Jan. 30, 2020

FFR 009 - Payment Plan vs One Time Payment

FFR 009 - Payment Plan vs One Time Payment

When offering products over the $200 range one of the biggest hurdles you can often come across is that your customer wants your product, but they can’t afford the full amount right now.    The obvious solution to this problem is to...


  • When offering products over the $200 range one of the biggest hurdles you can often come across is that your customer wants your product, but they can’t afford the full amount right now. 

 

  • The obvious solution to this problem is to offer the customer a payment plan option in addition to the full payment

 

  • The common way of setting this is that the payment plan ends up costing them more... but they have the convenience of spacing out the payments. This way of doing it makes a no-lose situation for the seller as they end up making more money anyway. 

 

  • However, you don’t have to do it this way and can instead just divide up the same total cost by the number of payments. 

 

  • There are two schools of thought with this one... firstly some marketers say that people seeking payment plans are not the sorts of customers you want and often they don’t follow through and complete the payment installments. 

 

  • Then other marketers say you will get a lot more sales by including a payment plan option as this is what most people prefer.

 

  • With that in mind... I wanted to show you an interesting case study in Russell Brunson’s book 108 Split Tests

 

 

 

  • This case study was regarding a “make money online” offer and was selling a product for $497... which is a pretty high price point

 

  • So they decided to test adding a payment plan option directly underneath for 2 x payments of $248.50. On top of that the pricing in large letters said $248.50 in large font if they chose that option (instead of $497).

 

  • So even though they were effectively paying the same amount, when clicking on the payment plan they could see the price change from $497 to $248.50

 

  • The clear winner in this test was the payment plan option. The conversions tripled from 0.33% to 1.05%. In this case they didn’t lose any revenue either as all of the split payment were actually collected. 
  • The conclusion here was that people love a good financing deal, especially for higher priced products than what they were used to

 

  • One other way of approaching this is to only show one option initially for the full amount... and then if they show exit intent a payment plan option appears on the pop-up.

 

  • This is like a last chance option to get the sale if the initial offer was rejected... and works well if you would prefer the majority of people to purchase the product with one full payment. 

 

  • Once again, the best idea is to test both methods and see what works best for your business.