It's imperative that retailers understand buy now, pay later shoppers when tailoring their acquisition and retention offers, messaging and media strategies.

Alex Banks

Alex Banks, vice president, brand sales at Resonate

Buy now, pay later (BNPL) models are as old as commerce itself, but technology’s democratization of this option across the ecommerce landscape represents a fast-growing trend. BNPL options like Affirm, Klarna and Afterpay have become ubiquitous within online shopping experiences, enabling ecommerce sites to offer simple financing opportunities without directly incurring the financial risks and obligations that come with traditional brand-managed programs.

For online retailers, BNPL options can provide a gateway to new customers and revenue streams. Still, it’s imperative that retailers understand the unique characteristics of these shoppers when tailoring their acquisition and retention offers, messaging and media strategies. To help with this, we recently tapped into the Resonate Ignite consumer intelligence platform to create a profile of individuals likely to use BNPL options. Here’s what we learned—and what retailers need to understand to attract and serve this group of nearly 58 million shoppers.

Who are they?

The BNPL consumer skews slightly female and heavily toward the Gen Z and millennial generations. Generally speaking, these consumers are early in their careers, with some college education and a household income of between $25,000 and $50,000.

As one might expect, many BNPL consumers are drawn to this option because of their financial realities. Compared to the average consumer, this group is two times more likely than the average consumer to incur late or skipped payment fees on their primary credit card. That means the automatic payment debits that occur through most BNPL platforms are likely appealing. But they might also be turning to these options due to challenges or limits on traditional credit cards. About 40% of these consumers carry a balance month-to-month, and they are two times more likely than the average consumer to make just minimum payments.

These individuals have been particularly hard-hit by the pandemic, with about 30% of these folks using credit cards for bill payments right now. About 55% of them say they’re financially “getting by,” meaning they’re able to pay their bills with a little leftover.

What drives BNPL shoppers?

While the BNPL customer might not have a lot of disposable income, they’re also young. They’re still getting started from a career and financial standpoint, and they’re coping with a once-in-a-lifetime global event that—quite understandably—has upended income and budgets for a huge portion of the population.

Thus, retailers should not overlook the lifetime value potential of this significant swath of consumers. In fact, for retailers that take the time to get to know this audience and tailor their messaging and BNPL options accordingly, there’s a tremendous opportunity to foster brand loyalty that will pay dividends as these individuals move forward in their lives and careers.

When tailoring messaging and offers to this audience, retailers must keep their motivation in mind. For example, the top personal values of this audience include:

  • Acquiring wealth and influence.
  • Demonstrating their abilities and being admired.
  • Living a life full of excitement, novelties and challenges.

In this regard, it’s not surprising that the BNPL consumer’s top psychological drivers include living an exciting life, expressing their creativity and receiving recognition from their peers. In other words, these are upwardly mobile consumers who want to project an air of achievement—even if they’re still on their way to that achievement. Retailers would do well to acknowledge their ambition within their targeting and creative strategies.

Where do you find BNPL shoppers?

Knowing how to connect with these consumers is half the battle. But where can retailers find them? Well, let’s start with the obvious: They’re online—a lot. More than half of BNPL consumers spend over 20 hours a week online. When it comes to their specific media choices, here’s what our analysis found:

  •      Top paid streaming subscriptions: Peacock, YouTube TV/YouTube Premium.
  •      Top TV networks: IFC, Adult Swim, Travel Channel.
  •      Favorite streaming devices: Mobile phone, streaming box (e.g., Roku, Fire TV, Apple TV).
  •      Preferred social media networks: Twitch, TikTok, Snapchat.
  •      Top newspapers read: Wall Street Journal, Washington Post, New York Times.
  •      Top magazines read: Better Homes & Gardens, Good Housekeeping, People.

If retailers are looking to connect with consumers interested in BNPL options, they need insights that can help them reach them at the right time, on the right platform, with the right message. While these consumers might be budgeting carefully today, they’re also forging relationships with brands right now—ones that will remain relevant throughout their lives. Now is the time to meet them where they are on their buyer journeys.

Resonate provides customer data and intelligence services.