I’m taking a small break from the ever important topic of diversity, which is incredibly important to my heart, to talk to you briefly about the future of payments. Or more specifically, as I see it, the future of shopping.
I’d like you all to cast your minds back to when I was 20.
For me, I had just started my career in investment banking. It was quite good. But I always had a niggly question in my mind that I couldn’t answer. That question was: why does everyone else have designer goods?
Clearly, I’d missed something, but what’s the psychology behind what I’d missed.
I began to ask myself so many questions:
- How do you create a brand that people are loyal to? Why do people buy your stuff instead of someone elses?
- Why would I buy an apple phone over an android?
- Gucci over chanel?
I had to go and explore, and that curiosity led me to a career in marketing. All about why and how people buy stuff. Then, quite naturally, I had ended up having a career in payments. Payments, to me, is the sexy bit. Are you really going to do it? It’s the crux of a shopping decision.
Before I get into the nitty-gritty of how a payment process can sway that decision, I’d like to first talk you through some of my findings on why everyone else is in Gucci and I’m rolling in H&M, which I think is a very good brand by the way.
In purely psychological terms, as you shop, your brain releases endorphins and dopamine. This is what your brain releases when you’re happy, and as many things that make you happy are, it’s highly addictive.
For different people, this means different things. Your brain calculates how buying something will feel before you consciously consider whether to purchase it. Perhaps you’ve set a strict budget for yourself but then you encounter something delectable and all of a sudden your neurological flares go off and your best-laid plans are out the window.
(Uma Karmarkar, a neuroscientist and assistant professor at Harvard Business School, gives this example)
But it’s not all in your head, brands can do a lot to twist your views. In store, your shopping experience is influenced by colours, sound, smell. Apple, for example, set laptops at exactly 70 degrees in their store, which entices you to touch them. And eventually, probably, buy them.
Our loyalty to a brand impacts our enjoyment of the shopping trip, how long we’ll spend in a shop, and our tolerance for that. We will only be prepared to invest time and effort in learning the particular way of a new store if we perceive it to offer a genuine benefit. For example, in Lidl you have to learn that prices are displayed on the shelf above the goods. You’re less likely to bother learning that if you’re a regular Waitrose shopper.
And with Argos, Online, it’s a bit more clinical. Price, discounts, ease of site, reviews, shipping costs and a tailored selection of products all feed into whether you’re going to purchase or not. Of those levers, a tailored selection of products is interesting to me.
This should be far easier to do online than in-store because you can track the journey of each individual shopper and use that data to make their journey better. Either during this shop, based on what ‘people like them’ do, or in future when they return to your site.
Remember when you got your first Tesco loyalty reward voucher through your door before it was all automated? I remember being shocked, and if I’m honest, a bit embarrassed, that they knew me so well.
Now, I look at a dress on an H&M site for 2 seconds and it follows me around the internet for weeks, getting cheaper and cheaper by the day. I believe brands that use data well can change your shopping habits irreversibly. But they must be ethical in this, and they must understand what data is valuable to them and where the red herrings are. Too many companies end up down a rabbit hole due to an outlier in a data pattern.
How does the payment piece fit into this? As I said, payment is the crux of the shopping journey, the sexy bit and it’s not easy.
Cart abandonment is, on average at 69%. That means you’ve whetted their appetite enough with product, marketing, and sales for them to put your product in their basket and get ready to buy. And yet, at the last minute they’ve just dropped off, decided against it.
When people talk about an optimized checkout experience they talk about:
- Ensuring your mobile checkout works.
- Reducing the number of checkout steps.
- Using guest checkout.
- Showing checkout progress.
- Using auto-fill.
- Offering mobile payment options
But depending on the consumer, and the purchase… the wants, needs, and desires of a payment changes.
Some want the Uber effect. Low cost, high-frequency purchases where I never consider the payment. It just happens.
For others, they want to input their address to ensure it’s right, they want the validation of 3DS to make them feel more secure.
Endorphins rise as they hit more clicks through the journey.
SCA (Strong Customer Authentication) in the payments journey introduces regular use of two-factor authentication, added friction.