Sales funnel paygates: Paygates after delivery (series)

This blog post is the fifth in a series called Sales Funnel Paygates – a strategic look at where in the sales funnel your payment transactions can be placed. (See the introductory blog post in this series for more information).

SALES FUNNEL PAYGATE: AFTER DELIVERY
This paygate occurs after your customer has received delivery of the product or service you sell. (Note the green paygate in the sales funnel, pictured below).

This is a classic B2B model: Businesses that sell to other businesses might convert their business contact into a customer, deliver the product or service later, and then invoice the client after delivery.

This paygate model is also seen frequently in the B2C world, too. You see it in utilities like power, water, cable, telephone, internet, and credit cards. And you see it in services like car repair, medical services, plumbers, electricians, accountants, etc.

Why would a customer prefer this paygate? Business customers like this model because it allows them to first acquire the things they need to conduct business in order to earn enough money to pay for those purchases. For business customers, it’s all about generating cash flow first. Consumers may prefer this model because they can own and enjoy the service first and delay the pain of purchase until later.

Regardless of whether you are a B2B or B2C business, if you use this paygate model, you run the risk of having receivables. Some businesses accept receivables (and the work they can take to collect, and the inevitable losses that come with it) as a cost of doing business. But receivables can be a costly — and even dangerous — part of your business. If you aren’t used to working with receivables or you don’t like doing it, this paygate model might not be right for you.

Why would a business prefer this paygate? Businesses that sell to other businesses will find this paygate model can help them make more sales. That’s because their B2B customers may not keep a lot of cash on hand but they are willing to cut a check later after they’ve received money from their customers. Businesses that sell to consumers might prefer this model because they can’t charge a fixed price up-front. Perhaps they have use-based fees and need to first deliver to know how much to charge.

Like other paygate models that delay payment, businesses like this model because it reduces the barrier to purchasing. Lots of customers (especially consumers but also business customers) want to own the product or service and will decide later how to pay. They don’t have to have the money when they convert or when they receive delivery, thus they can own the product or enjoy the service without worrying about the money. This “buy now, pay later” method helps to increase sales.

Sales funnel paygates: Paygates at delivery (series)

This blog post is the fourth in a series called Sales Funnel Paygates – a strategic look at where in the sales funnel your payment transactions can be placed. (See the introductory blog post in this series for more information).

SALES FUNNEL PAYGATE: AT DELIVERY
The next paygate location we’re going to cover is payment at delivery. Pictured below, you’ll see the green paygate at the delivery step of the customer stage.

I believe there are negligible differences between this paygate location and the previous one – paygates between conversion and delivery.

For B2C scenarios, this paygate location offers the same benefits: The ability for the customer to feel like they have some control over the purchase (which tends to increase the likelihood of a purchase). It’s also an attractive paygate for customers who want to hold the purchase in their hands before they pay. Cash-on-delivery purchases, including things like pizza delivery and mail order, use this paygate location.

I don’t think we see this paygate location used as frequently in B2B scenarios as we might think. As you’ll read tomorrow, there is a far more common paygate location for B2B.

Why would a customer prefer this paygate? The biggest reasons are convenience and control. The customer wants to be able to conveniently order when they want and only pay when they receive the item (and pizza delivery is a good example here). And, the customer wants to feel some sense of control over the transaction – intending to withhold payment if the product or service isn’t delivered to their satisfaction.

Why would a business prefer this paygate?Businesses like this because it can increase sales by reducing the barrier to purchasing: It puts off the need to pay while accelerating the sense of ownership for the customer, thus encouraging sales. But just as important is the sense of control for the business: They can deliver the product or service but not fully deliver it until the customer actually ands over the money.

If your business has a lot of receivables, consider using this model to continue encouraging sales while reducing the amount of non-paying customers. If your business struggles with sales and you are demanding cash up-front, consider switching to this model, which is still a risk-minimized business model.

Just read: ‘Give ’em Something to Talk About’ at Fast Company

My wife and I eat at restaurants as much as anyone else. But when it comes to talking up a restaurant to friends, the quality of food or the friendliness of the service rarely plays a part.

Rather, we talk up restaurants for the unique experience: We recommend Nando’s because you order your food and then walk over to a wall of sauces and choose what you want to apply to your dinner. We recommend Gasthaus Gutenburger because some dude in authentic German garb walks around playing the accordion.

Adding sauce to your food isn’t a big deal. Neither is an accordion. But these elements are creatively applied to enhance the overall experience.

In this article at Fast Company, Dan and Chip Heath talk about enhancing your customers’ experience with something unique and “talkable”.

Give ’em Something to Talk About – Voodoo Doughnut – Doubletree – Zipcar | Fast Company.

Add some personality to your business. Find something unique to you (or your product) that you can add as an experience into your sales funnel. Help people talk about you business.

Sales funnel paygates: Paygates between conversion and delivery (series)

This blog post is the third in a series called Sales Funnel Paygates – a strategic look at where in the sales funnel your payment transactions can be placed. (See the introductory blog post in this series for more information).

SALES FUNNEL PAYGATE: BETWEEN CONVERSION AND DELIVERY
This paygate occurs after your contact has converted from prospect into customer but before the delivery of the product or service. (Note the green paygate in the sales funnel, pictured below). This can only occur, of course, when there is a period of time between the conversion and the delivery. The possibility does not exist when conversion and delivery happen at the same time.

Here’s an example of when you see this: In a B2C situation, you might see this in a real estate scenario. The prospect becomes a customer (the conversion) by signing the papers to buy the house; later, they drop off a down payment (the paygate); still later, they receive the house (the delivery).

As for a B2B situation, I actually think you don’t see this very much. I suspect that one of the reasons you don’t see this as much in B2B is because businesses will either get some or all of the money up-front during conversion or they’ll get some or all of the money at or after delivery. It seems inefficient to have this extra step in a B2B scenario of receiving payment after conversion but before delivery. (That’s not to say you never see this paygate location showing up in B2B, but I think the predominant B2B paygate location is post-delivery, which we’ll talk about in a few days).

Why would a customer prefer this paygate? This model works well for large purchases because it actually helps the purchase to seem manageable. If prospects converted to customers AND had to pay for a large purchase right away, it can seem overwhelming, which can be a deterrent. However, by separating the buying process into smaller steps, it is much more manageable, especially when there are a lot of moving parts (as in a complex real estate transaction). By signing first and paying later, the customer can enjoy the sense of ownership for a while before having to hand over their cash. I believe this increases their likelihood of gathering the money they need and handing it over.

I mention large purchases above because I’m not sure it works as well in smaller purchases. Smaller purchases can rely a little more on impulse because the combination of converting and paying with a smaller dollar amount are not as overwhelming to a customer. However, a magazine subscription might be a good example of this paygate location. You order the magazine. They send you a bill, which you pay. Then you receive the magazines.

If you have a larger purchase, consider using this paygate to help soften the obstacle of purchasing. If you use this paygate but are getting a lot of non-payers, increase the amount of communication you have with your new customers between conversion and the paygate. Make them feel welcome and give them added value before they pay.

Why would a business prefer this paygate? Like the paygate I discussed in a previous blog post, this one eliminates receivables because the money is obtained before delivery. And although it can add an extra step and a bit more work (to convert the customer and then to collect payment later) it can increase sales, especially with those who might otherwise resist the purchase when conversion and payment are combined.