Payment strategies to help SMEs weather cost of living crisis

Ease of checkout and a broad payment offering – combined with data-led loyalty programmes – can help SMEs to weather market headwinds

Article as seen in Business Cloud. Nick Horne, Suresite Groups Sales and Commercial Director discusses payment strategies to help SMEs weather the cost of living crisis.

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Amid rising household and energy bills, it comes as little surprise that Brits’ spending habits are shifting.

As the cost of living crisis deepens and purse strings tighten, takeaways, meals out, gym memberships, subscriptions and hair & beauty treatments are all on the ‘cut’ list.

Disposable income isn’t what it used to be – and this will hit SMEs hardest of all. At the same time, increased costs are eating into often already small margins.

So how can our 5.6 million SMEs leverage innovation in payments in order to make every penny spent with them count?

Rethinking your payment options

Removing barriers to a sale of any kind is the very first thing SMEs should be doing as the cost of living bites. Not offering a customer’s preferred payment method can be one of the swiftest ways to lose custom. Accepting mobile payments is a must: new data suggests that 61% of customers are leaving their physical wallets at home, such is their confidence in contactless and mobile payment options. SMEs should explore a range of payment partners to ensure that they are able to accept any kind of payment method – from mobile, to coins, to crypto.

Buy now, pay later (BNPL) services also have a role to play – taking a sympathetic approach given that rising costs are, in some cases, pushing people into debt in order to cover basic services. Pay later options such as Klarna and ClearPay are commonly used across online retail – and have a significant impact on cart abandonment rates.

Other industries might also benefit from BNPL options too. Take beauty & hair services as an example – identified as something that consumers may decide to cut from their monthly budgets. Offering a BNPL option at the point of booking an appointment online can both help customers to spread the cost of their hair or beauty treatment across two or three payments, and can help SMEs mitigate the risks of cancelled appointments and no-shows due to customers having insufficient funds.

BNPL options – much like credit and debit card payments – also offer SMEs an immediate settlement. The money clears in two or three days, depending on the service provider, and can help businesses to better manage cash flow.

Spend via third party partnerships

Retail SMEs may be able to add value – and also cast a wider net in terms of customers – through third party partnerships and home delivery. For smaller, independent convenience and grocery retailers in particular, offering home delivery services via a third party can expand your customer pool, and help differentiate between competitors. Online grocery shopping peaked during the UK lockdowns, but has since stabilised and remains a steady market.

Third parties should be reviewed and selected carefully – with retailers focusing on ease of use, simple customer interface via an app, streamlined checkout processes and cost of deliveries. When done well, home delivery is a great way to foster customer engagement outside of their usual shopping habits.

A shift in approach to grocery delivery may well be seen over the coming months as inflation bites – from the pleasure seeking to the practical. Consumers still require the essentials – and a sharp, swift and simple-to-use delivery option can be the difference between a consumer buying their basics with one business or another.

Data and payments – the silver bullet for SMEs

Payment technology can unlock incredibly valuable data insight. Whether shoppers engage in person, or via third party delivery apps, the relationship between consumer and business can be enhanced further with value-focused loyalty programmes that are led by spend data analysis.

Payments made via an app, mobile or contactless card can allow SMEs – working with experienced partners in the spend data analysis space – to collect a wide variety of customer data; what they are buying, what kind of customer they are, where they spend, when they’re spending and how often. This insight, in turn, can be leveraged to create personalised and relevant offers to engage and retain customers, and most importantly, support them in times of financial hardship – with fair prices and helpful promotions. Businesses can also measure the impact an offer or discount has on customer behaviour – helping to hone with every transaction exactly what the customer needs and how the retailer can respond.

As an increasingly high-spend product purchased within a regular transaction cycle, fuel retail is a perfect example of how data and loyalty schemes can be leveraged together. Data insight could be as simple as helping a smaller forecourt and convenience store to identify the best time to open their doors to customers, or when additional staff may be needed to serve busier periods. Throwing in a discounted coffee with a tank of fuel, for example – during the height of morning commuting hours – will likely encourage customers to spend at one site over another.

With data-driven offers and loyalty programmes, SMEs can enhance the final spend at checkout – whilst still delivering value to the customer. Every penny counts.

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