financing solution at the point of sale, you can reduce the number of customers who abandon their carts due to cost concerns. In fact, retailers have seen a 2.1% increase in conversion after offering BNPL services.
• Increases Cash Flow: Offering consumer financing can help to ensure more predictable and consistent cash flow, as payments are typically received in a lump sum from the financing company, reducing the risk of late or defaulted customer payments.

5 Ways to Increase Average Order Value with POS Consumer Financing

Now, let’s explore how you can maximize your POS financing efforts to boost your average order value. Here are five actionable strategies to consider:

Promote Your Financing Offer to Customers

Driving higher average order values with POS consumer financing hinges not just on its availability but also on how effectively you promote it to your customers. Here’s how you can put this strategy into action: 

• Highlight Financing in Your Marketing Campaigns: Start by incorporating information about your POS consumer financing into your marketing materials. Whether it’s an email newsletter, social media post, or a banner on your website, ensure your customers are aware that this option exists. Make it clear that they can afford higher-priced items or make larger purchases through manageable installment plans.
• Educate Your Sales Team: Your sales team is on the front lines, interacting with customers directly. Equip them with the knowledge and tools to explain the benefits of your financing options. When customers understand how financing can ease their purchasing decision, they’re likely to spend more.
• Display Information at Point of Sale: Whether you operate online or have a brick-and-mortar store, make sure information about your financing options is visible at the point of sale. This can be a simple sign, a pop-up message, or even a dedicated section on your website. The goal is to ensure customers are reminded of the financing option at the critical moment of making a purchase decision.
• Leverage Customer Testimonials: Sharing positive experiences of other customers who have used your financing options can be an effective promotional tool. Real-life testimonials build trust and demonstrate the value of your financing offer in a relatable way.
• Offer Exclusive Financing Promotions: Periodically run promotions exclusive to customers who opt for POS consumer financing. For instance, offering a small discount or additional benefits on the first purchase made with financing can incentivize customers to try it out. 

Promoting POS consumer financing effectively is about clear communication and strategic positioning. By ensuring your customers understand and see the value in this offering, you can drive higher average order values and enhance customer satisfaction.

Offer Tiered Financing Options

Implementing tiered POS consumer financing options can be a powerful strategy to boost your average order value.

But what does this look like in practice, and how can you make it work for your business? 

A tiered financing system is a structure of different financing offers, each associated with a specific purchase value range. For instance, purchases over $500 might qualify for a longer repayment period or a lower interest rate compared to smaller purchases. 

Here’s how to get started:

• Define Your Tiers: First, decide on the different tiers or levels for your financing offers. These could be based on the total purchase value, specific product categories, or even customer loyalty status. Ensure that the benefits increase with each tier, incentivizing customers to spend more to reach the next level.
• Communicate Clearly: Make sure your customers understand the tiered system and the benefits of each level. Clear and concise communication is key, whether it’s through your website, marketing materials, or sales team.
• Highlight the Benefits: In your marketing and sales conversations, emphasize the benefits of reaching a higher tier. For example, show customers how they can save more or enjoy better terms by increasing their purchase value.
• Offer Limited-Time Promotions: Consider running special promotions where customers can access a higher tier’s benefits at a lower spending threshold. This can create a sense of urgency and stimulate larger purchases.
• Review and Adjust: Regularly review the performance of your tiered financing system. Are customers responding? Is it driving higher-order values? Use this data to adjust and optimize your strategy. 

By offering tiered financing options, you’re encouraging customers to spend more while providing them with greater value in return. It’s a customer-centric approach that not only boosts your average order value but also improves customer satisfaction and loyalty.

Promote Bundled Offers

Bundling products together and offering them with attractive financing options is a strategy to increase your average order value. But how can you put this into practice? 

• Curate Relevant Bundles: Start by identifying products or services that naturally complement each other and bundle them together. For example, if you sell electronics, you might bundle a laptop with a carrying case, mouse, and keyboard. Remember, the key is relevance; your bundles should make sense to your customers and provide added value.
• Price Bundles Attractively: Your bundled offer should be more cost effective than purchasing the items separately. This perceived saving, combined with the ease of financing, will incentivize customers to go for the bundle rather than individual items.
• Promote Your Bundles: Highlight your bundled offers in your marketing efforts. Whether it’s through email campaigns, social media posts, or on your website, ensure your customers are aware of these value-packed deals.
• Offer Exclusive Financing for Bundles: Make your financing options particularly attractive for bundled purchases. For example, offer a lower interest rate or a longer repayment period for these deals. This can be a powerful motivator for customers to choose the bundle over individual items.
• Train Your Sales Team: Your sales team needs to understand the benefits of the bundled offers and the associated financing options. They can then effectively communicate these benefits to customers, encouraging them to take advantage of these offers. 

Bundled offers, paired with attractive financing options, can drive up your average order value by encouraging customers to buy more in a single transaction. It’s a strategy that boosts your revenue and enhances customer satisfaction by offering great value and convenience.

Cross-Sell and Upsell

When leveraging POS consumer financing to increase your average order value, the twin strategies of upselling and cross-selling can be highly effective. 

Here’s why: Upselling encourages customers to consider a higher-end product than the one they initially had in mind. With the availability of convenient financing options, customers are more likely to be receptive to this proposition. 

After all, the difference in monthly installments for a more premium product may be quite small, making it an appealing option. So, you’re not just selling a higher-priced item; you’re offering a better value proposition. 

Now, let’s talk about cross-selling. This strategy involves recommending related products or services that complement the customer’s primary purchase. For instance, if a customer is buying a laptop, a cross-sell could be a laptop case or an extended warranty. 

With POS consumer financing, these additional purchases become more affordable, increasing the likelihood of the customer agreeing to add them to their cart. 

So, how can you effectively implement these strategies? It starts with educating your sales team about the benefits of POS consumer financing and how to communicate these advantages to customers. Training your team to identify upselling and cross-selling opportunities, and to present these options alongside flexible financing plans, can be the key to boosting your average order value. 

Remember, it’s not just about selling more; it’s about providing more value to your customers. When you pair valuable product suggestions with accessible financing options, you’re serving your customers’ needs while improving your bottom line. It’s a win-win situation, and it’s within your reach with POS consumer financing.

Implement Loyalty Programs

Integrating loyalty programs with your financing options can incentivize customers to spend more, knowing they’re earning rewards in the process. Here’s how to make it happen: 

• Design a Rewarding Program: Start by creating a loyalty program that truly provides value to your customers. This could be in the form of points for every dollar spent, tiered rewards based on purchase value, or exclusive benefits for loyal customers. The key is
• Integrate with Financing: Next, tie your loyalty program into your financing options. For instance, offer bonus points or rewards for purchases made with your POS consumer financing. This creates a compelling reason for customers to opt for financing and spend more per transaction.
• Promote Your Program: Make sure your customers are aware of your loyalty program and its benefits, particularly as they relate to your financing options. Highlight these advantages in your marketing materials, on your website, and through your sales team.
• Personalize the Experience: Personalization can enhance the effectiveness of your loyalty program. Tailor your communications and reward offerings based on individual customer preferences and buying behavior. This can create a stronger connection with your customers and motivate them to take advantage of your financing options.

Final Thoughts

Integrating POS consumer financing into your business strategy can be transformative, unlocking new avenues for growth and customer satisfaction. 

You can significantly boost your average order value by upselling and cross-selling, promoting your financing options, offering tiered financing, creating bundled offers, and integrating financing with loyalty programs. Each of these strategies encourages higher spending and enhances the customer experience by providing added value and convenience.