Why Interest Free Installments Will Boost Your Business


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As participants in the e-commerce rat race, you know better than anyone how necessary it is to set yourself apart and get ahead, and now is the best time to do just that. The holidays are your outlet to not only reel in the customers, but also convince them to become loyal ones.

Credits: comScore, PR Newswire
Credits: comScore, PR Newswire

After all, online spending during the holidays was expected to increase by 18% this year alone. Throw in the general competition that permeates the market at any given time of year, and you can either spend this next month falling short or winning big. Assuming that winning big is your goal, new ways of thinking will help get you there.
This brings us to a new tool available in the marketplace – interest-free installment payment programs.

-Problem-solving drives sales

-Everyone wins

-Draw repeat customers through novelty

Problem Solving:

One of the most basic tenets of marketing a company is showing why you are the be all and end all solution to a very widespread problem.

A good way to illustrate this is by using the example of an “elevator pitch” that you deliver when you have thirty seconds to convince someone to take your company to the next level. The first thing one should do when delivering an elevator pitch is identify the problem of the potential target audience right out of the gate, second only to introducing yourself.

People want to know what it is that you can do for them, and in order to show your value, you have to illustrate the problem, the need for a solution, and how your company or service will provide it.

Credits: Pixabay
Credits: Pixabay

Working off a problem is a pretty foolproof way to boost your business, so let’s do that together now:

Problem: Many people can’t afford nice things, and end up abandoning their cart before they get to the checkout stage.
Solution: Let those people pay in installments

Why does that work? We’ll use the following scenario as an example:

– Jon and Michelle just got engaged, and they can’t be more ecstatic. Michelle has been dreaming about this moment for years, and Jon wants to do whatever he can to make her happy, so he decides they should pick out her ring together.

Credits: Pixabay
Credits: Pixabay

– They find a high quality local jewelry store that was recommended by all the family friends, and explore the exquisite jewels with wide eyes and full hearts. But Jon is in school and Michelle’s still an intern, so there’s no way they can come up with the $4,000 the dream ring with emerald cut and diamond band requires.

– The punchline: Jon and Michelle leave with their tails between their legs, forlorn and empty-handed.

Your part:

– Say you’re the jeweler, whether in an online store or brick and mortar store. You know your product is top-notch; you get the best, most perfectly-crafted stones from all around the world, and you offer a ton of variety to ensure that no one leaves your shop without making a purchase.

– What you sell is quality, and quality deserves to be paid for. But what are you going to say to Jon and Michelle to convince them that it’s their lucky day, because your ring is everything they’ve been looking for and more? Nothing, because they can’t afford it. You’re going to watch them walk out your door, and watch as your potential sale leaves along with them.

Alternative ending where you both win:

– You offer the couple a payment plan. It’s interest-free, they don’t have to sign up for anything, and they can set up monthly installments for their payments for the ring.
– Suddenly, you have just brought an affordable solution to the problem that expensive products pose. Maybe Jon couldn’t come up with all the cash up front, but his modestly-paying part time job will more than cover the monthly payments he’s agreed to.
– Paying for the ring doesn’t come with extra stress, because the payment happens automatically, right through their very own credit card. Jon and Michelle walk away thrilled, and you walk away with a sale.

Paying for the ring doesn’t come with extra stress, because the payment happens automatically, right through their very own credit card. Jon and Michelle walk away thrilled, and you walk away with a sale.

Credits: Pixabay

The takeaway:

-While your service may not be catering specifically to the young couples of the world who are trying to make ends meet, this same logic applies to any product you sell (online or otherwise). Make expensive things affordable, and make affordable look very, very appealing.
-Giving customers a painless way out of coming up with cold, hard cash that they don’t have, while still letting them take your desired product home, is guaranteed to close you sales you weren’t closing before. It will also make your customers feel a whole lot better about themselves in the process since they will not be returning home empty handed.

Repeat Customers:

-Allowing customers to budget their payments will ease their pain of overspending and encourage customer loyalty, because it’s a solution that works, and they’re going to want to stick with it.
-In other words, Jon and Michelle will be back in your jewelry store, because you made your goods affordable and tangible–they’ve seen that they can have nice things thanks to your service, and now they’re going to be willing to buy again.
-Statistics show that upping your customer retention rates by just 5% will increase your profits by at least 25%.
-By allowing customers to pay in installments, you show them that you trust them, which will encourage them to come back.


