Every business owner dreams of a clientele that readily embraces and willingly invests in their premium services at premium prices. But let's face it, budgets can be tight, and sometimes that luxury service or a full skincare package gets put on hold.  This is where buy-now-pay-later (BNPL) services can become your secret weapon.

What is Buy-Now-Pay-Later or BNPL and Why Should You Care?

If you haven’t heard about it before or understand how it can benefit a service-based business like a salon or spa, then read on. In this article, you’ll learn how BNPL can transform how you do business and 10 reasons why BNPL service options like Afterpay, and others like it, are changing the face of commerce in today’s world and the way you do business. 

How many of you have premium beauty or spa services or products that are priced higher than the average range of $100-$350 per ticket these days that may create a slight hesitation for you or your service providers to offer and price confidently? This is when a BNPL product within your pricing strategies will become a promising solution by offering  flexible payment options that enable your customers to pay for purchases in interval based payments over a fixed period of time. 

Merchants utilizing BNPL payment options can offer the choice of splitting their higher ticket purchases, which can vary between $400-$1000+,  into four interest-free payments. Something to consider are the eligible purchase ranges which may have a maximum amount. These maximum amounts may vary based on the purchaser’s buying power. But nevertheless, the maximum amount allowed will, most likely, be higher than your current average tickets which allows for expansion of your current prices. 

It’s logical to say that BNPL solutions will make higher-priced offerings more accessible, potentially increasing your average purchase value and increasing your conversion rates at the time of the buying decision. Offering flexible payment options such as BNPL can encourage consumers to invest in a service they normally may not consider or even be open-minded to understand the value of what your business has to offer. 

 Innovative BNPL options have become a modern payment solution that will not only change how small businesses and merchants do business, but also increase their abilities to produce more revenue and price confidently with methods that may not have been available to them before. 

A Spotlight on a BNPL Solution - Afterpay

An example of a leading BNPL solution is Afterpay, which integrates across Square’s online and in-store POS. This tool has become a fan favorite among beauty merchants using Afterpay by offering consumers a flexible payment option,  all while taking on risk for the  merchant so they can receive the revenue up front. As a unique product within the Square ecosystem, Afterpay has elevated the Square seller experience (and beyond) with payment options that have created numerous successful case studies. 

Customers  can get access to the services they need and merchants can now comfortably offer services at the premium price points that will drive sales aligned to many of the service offerings in salons today. It’s a literal win/win for everyone involved. Top merchants that choose to diversify their payment options with BNPL services will differentiate themselves in their local communities,  which could result in increased revenue growth as well as elevated guest experiences.

Here are 10 Key Factors in how BNPL can Benefit your Business: 

1. BNPL Improves the guest experience

Studies and survey reports have all unanimously agreed that putting focus on offering multiple payment options to your guests will convey to the customer that the business cares how streamlined the transaction experience can elevate the guest experience. 

2. Purchase Power

BNPL offers a flexible option to enable consumers to comfortably make higher priced purchases without worrying about interest.  Be sure to review with the customer your BNPL provider’s policies and how it all works. 

3. Minimizes Discounting

The fact remains that many beauty pros make emotionally reactive decisions to accommodate their guests by discounting their services. BNPL options gives your service providers the confidence to offer installment payments in lieu of continuing to maintain lower  prices out of fear or emotional discounting. 

4. Competitive edge

Staying ahead of the modernization of digital payment methods and unique offers helps businesses to gain an edge over the competition and strengthen their reputation by implementing the tools that can give customers what they need to stay engaged in desired services and loyal to your brand. 

5. Expansion of Transaction

Introducing flexible payment processes at the point of checkout will only offer your ability to secure more revenue and convert more clients. 

6. Staying Power

Businesses that offer multiple ways for the customer to continue to buy,  redeem and accumulate purchase power will significantly be able to increase guest retention.  

7. Increase Ticket Size 

Clients, at times, might hesitate to buy multiple services or products at once. But with BNPL, they can be more open to adding that extra add-on, series, product bundle or a new styling tool to their purchase, meaning more revenue for you.

