Is offering a store credit really good? This is one of a few questions retailers always have in mind. While cash is considered to be the king in business, it is not always possible to make all sales on a cash basis.
Since all businesses have to beat the competition, giving customers credit terms can be a great option. However, from the name itself, it can be risky. You are giving out products or services without any immediate pay. It is greatly important to weigh things up before deciding to offer such an uncertain thing so your business won’t be compromised.
In this post, we will help you do that!
Pros and Cons of Offering Store Credit
The Good Side
Store credit can be used to:
- Reward customers
- Offer compensation
- Encourage sales
- Improve customer retention
Customers with retail store credit account can earn rewards. They may also receive coupons and invitations when there are special events in the store. This can also be an easy way for them to track their spending at a particular store they are registered at.
If you want to improve customer retention, offering store credit can also be a big help.
The Bad Side
Creating store credit accounts is popular in retail marketing but it is not good for everyone. Unlike credit cards issued by the bank, one who created a store credit account is not allowed or is limited to purchase in the markets outside of the store.
Store credit is not a part of the major payment network that they can’t easily shop around elsewhere.
Things to Remember
Store credit can create a big impact on the cash on hand and in-stock products of the company. Before offering things like this, make sure you can take hold of the financing options. Evaluate how credit can help your business in the first place.
Let your customers know exactly about the payment terms, the due date, the fees, and the interests. One other thing you need to consider is how to track your customers. Most retailers draw on WooCommerce POS to ease the pain but you can also use other software relevant to the kind of industry you are currently in.
Using such kind of tools can also help you to stay on top of your customer’s needs and monitor their queries even those who owe you money. This means there is no more extra expenses to be paid while there is only less effort exerted.
What if your customer needs to return an item in your store? Of course, it can affect your current cash but there is one thing you can issue to make sure your cash on hand remains intact – credit note.
Issuing Credit Note
Issuing credits is one of the most complex scenarios you can experience in the world of business. A credit note or credit memo is not actually a refund. It is used to document the changes happen on the items already paid. Instead of giving cash for the defected products they are returning in, you can issue a credit note instead which can be applied to future purchases.
WooPOS is able to produce a credit note which your customer can use in your store any time. Store credit is daunting and WooPOS would like to take the load off your shoulder by issuing a credit note in just a single tap on the screen.
Do you have any other way to improve customer retention? We’d like to hear your thoughts below.