-We all know by now that telling your story, building your brand, producing unique content and employing other various marketing strategies are important, but unfortunately these are no longer trade secrets. Your competition has been scouring the same sites for sales tips as you have, and they’ve probably been reaching the same conclusions. Except….
-Using card based installments has not become a popular strategy yet. Capitalize on that; your customers will come to you because you make your products affordable, and other businesses don’t.
-You’re memorable. When your business is associated with a positive experience it is more easily remembered, so customers are more likely to think of your store first when trying to decide where to shop.

How Should This Work?

Statistics show that 54% of shoppers will purchase products they’ve left in shopping carts if those same products are offered again at a lowered price. By that same logic, it stands to reason that customers will go after desirable items if their immediate price is lower–meaning, with a manageable payment plan that takes less money out of their account at a time.

The bare bones of installment systems

– It’s simply a credit sale between you and the customer, where payments are made in installments over an agreed timespan. This can be mediated by a third party who will hold the credit line on the credit card, re-send an authorization request to the customer’s card for the leftover balance as needed, collect the installment amount each month, and send it directly to you.
– The customer makes a down payment of sorts on the item he wants, and gets to check out or leave his shopping trip with your product in hand.

Offer your customers an interest-free payment plan

-Give your customers several payment plan options. For example, IFN Modern lets their customers choose how many months they want to pay for their purchase over, from anywhere between 2-6 months or along the span of a year.
-Buyers are naturally suspicious; charging interest causes hesitation in a smart shopper, as it should. Remember, your goal isn’t to profit on their installments but to make the decision of buying from you a no-brainer.

Which credit card should be used?

Definitely your customers’. In a similar vein with not charging interest, your customers shouldn’t have to feel like there’s a catch involved when paying in installments. While using small business credit cards has its merits (such as high reward rates and sign-up bonuses), that’s not the point of card based installments, so best leave that for another day.

It works to your advantage. Having your customers use their own cards enables you to decide to only let the initial transaction go through if they have enough available credit on their card for the entire purchase. This way, you can hold the credit line on their card for the complete product amount and just reduce it each month until the payment has been made in full.

Shopping can already be a somewhat stressful experience, primarily because of the number of decisions the customer has to make: Is the product really in my price range? Which one should I buy? How many do I need? This store or that store? Online or in the shop?

The more time we spend making decisions, the less confident we feel. Every dilemma your customer is posed with adds one more thing to their already busy cognitive load and can overwhelm them. That’s why you shouldn’t add anything more to their decision making list. Let them go with what’s natural to them, which for most people would mean using their own credit card.

Use card based installment plans as an incentive to spend

Just because you’re not charging interest doesn’t mean you can’t give your customers a push to spend! For example, you can offer the installment plan only on purchases of $75 or higher, which will likely increase the size of your customers’ purchases and most certainly raise your chances of your more expensive products getting sold. Surprisingly, 60% of high income consumers preferred installment plans as their method of spending, and four in ten credit card users would increase their purchase size by 10% or more if given the option of an interest-free installment plan. Use this to your advantage. Your customers are willing to buy from you; encourage them to do so.

Parting Thoughts

In front of you is a gold mine full of customers eager to be convinced that your store is the one they should buy from. Jump on the opportunity! Setting up a card based installment service will both allow customers to buy products they might not have been able to afford, as well as rake in sales that you might not have been able to close. This innovative solution will reduce cart abandonment, bring in loyal customers, make your store memorable, and most of all, drive your sails upwards. Happy customers equals happy sellers, so make the process as enjoyable as possible for them, but look out for opportunities to use this new system to your advantage.

Harry Djanogly
A native of Atlanta, he's the inside sales manager for a major software company in Georgia. He was always fascinated with the fields of marketing and computers and for him being able to combine these two topics together for a living was a dream come true! He's a huge fan of the Hawks and Falcons (No, not the birds. The teams!). and he loves old school rock music.


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