In our recent Who’s minding the store in B2B e-commerce blog post, we talked about the need for B2B e-commerce companies to have accountability when it comes to growing revenue. E-commerce is still new for many B2B companies, and therefore it also demands a significant investment of time and money that includes not only deploying a new technology, but often times changing the structure and culture of the business to accommodate changing buyer demands.
In short: going digital isn’t easy.
With so much on the line, revenue growth in the e-commerce channel is likely a high priority for most B2B firms. And a key part of growing revenue is ensuring that your site meets as many customer demands as is possible. Luckily, in the digital age, where there’s a problem, there’s often a digital solution! And when it comes to growing revenue, offering a flexible payment option is possibly the most direct solution for revenue growth.
If you’re a B2B seller who’s skeptical about the impact flexible payments might have on your bottom line, you don’t need to be. Why? Because they’ve already been proven in the B2C world. The prime example of this is PayPal/Bill Me Later, a common provider of instant credit in B2C. PayPal actually commissioned a study from Nielsen of all the transactions it enables and compare that to industry benchmarks. They found providing flexible payment options actually converted at 70 percent higher rate than non-PayPal transactions.
If that’s not enough incentive to offer better options, here are three more ways flexible payments can help your company grow its revenue.
We’ve talked before about how the trade credit system is broken and credit cards typically aren’t an economical or as convenient a solution as they may seem. We’ve also talked about the importance of optimizing conversions. Offering a flexible payment solution is a key ingredient in the process of increasing conversions. And when your conversion rate goes up, your revenue does, too (along with ROI on your marketing spend, but that’s a different discussion).
When a B2B buyer places an order with a company, they often need to hold back on the amount they spend. That’s for two reasons:
1. The supplier will only allow a limited order size on trade credit to ensure that they get paid in a timely manner.
2. The buyer only has access to a certain amount of credit on cards.
While these perspectives are perfectly reasonable, neither is fully in line with a modern e-commerce environment. By offering an instant credit line (instead of slow trade credit or highly limited credit cards), a B2B seller can provide the wiggle room for a buyer to make larger purchases, even if they’ve never done business together for. In this sense, convenience trumps trust. Plus, because it’s not the seller’s own money on the line but the third party who’s offering the credit line, there’s an instant level of trust that’s created between the buyer and the seller.
Similarly, convenience is the name of the game when it comes to reorders. And when a buyer has an already existing line of credit, they’re more likely to order from that merchant instead of spending the time to find another one. Plus, they’re more likely to come back and make purchases more frequently when they have existing credit. With each purchase, you have an opportunity to grow your relationship and increase customer loyalty, ultimately growing the average lifetime value of each customer.
Are you ready to grow your revenue?
If so, we can help. Contact us to schedule a Credit Key demo and learn how flexible payment solutions can contribute to your growth.