8. Broaden your Client Base

BNPL can attract clients as a marketing strategy. Of course, it’s not your only  marketing strategy but it can certainly be a stand out position in the marketplace of salons in your community.  BNPL options are  a valuable addition to how you differentiate.  

9. Boost Sales or Unique Offerings

Let’s face it, there are many barriers to your team upselling due to their own blocks about asking the customer to buy more, in terms of what they “feel” are higher ticket offerings.  Having BNPL options breaks down those barriers for your team as much as it does for your customers. Examples of premium services that could categorically increase your revenue are memberships, loyalty program  enrollment fees, extensions, skin care series, complex nail designs  or luxury offerings. 

10. Attract New or Maybe Younger Clients 

Millennials and Gen Z buyers are huge fans of BNPL. By offering these options, you're opening your doors to a tech-savvy demographic who are comfortable managing their finances this way.

Beyond the Sale: Additional Considerations 

While BNPL offers a treasure trove of benefits,  there are a few things to keep in mind. 

• Fees:  BNPL providers can charge merchants a fee for each transaction. Be sure to factor this into your pricing strategy.

• Late Payments:  While BNPL is generally responsible for collecting payments,  Encourage clients to be familiar with the BNPL provider's terms and conditions. 

• BNPL isn’t a Replacement for Marketing:  Don't rely solely on BNPL to drive sales.  Make sure you're still promoting your high-end services and highlighting their value to your existing clients…just with more confidence now. 

Implementing BNPL in Your Salon for Employees & Contractors

We saw how BNPL services can boost your salon by making high-end services more accessible. Now, let's delve into  implementing these services for both your employees and independent contractors.

Setting Up BNPL for Employees:

• Streamlined Integration: Choose a BNPL provider with a user-friendly system that integrates seamlessly with your existing point-of-sale (POS) system. This ensures a smooth checkout experience for both you and your clients.

• Commission Calculations:  Clearly define how commissions will be calculated on BNPL transactions.  Will the commission be based on the full service price or the amount received upfront by the salon?  Discuss and  agree upon a fair structure with your employees to avoid confusion.

• Training and Education:  Educate your employees about the BNPL options you offer. This includes understanding the terms and conditions, explaining the benefits to clients, and troubleshooting any potential issues.

Setting Up BNPL for Independent Contractors  

Integrating BNPL with independent contractors requires a slightly different approach:

• Independent Contractor Agreements:  Review your agreements with independent contractors to ensure there are no conflicts with offering BNPL options. You might need to add amendments  specifying how payments will be handled and potential fee structures.

• Split Payment Options:  Some BNPL providers allow splitting payments between the salon and the contractor based on a predetermined percentage. This can be a good option for commission-based contractors.

• Independent Contractor Responsibility:  Emphasize to your contractors that they are responsible for educating their clients about BNPL options and ensuring timely payments through the chosen provider.

General Tips for a Smooth Implementation

• Clear Communication:  Transparency is key. Clearly communicate your BNPL policies to both employees and contractors. This includes fees, commission structures, and dispute resolution processes.

• Marketing and Signage:  Promote your BNPL options!  Advertise them on your website, social media, and in-salon signage. Make sure clients are aware of this flexible payment method.

• Monitor and Analyze:  Track how BNPL is impacting your sales and client behavior. Analyze the data to see if adjustments are needed to optimize your BNPL strategy.

The Final Cut: A Win-Win for You and Your Clients

By incorporating BNPL  into your salon's payment options, you're connecting the dots between setting goals and getting results. You get paid in full by creating win-win sale scenarios while BNPL services handle the payments. Additionally, merchants can expand their client base and boost sales in person as well as online sales. With all of these benefits to your business, salon owners can now open more access to the services, in high demand, utilizing flexible payment methods, and you get the chance to increase sales and be a stand out salon. 

So why not give BNPL a try and watch your salon success story unfold? Carefully considering these points, you can successfully implement BNPL services for both your employees and independent contractors, unlocking new sales opportunities and fostering a thriving salon environment.

To learn more about Coach Nikki Le, read about her in our 2024 Coaches, Consultants and Business Resources Directory.