Retail Observer

RETAILOBSERVER.COM APRIL 2020 50 P rivate Label Credit Cards (PLCC, or retail credit) have been around forever. And for good reason: It works! So we're not re-inventing the wheel, or introducing a new, innovative payment method. Let's look at some of the major benefits of PLCC versus your standard VISA/MC/AMEX transactions. Higher Average Tickets. Looking at the data from a portfolio that I help manage, bank card transactions (VISA/MC) in the Major Appliance, Consumer Electronics and Furniture industry average around $700 per transaction. Compare that figure to a $2,100 average transaction for customers using their PLCC. The proof's in the pudding – customers are significantly more likely to spend more when they can spread payments over 6, 12 or 18 months. PLCC sales also give your retail sales associates a much better opportunity to attach high-margin services to the ticket (extended warranties, installation, etc.). Repeat Customers. According to a recent study by Synchrony Financial, 68% of PLCC cardholders said they plan to use their card again in the future. So, not only will customers spend more in your store, they'll also plan to (and will) come back and use the card over and over again at your store. Marketing Opportunities. This is probably one of the most under-utilized features of a PLCC program. Once a customer signs up on your retail credit program, you have a guaranteed touch point with that customer on a monthly basis, as long as the customer has a balance. The credit card statements the customers receive, online or through the mail, give you an easy ability to promote new offers and/or remind them of available credit they have, at no additional cost to you. Where else can you market to and keep your name and brand in front of your existing (and historically best) customers on a monthly basis at no extra cost – a customer who has available credit and money to spend? In addition to this free marketing, most PLCC providers allow you to easily pull a report that lists all customers (inclusive of current/accurate mailing address or email if customer elects). The report will show you, by customer, available credit they have to spend IN YOUR STORE. I often help my customers use this list for direct mail or email "Open to Buy" campaigns that feature an offer – either a finance offer or product offer – and show the customer the dollar amount they already have available to make another purchase in your store. When we include this information on the marketing piece, we see approximately a 3% response rate on these campaigns compared to less than 1% on traditional direct mail offers. Increased Close Rates. Another Wells Fargo survey tells us that 89% of cardholders say that financing made their large purchase more affordable. To further support this, a recent study by the Federal Reserve Board shows us that four in ten adults would not have available cash if faced with a $400 emergency expense. Financing these unexpected purchases makes these purchases more palatable and budget-friendly. Lowered Expenses. If you haven't checked PLCC rates recently, it's definitely worth your time. You can lower your credit card processing expenses when you use your PLCC as a payment method. This will largely be determined by which term you are offering: 6 month, 12 month, 18 month, etc. The longer the term, the higher the discount on the amount you're charged. But you can expect for a six-month "no Interest" promotion to only charge you around ~1% versus a traditional credit card (VISA/MC/ AMEX) discount of nearly double that amount. For even more savings, you can also find substantial savings for your PLCC discounts/processing fees through a buying group affiliation like Nationwide Marketing Group. These groups often aggregate their members' purchases to negotiate the very best rates and offer even lower rates for the vendors they work with. I recently saw a motivational quote at the gym: "Once you see results, it becomes an addiction." I couldn't help but think how it applies to many aspects of our lives and business. If you don't have a retail credit offering program, get one. If you do, push (and reward) your sales associates to promote and offer your PLCC with every sale. The results will speak for themselves. THE TRIED AND TRUE BENEFITS OF RETAIL CREDIT Chris Kirk Business Trends RO Chris Kirk, VP of Member and Financial Services

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