Small businesses could benefit from making strategic updates to payments infrastructures to meet ever changing demands of the modern consumer, argues Pranay Agrawal, Director of Product at GoDaddy.
Last month, the domain registry and web hosting firm released a survey exploring the preferred traits Gen Z and millennials have for businesses. Payment Expert reached out to Agrawal for further insights into the payments expectations these demographics have for SMEs.
What are the fundamental expectations of Gen Z and millennial consumers for the modern payments journey?
Gen Z and Millennial consumers live in a digitally dominated world and are accustomed to instant gratification. This carries over to what they expect when making a purchase – ease and accessibility.
The popularity of accessible digital wallet payment options, like Apple Pay or Google Pay, is on the rise. According to a recent GoDaddy survey, 85% of Gen Z and 82% of Millennials said it is important for small businesses to accept contactless digital payments.
However, 27% of small businesses are not meeting that need and do not accept digital wallet payments. Failing to meet customer’s expectations leads these small businesses to lose both revenue and customers.
Beyond the ability to pay quickly and easily, Gen Z and millennials expect to have access to a convenient shopping experience, both online and offline. For example, something that gives them added benefits or options as part of their payment experience, such as “Buy Online, Pickup In-Store” or free shipping.
They tend to make most purchases from a mobile device and want to be able to shop directly through social media platforms. The same survey showed that 80% of Gen Z and 75% of millennial shoppers believe it is important for small businesses to have a storefront attached to their social media pages.
However, too many small businesses are using their social media platforms for brand awareness over sales, missing out on these channels as sales funnels.
Can you lay out some of the key differences in payment preferences between younger and older consumers?
There are some very distinct differences between younger and older consumers regarding payment preferences. For instance, when using a debit or credit card, younger consumers are more likely to use contactless digital payments, such as Apple Pay or Google Pay.
In fact, GoDaddy’s survey showed 50% of Gen Z and 31% of millennials preferred to use Tap-To-Pay technology, while only 18% of Baby Boomers consider it important. While Tap-To-Pay is a significant feature for the younger generation’s payment preference, the ability to shop and buy online is even more crucial.
The majority of younger generations (55% of Gen Z and 61% of millennials) consider it very important to be able to make direct purchases from a business’s website, while only 41% of Boomers feel the same. millennials also tend to be more comfortable paying online through a pay link vs sharing details to pay for a good or service over the phone.
To be successful, businesses need to offer modern payment experiences to better cater to the financial habits of newer generations while still catering to the older generations with more traditional habits. SMBs that can be flexible and collect payments as per the customer’s convenience tend to see better conversions across all channels.
Is retail commerce lagging behind its online counterpart when it comes to adopting new ways to pay and innovative fintech practices?
For brick-and-mortar stores, switching providers and digitising their in-person retail business can be challenging. Online businesses are, generally speaking, relatively new and have more flexibility when it comes to switching their payments technology.
Online retailers have taken significant advantages of new one-click checkouts (like Apple Pay, Google Pay and other digital wallets) and see much larger adoption compared to in-person retailers.
Switching to a modern POS system for a store requires a time investment to migrate and learn the nuances of the new system, as well as additional time to train staff on operating a new system.
There are more moving parts for retailers. But we’re seeing with the advances in AI technologies, this process is becoming much simpler and less cumbersome for brick-and-mortar businesses.
How can SMEs catch up when it comes to greater tech adoption in payments and the customer experience?
Small businesses can make a few strategic updates to their payment technology that can level up their business and have a great impact on customer experience. There are cost-effective ways small businesses can integrate more convenient payment options for their customers.
Tap-to-Pay is a great example. Tap to Pay enables business owners to quickly accept payments with their own smartphone, so they don’t have to purchase any hardware. Tap payments can help speed up checkouts and shorten wait times for customers in line. GoDaddy offers Tap to Pay on iPhone and Android via its free GoDaddy Mobile App (more info here) for businesses in the US SMEs simply need to log into the app to start accepting payments.
Additionally, small businesses that sell both online and in-person should lean on technology that can connect multiple aspects of their business to help them work more efficiently and save them time.
For example, the GoDaddy Smart Terminal works seamlessly behind the scenes so SMBs can easily track and manage curbside or in-store pick-up orders placed online and keep their online and offline selling organised in one centralised dashboard. GoDaddy also recently added new features to its Smart Terminal to help reduce the average time a customer spends in line.
Can you walk us through GoDaddy’s own experience of this? What efforts has the platform made to embrace payment innovation?
GoDaddy offers a suite of connected commerce tools that empower entrepreneurs with everything they need on their journey – whether they want to start, grow, and scale their business. And we are continuously innovating and adding new ways to help small businesses grow.
Here are some examples of what GoDaddy Commerce implemented from just the last year:
- Expanded GoDaddy Commerce into Canada, including GoDaddy Payments and GoDaddy POS.
- Upgraded GoDaddy Smart Terminal software to support large and complex catalogues, provide order and inventory management capabilities, live reports from the terminal and more.
- In collaboration with Apple, launched Tap to Pay on iPhone via the GoDaddy Mobile App. And just last month launched Tap to Pay on Android.
- Integrated new digital wallet Paze with GoDaddy Online Store, enabling small businesses with an Online Store and GoDaddy Payments to accept Paze transactions.
- Partnered with Microsoft Teams so service-based businesses can accept GoDaddy Payments on video calls.
- Partnered with WorldPay.
- Launched Payable Domains, which was a first for the industry.
Has the importance of engaging a wide range of consumers been elevated amidst a challenging economic climate?
Yes, and where you engage with potential customers has also become more important. For example, having products listed across social channels and marketplaces like Amazon and Etsy is no longer a nice-to-have.
As businesses increasingly sell across multiple channels, finding and leaning on the tools that help track and manage sales and inventory across all the platforms (including brick-and-mortar and online) is going to save entrepreneurs a lot of time and headache.
Why do you believe variation of payment options is so crucial during such a tough economic period?
Understanding that Gen Z and millennials may have different shopping preferences compared to Gen X or Boomers is important because businesses never want to alienate a potential customer.
By offering a variation of payment methods for your customers makes it easier for them to pay you in the way most convenient for them—this enhances their customer experience and makes them more likely to return in the future.
As many business owners can attest, acquiring new customers costs five times to 10 times more than selling to a repeat customer. And returning customers spend 67% more on average than those new to your business. When every dollar counts, doing what you can to ensure customers have a positive experience matters.