The flip side of this huge potential to drive growth is the danger of missing out on new conversions and loyal customers if a payments strategy fails to deliver the experience customers crave.
The research we have carried out at AccessPaysuite lays bare this rise of a disconnect between what organisations offer and how customer behaviour and expectations are changing. We have conducted surveys with the public across several industries – including insurance, financial services, health and wellbeing and gyms -- and we have also looked at independent research into payment experiences.
One huge take out is that customer experience and payments are intrinsically linked. A company can get everything right, in terms of product, service and pricing, but if they do not offer the right payment channels and if they don’t get it right first time, people will simply take their custom elsewhere.
What do customers expect?
The payments experience consumers are now expecting can be summed up by two words – choice and flexibility. AccessPaysuite research found:
Payment choice:
- 62% report a wider choice of payment options positively impacts their choice of insurance provider
- Nearly a third, 32%, of health and beauty customer say choice is important in recurring payments
- Nearly a third, 30%, of gym members report frustration with lack of payment choice
Payment flexibility
- 69% says flexible payment options are important in choosing an insurance premium
- 41% of gym members value flexible payments
- Nearly a third, 32%, of health and beauty customer require flexibility
Changing customer behaviours
As our white paper makes clear, consumers expect to be offered the payment method they prefer, and they require flexibility. This is not necessarily shown by debit and credit cards still being the top payment choice in the UK but rather in the channels that are growing. Research from UK Finance has found the relatively new options of Buy Now Pay Later (BNPL) are used for 14% of transactions now, and paying remotely via a bank account (often referred to as Pay By Bank) accounts for 10% of payments (the same proportion as direct debits).
So, the clear take out from the research is that organisations must adapt to how consumers now want to approach payments. An extra level of complexity is added by digital wallets. Government research has found a little over half the UK adult population now use their cards within these wallet (such as PayPal and ApplePay) more often than they do the cards on their own.
The price of failure
So, if customers want choice and flexibility, and they want payments to go through with the minimum amount of hassle, what happens when they are let down?
Well, one can never draw a straight line between cart abandonment and payments, but our research shows there is likely a good link between the two. Abandonment rates are running at anything between 30% (according to the UK Government) and 70% according to other reports, but the crucial thing is customer attitude. According to the Baymard Institute, surprise costs that only crop up at the check out page are the biggest cause for abandonment. However, one in four people say they abandon carts because they do not trust the company’s payment security and 13% walk away when their desired payment option is not available while 9% quit when an attempt to pay does not work out.
Failed payments are a massive issue for organisations to consider, alongside choice and flexibility. Research from Lexis Nexis shows a cast iron link between failure and customer churn with 60% of companies saying the lose customers due to failed payments, rising to 80% for those who process the most payments.
The full scale of the problem has been exposed by our own research at AccessPaysuite. In financial services, one in two customers report having a payment issue. Drilling down, in insurance, more than a third of customers have had issues with failed payments, such as being overcharged or facing difficulties cancelling payments.
And the ultimate disappointment for consumers? Not only are they having payments problems, but they also don’t feel listened to. Nearly a third of customers in financial services bemoan the lack of decent customer service in payments. The same applies to nearly a quarter of gym members.
The key is to work with a payments partner who can ensure an organisation offers the payment channel mix required by customers in a tech stack that gets it right first time, as often as possible. The ultimate solution is to have the best technology but also a caring customer support team who have the tools available to put issues right for customers swiftly, reducing the risk of churn and brand damage.