Offer rate & tech performance: How to choose a B2B Buy Now, Pay Later provider
Last week we introduced you to our series of articles on how to choose a Buy Now, Pay Later provider for B2B. In this next instalment, find out in more detail why offer rate and tech performance are among the 9 key criteria you should be evaluating as you look for a digital trade credit solution.
One of the first things to consider when comparing different Buy Now, Pay Later (BNPL) solution providers is the offer rate that said provider will be able to extend to your B2B customers. But before we cover the why, it’s important to understand the what. So, what exactly is the offer rate?
Put simply, the offer rate (a.k.a. acceptance rate) of a Buy Now, Pay Later scheme refers to the proportion of positive responses from your BNPL provider to requests for payment terms. For example, if your provider can offer deferred payment to 80 out of every 100 of your customers who request it, their BNPL solution has an offer rate of 80%.
Technically, the offer rate can be measured at transaction level (accepting 80 transactions out of 100), at customer level (offering payment terms to 80 customers out of 100) as well as GMV level (offering on £80 out of £100). All of these measures matter and track slightly different aspects of the offer rate performance. For instance, a provider that only extends small credit limits might be able to cover a majority of your buyers in number but not the top customers that account for the bulk of your business.
Offer rate is directly dependent on the ability of your Buy Now, Pay Later provider to offer credit terms instantly, even for first-time customers. A good provider will have processes in place which enable quick and responsive escalation for large or particularly sensitive cases, so that as many of your customers as possible can be offered the option to pay later.
Why does the offer rate matter?
The higher the offer rate, the more of your customers will be eligible for payment terms and the more you will benefit from your Buy Now, Pay Later solution. We’re talking greater average order value, an uplift in conversion rate and increased purchase frequency.
To ensure that you pick the right BNPL solution, you need to understand the difference between a good provider and a poor one.
Buy Now, Pay Later providers who are not technologically savvy or don’t have the right level of backing will likely extend a low offer rate of 70% or below, and even when they are able to extend payment terms, they won’t be able to offer in real time. Instead, customers will have to wait for a few minutes – which destroys your conversion rate – or worse still, fill out credit application forms. A slow escalation process and delayed response times are also telling signs of a below average BNPL solution provider.
If you partner with a company who matches the description above, you risk alienating your customers and losing them to a competitor who has integrated with a leading provider of B2B Buy Now, Pay Later services.
Leaders will likely be able to offer BNPL options to at least 80% of your customers in real time thanks to automated credit and fraud checks, sub-second answers, the ability to offer large credit limits when required and clear rejection codes. In rare occurrences when a real time decision cannot be made, your provider will be able to respond quickly and escalate the case appropriately, ensuring that as few customers as possible are lost to the competition.
Clearly, the high offer rate extended by leading B2B BNPL providers is partly dependent on their tech performance, but technology is such an important factor to evaluate when choosing a Buy Now, Pay Later solution that we consider it as a criterion all of its own.
Tech performance is a big topic in its own right, but there are two KPIs worth considering in particular: uptime and latency.
Uptime refers to the time a given tech solution is live for. How often will your BNPL provider pull their solution offline for scheduled maintenance? How often will it let you and your customers down without any warning?
Meanwhile, latency is the average time it takes for data to be transferred between your online store and your solution provider. In the context of B2B commerce, latency refers to how quickly your customers receive their Buy Now, Pay Later options.
Why does tech performance matter?
Your site is live 24 hours a day, 7 days a week, and your customers could be transacting at any time, so you need a solution that supports you 24/7. Unfortunately, most incumbent solutions are not fit for digital commerce and they are prone to frequent crashes or being pulled offline for (un)planned maintenance. Uptime is important because if a customer reaches your checkout expecting the option to buy now, pay later only to be let down, they will find another supplier who meets their needs.
Latency matters because speed and efficiency are important to B2B buyers. The longer your customers have to wait for their payment terms, the worse their buying experience will be which might put them off returning to your store the next time they need to make a purchase. Ultimately, high latency will negatively impact your conversion rates. A rule of thumb to go by is that every 100-millisecond delay in load time can hurt conversion rates by 7%.
Providers whose tech performance is not up to scratch will likely be those whose B2B BNPL solution was originally developed for offline trade and has since been shoehorned into a digital space without proper optimisation. Avoid such providers, as well as those with a reputation for frequent interruptions and downtime – planned or otherwise. If a prospective provider has latency of 1 second or more, steer clear.
Instead, seek out a B2B Buy Now, Pay Later provider whose solution supports frictionless online checkout. Modern architecture, built and optimised specifically for online commerce, should be high on your list of requirements. Leaders in this space will support you with ongoing performance monitoring and a highly reactive technical support team. Better still, look out for a provider that publishes a transparent dashboard that allows merchants to monitor uptime and latency of their BNPL solution.
Interested in how Hokodo’s superior offer rate and tech performance could help increase sales on your online store? Book a demo today to find out more about our B2B Buy Now, Pay Later solution.
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