Retailers are adding lease-to-own options to appeal to the half of U.S. consumers who don't have a credit score or have a credit score under 700. But the job's not done once retailers decide to implement a lease-to-own solution to service non-prime customers — and unless retailers update their technical and marketing strategies to fully integrate their lease-to-own checkout option, these differences can stand in the way of retailers achieving the exciting outcomes that are possible.
"Offering a lease-to-own product opens up a retailer's addressable marketing base to an exciting, underserved segment," said Misti Achilles, Vice President and Head of Marketing at Katapult, the leading omnichannel lease-purchase platform. "But in courting a new customer base, retailers don't always know the specifics of how and where to market to these customers. "
Taking steps with your new POS solution partner to fully integrate the lease-to-own option within your website and marketing efforts allows you to maximize conversion rates and achieve the exciting outcomes that are possible.
Here are five tech and marketing opportunities retailers can update to make the most of a lease-to-own partnership:
1. Understand how it fits into your retail landscape
Layering lease-to-own messaging throughout your website is a must for a successful partnership. But your partnership needs to fit the context of how your customers shop — which is unique to your online retail store.
Most retailers promote products first, leaving the method of payment for the waterfall of options that comes when a customer is ready to checkout. This might be the right move for a retailer with a mostly prime customer base. But if you want your lease-to-own solution to stand out and maximize conversions, you'll want to add specific calls to action to make the option more clear.
"If you don't give your lease-to-own partner prime real estate within the online experience, you won't see the full benefit of attracting underserved customers and adding to your bottom line," said Achilles. "Consider what percentage of your audience is subprime and make sure you're sending them to an experience where they can clearly see what products you have available for them."
2. Update your search terms
Lease-to-own partnerships don't just unlock your existing subprime customers. These partnerships can also be a front-running reason for new customers to seek out your website and products if you deploy strategic search engine optimization (SEO). Adding or optimizing search can make your existing strategy — including paid search, email, text, social, and programmatic marketing — even more effective.
"Subprime customers know who they are and are increasingly aware of lease-to-own as a preferred checkout option," said Achilles. "Your lease-to-own partner can come to the table with a strong understanding of the search terms those customers are looking for and help you build a pipeline of customers that are interested in transacting with you."
3. Put compliance first
Any payment option is subject to laws and regulations, and lease-to-own is no exception. But because lease-to-own options are subject to different requirements than prime loan and financing options, retailers need to take care to avoid causing confusion among customers.
When you're marketing your partnership, be transparent about how the checkout process works and what customers can expect from their experience, including the total cost of ownership for the customer and the options to purchase early or return the leased items at any time. For example, lease-to-own programs often offer flexible terms that empower customers with tailored payment options that fit their needs.
"We want customers to have a really strong understanding of the product they're getting, all the costs that are involved, and the different options they have," Achilles said.
4. Maximize your merchandising
With a strategy in place, you can start to make choices about merchandising your online retail store with lease-to-own solution branding, including assets, buttons, banners, and landing page creative to highlight the benefits of your partnership. Placement of these assets should be clear and helpful, from product pages to category pages, throughout the checkout experience and across heavily trafficked areas of the site.
"Retailers that go all-in on advertising their lease-to-own solutions see higher conversion rates among customers," said Achilles. "When they have a true launch and introduce their customers to this flexible checkout option. Merchandising and branding with your partner doesn't have to be a heavy lift for the retailer. Your lease-to-own partner can provide tools and digital assets — even custom ones — to make the process easier and more effective."
5. Make full use of your partnership
Small businesses often don't have access to bottomless marketing resources. For retailers in this situation, it's even more critical to lean on your lease-to-own partner for support with integration, branding, and analyzing the partnership over time — making sure customers have a positive ongoing experience after the lease-purchase transaction is complete.
"Once a customer is approved and converted, they're in a relationship not just with that retailer but with the lease-to-own partner," said Achilles. "That relationship ends up being critical in getting the retailer repeat transactions and building a loyal, long-term relationship."
Lease-to-own as a key to growth in 2022
Don't let the many priorities you balance distract from making the most of your lease-to-own partnership in 2022. That partnership could very well be a critical part of your success, as it introduces you to a new audience with yet unmet needs — needs your brand can meet with in-demand products.
About Katapult
Katapult (NASDAQ: KPLT) is the leading omnichannel lease-purchase platform, providing alternative solutions for retailers and consumers. As a financial technology company, Katapult provides cutting-edge technology that integrates seamlessly with online platforms, enabling our retail partners to expand their customer base, increase transactions, and grow revenue. Katapult's consumer-centric focus ensures an efficient application and approval process while providing transparent and tailored payment terms. Katapult partners with hundreds of retailers across the United States and millions of approved consumers to create new opportunities for point-of-sale transactions. To learn more about Katapult, click here.
