What’s an acquiring bank and why you need one
In times like these, it can be difficult to find the headspace to map out your business growth. It's difficult to know where to start. What you need is a framework. In 2000, three McKinsey consultants published The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise. In it they present a model that invites business owners to open their minds and break free from existing thought patterns. It’s called The Seven Degrees of Freedom for Growth, and it provides a framework intended to help businesses broaden their horizons.
McKinsey’s Seven Degrees of Freedom for Growth
Payments can be one of those unobvious opportunities for growth that can be a real driver of your expansion plans. It can easily be mapped to at least four of the seven degrees shown above. We recently looked at how your business can remove existing complexities, now we’ll look at how your payment platform can play a part in planning your growth.
Step one in any growth plan is to work out how you can sell more to those you already sell to. Your customers know who you are and what you offer. Now it's a matter of increasing the frequency of their purchases. Payments can be an essential tool in your efforts.
Know thy customer: Selling more means understanding them more. How and where your customers pay are two of the most fundamental characteristics you should know, in order to grow your business. For example, do they use Apple Pay on mobile but a debit card in store? An effective payments partner can identify your customers’ preferred methods and ensure you can offer the whole range of them, both online and offline.
Maintaining loyalty: There’s never been a more important time to build meaningful relationships with your customers. 73% of global consumers said that they would continue to favour the businesses they relied on during the pandemic. If the payments data between your digital and physical channels is connected, you can build a centralised view of your customers and in turn tailor your communications to specific customers. For example, you could send an email with a 10% discount on the day of the month they tend to spend most.
|Avoid not linking card details to shoppers||Instead connect data identifiers with payment data. This will enable:|
|Card acquisition and payment requests can return several customer identifiers. It‘s up to you which of these identifiers you want to use.||Passive customer recognition: Customer origin data can help you to decide if you should accept new payment methods, offer currency conversion on your terminals, or add signage in other languages in your shop.|
|Active customer recognition: Engage recognised customers by personalising their shopping experience. Add points to the shopper's loyalty account, or you can apply this before a payment to award a discount or a loyalty gift on the spot.|
|Tokenization for recurring online payments: Use when cross-selling products that require regular payments, such as an insurance policy for a product that the customer bought in your store.|
You’ve figured out how to encourage increased spending from existing customers, now it’s time to look further afield and attract new ones to further your business growth. Understanding them is the first step, which can be made easier by using market segmentation to divide your market into niche groups. This will help you develop targeted marketing campaigns to cater to the need of each grouping. Segmentation is traditionally done by these four categories:
Knowing where, how much, how often, and how your customers shop can be invaluable in building a detailed picture of your potential new customers. Payment identifiers can help with adding more detail to your behavioural and geographic groupings. For example:
You can also use payments data to increase your share of customers in segments that may be underperforming. For example, adding a mobile responsive checkout and accepting wallet based payments will lead to an increase in conversions among Gen Z.
Payments data can help you map out and define customer segments so you can:
Evaluating and redesigning the system by which your product or service is delivered to customers can also help grow your business. We found that 7 in 10 shoppers abandoned an online shopping cart at least once in the past six months due to difficulties completing a purchase, resulting in a staggering figure of £257bn in lost annual sales.
Delivering a superior payment experience ensures you can generate as much revenue as possible from your existing customers as well as those new ones you’ve worked so hard to attract. This can be done by optimising your purchase funnel and payment page. From offering one-click payments to auto-filling personal information into forms, there’s a variety of ways to create a more enjoyable checkout experience.
|Redirecting, if not relevant: Forwarding customers to a payment page that isn’t hosted by you can arouse suspicion.||Go native: This will increase trust and boost conversions since it minimises steps to payment. If you have an app, go for in-app payments instead of a redirect.
Targeted redirect: If you have a variety of use cases where there’s 1:1 interaction - including chatbots, social media, and telephone - opt for a Pay by Link redirect. This will ensure a smooth and branded experience that completely fits your conversational commerce strategy with conversion in mind.
|Bombarding customers with options: Just because you can offer 100 payment methods, it doesn’t mean you should.||Shortlist: Pick your top 5, which will usually include the locally preferred options (e.g. cards or bank transfers) + wallet options. Adyen builds this logic into your checkout so you offer what matters. This will ensure customers can seamlessly jump to the next step of completing the payment.|
Payments can help you to increase distribution in existing markets while making sure you create an impact in new ones. Here’s two examples of how we’ve helped merchants remain compliant and grow into new regions.
Even if you know your market inside-out, you can’t be expected to know everything about payments regulations. Your payment provider may have the local expertise that you might lack and can keep you up to date with all the latest developments in your market.
For example, a recent Swedish law dictated that the first payment option shown in a checkout page could not be a credit option. In other countries this is common. If you were a merchant operating in Sweden, we’d seamlessly factor this change into your checkout logic.
Once you integrate with Adyen, you can take advantage of our global payments technology and in-depth knowledge of local payment options. Every market has nuances and favoured ways to pay. While mainstream cards are popular across the UK and Ireland, other payment options like online banking, open invoice, and local card schemes dominate in other markets.
Irish sportswear retailer Life Style Sports benefited from having a partner on hand to help them with its expansion to the Netherlands, Germany, and France where they rolled out iDEAL, Sofort, and Cartes Bancaires respectively. Gordon Newman, Head of Omnichannel, commented:
“Adyen has been brilliant. They’ve provided data to inform our decisions around new payment options, and implementation was very straightforward. Rolling out iDEAL was so simple that it’s given us the confidence to support other local payment options.”