Historically, marketers have relied on the 4 P’s — product, price, place When promotion – to inform their marketing strategy. These fundamental components help businesses meet the dynamic wants and needs of their consumers while meeting the demands of their business. But rapid advances in technology, amplified by the pandemic, have fundamentally changed consumer behavior, especially how they shop.
In the 2022 Commerce and Payments Trends Report, Joel Henckel, Senior Vice President of Mastercard’s US Market Acceptance, said: For the first time, card-not-present transaction volume has surpassed card-present transaction volume, and the shift has not returned to pre-pandemic levels. “
More than 50% of consumers now believe they are more digital than ever before, with 39% shopping on their smartphones daily or weekly, and 23% shopping online at least daily. I am answering And the number of payment options for online purchases continues to grow. 53% of merchants plan to expand their payment options in 2022, with 60% planning to add digital wallets, 60% planning to accept payments via QR code, and 51% accepting I plan to start. digital billing.
It took a while (and a pandemic) to happen, but here it is: shopping is digital.
Given this change, the actual transactions and payment methods used by consumers deserve more attention. We believe this trend – the prevalence and consumer adoption of new payment methods – presents a significant opportunity for marketers to better understand their customers. Payment is the 5th P.
Overview of payment options available to consumers
Until recently, American consumers only had a few options for purchasing anything: credit or debit cards, cash, or traditional hold programs. But in early 2020, as COVID caused brick-and-mortar store closures, an explosion in e-commerce created an opportunity for greater awareness, testing, and adoption of new digital payment options. There are many types of payments and the list continues to grow. Below is a quick snapshot of some of the retail payment options available to consumers today.
Why marketers should think about paying with a capital ‘P’ in their strategic plans
Payment settings and usage provide marketers with rich first-party data. Payment data at the consumer level is nothing new, but the diversity of payment options certainly is. This wide selection gives you a deeper understanding of your customer and prospect profiles. For example, you can create a robust learning agenda to answer key questions such as:
- What are the preferred or most popular payment methods for certain segments?
- What are your payment preferences like over time? Are certain payment options declining while others are expanding? What does this tell you about those customers? can you help me
- Is there a relationship between products or product categories and payment methods? Are there geographic or demographic concentrations?
Given today’s inflationary environment that reduces consumer purchasing power, we need to be aware that this poses risks to private consumption, especially discretionary spending. People won’t stop shopping, but they will face more difficult choices about what to buy and when, how much to spend, and which payment method to use. With this reality in mind, there are increasing opportunities to personalize products with a focus on flexibility.
Make sure your payment options are available across all channels and your customers are aware of them. In the US, 43% of consumers who have used pay after purchase (BNPL) used it to provide convenience. Due to lack of funds, this could accelerate. Gen Z adults and millennials continue to be the most prominent users of his BNPL service, but there is a steady stream of interest among Gen X as well. Make sure these segments are aware of the new flexible payment options.
Expanding payment options is an essential move forward as retail marketers focus on improving the customer experience. But it’s not just about new products. Value exchanges that may offer unique opportunities to different audiences should be recognized and articulated. For example, enhance segmentation based on payment method. This includes a new set of anti-churn communications to drive awareness of new payment options, abandoned cart or abandoned browsing communications to drive conversions, or making the shopping experience even easier to drive endorsements. may include other communications informing loyal customers about how to
While there is a lot of debate about possible regulation, we believe payments will continue to evolve and we will see further innovation. Consumers will continue to have more choices. As we already see today, what started out to meet online buying needs is now expanding into brick-and-mortar stores and virtual retail. I hope you will provide it. Everything comes down to balancing the value exchange and delivering the right customer experience.
As you begin your next marketing planning cycle, consider the following: payment as an important element of strategy. Try introducing new payment options through a test or pilot program. Analyze your customers’ payment preferences to understand their current preferences. Personalize your offers and messages with your customers’ preferred payment methods.
Lisa Katz is Senior Vice President of Customer Strategy at Merkle, a Fortune 1000 Customer Experience Transformation Business Partner.