Making finance more engaging

An engagement ring is one of the most exciting purchases many individuals (or couples) can make. Marriage proposals are causes for joy and celebration. However, the average engagement ring spend in the UK stood at (a not insignificant) £1,483 last year – a huge 89% increase on the year before, where Brexit-related nervousness seemed to put the brakes on the luxury goods market. The old tradition of spending three months’ wages on an engagement ring has long been outdated, with 78% of Britons spending less than this – but that could still mean a piece of jewellery with a four-figure price tag. And of course, the engagement ring is just the first in a long list of expenses associated with getting married. The average cost for a UK wedding reached a colossal £32,273 last year, according to a survey by the website Hitched – a 15% increase on the year before. Here again, it seems that consumer confidence in spending on luxury extras has bounced back after initial Brexit-related jitters. Part of that cost, of course, necessitates a return visit to the jeweller – for the wedding rings. With all these costs mounting up, it is hardly surprising that a proposal can be a daunting financial prospect. Many wannabe proposers are put off popping the question in order to raise the necessary funds – whilst others bite the bullet and place these emotionally and financially significant purchases on credit cards. It’s not necessarily the best foundation for engaged or married life. However, there is an alternative option – one which enables jewellers to help their customers approach the cost of a proposal (and wedding) in a manageable, structured and ethical way. Point-of-sale (POS) finance credit enables buyers to defer and spread their payments over a specific period of time using a ‘buy now, pay later’ system. This maximises affordability, and need not involve any interest payments. Retailers that offer POS finance, in other words, make it smoother, simpler and more transparent for buyers to undertake larger purchases. And given that an engagement ring might come second only to a car in the list of expensive purchases in someone’s lifetime, jewellers should be clamouring to get on board. Yet our own research has revealed that 42% of shoppers believe that retailers’ offerings fall short of their expectations in this area. There is, then, a huge opportunity for jewellers to differentiate themselves here, positioning themselves as convenient, flexible and customer-centric throughout the engagement ring purchase process. So, what are the key principles they should bear in mind whilst developing and deploying a POS finance offering? Visibility Our research also shows that almost all shoppers – 94% in total – do not think to ask retailers if POS finance is on offer. This means that jewellers need to take a proactive stance in communicating their POS offerings – through marketing materials, in-store and online messaging, and staff training. These need to be carefully tailored to the jeweller context, however – the same bold ‘0% finance’ messaging which can work fantastically for, say, a furniture store may seem brash and indiscreet for a jeweller. Clarity The key piece of information that any POS customer requires is the size of the regular payment they will be required to make, followed by the time period over which the solution will run. This information is critical in enabling them to decide if the solution is right for them, and in building a picture of the POS offering as transparent and reliable. Likewise, many consumers find the technical language around finance solutions confusing, so it’s important for jewellers to focus on providing clear, jargon-free information and answers to queries in an open and honest way. Quick decisions Once a customer is interested in POS finance, they need to go through the application process as quickly and simply as possible. Cumbersome and complicated application processes, or those which result in high referral rates, cause frustration and may lead to abandoned purchases altogether. Refer rates of just 1% are achievable with the right provider, but jewellers should check with prospective partners to confirm what their averages are. Ethics Sadly, weddings are still an area in which too many couples feel pressured to spend more than they can truly afford. Whether because of a desire to capture the perfect images for social media, a sense of comparison with other weddings showcased in the media, or simply a longstanding vision of the ‘perfect’ wedding, it is all too easy for costs to spiral, and for couples to go into debt to pay for a substantial portion of their celebration. Of course, not all debt is the same, and there is a big difference between a loan with a high interest rate and a POS finance solution with no interest at all, but jewellers should still place customer care and ethics front and centre when considering how they market POS finance to individuals or couples looking for an engagement ring. POS finance should be about convenience and customer-centricity, not positioned as the only way for a ‘dream’ engagement to take place. Similarly, it is vital for any POS solution to be compliant with Financial Conduct Authority (FCA) regulations, ensuring that the solutions offered are affordable and ethical. With all this in mind, jewellers seeking to develop a POS finance offering should seek out a financial solutions provider with a truly flexible approach, able to tailor their solutions to the precise needs of the sector. Engagement rings are unlike any other purchase – they can carry hefty financial weight, but the emotional investment can be even more significant. Jewellers in this space need to ensure that they guide purchasers through the process informatively, sensitively, flexibly and compassionately. POS finance solutions can truly be an important part of the picture. By Michael Bevan, CEO at consumer finance specialist, Duologi