Let’s continue digging deeper into understanding cash discounting. Welcome to the second episode in this series. In the first episode I compared...
Consumer’s React to Cash Discounting – Here’s what they’re doing
Thanks for joining me on this episode of the series “How to Sell Cash Discounting.” There is only one objection to cash discounting – only ONE reason every business in America is not currently doing cash discounting. Business owners are terrified they are gong to turn away their customers. Find out how consumers are […]
Thanks for joining me on this episode of the series “How to Sell Cash Discounting.” There is only one objection to cash discounting – only ONE reason every business in America is not currently doing cash discounting. Business owners are terrified they are gong to turn away their customers. Find out how consumers are reacting. Objective studies have been conducted. Let me tell you the results.
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The merchant viewpoint is easy to understand. “Cash discounting might wipe out $500 a month in fees on that $20,000 in volume. But if I lose 20% of my business, it doesn’t make sense anymore.” I haven’t sold cash discounting myself for this very reason. The fear is that a consumer who sees signage for cash discounting or surcharging will decide to go to another business. I didn’t want to hurt my business owners with cash discounting.
After doing much research, I have found two (and only two) conclusive reports which I believe to be objective and statistically accurate. The business types studied may have been skewed a little bit towards auto repair or other businesses good for cash discounting. There may still be a bit of impact on food services and restaurant type businesses. This is a “wait and see” situation. However, the two reports I found monitored a large group of merchants who did cash discounting. A comparison of volume in a normal processing month and then volume for the first month they did cash discounting was conducted. Surprisingly, there was no measurable difference! The conclusions of this are very interesting.
#1. Cash discounting does not seem to affect consumer behavior. I would think the credit card processing volume would go down while cash revenue would go up. But that wasn’t the case at all. So, consumers were either not bothered by cash discounting or were not bothered enough to change their behavior.
#2. In the study, 99.2% of the time cash discounting was not an issue at the point of sale. This was concluded after asking business owners and employees taking payments, “How often do customers complain?” This was after the very first month of cash discounting when more reaction would be expected. In my opinion, consumers have spoken. Their message is, “We don’t care if there is cash discounting.”
Some studies on surcharging revealed more mixed conclusions. Ironically, my previous opinion has been frustration with cash discounting. I felt there was too much confusion. To say, “If you want to use your card, the cost will be more” seemed more sensible to me. However, before my research I didn’t think of the psychological impact on the consumer.
Consider this example of psychology. When I shop for a car, I’m not upset by their cash discount. It makes sense to me that if I get a loan, the dealer would pay extra fees. So, they offer a discount to pay cash. However, my feelings would be different if the car dealer tells me the car costs $10,500 UNLESS I get a loan. Then the cost would be $11,500. I might be ticked by that, even though it’s the same thing as a cash discount.
According to the report findings, consumers seem to be enjoying cash discounting more than surcharge. This may be in part because cash discounting is less confusing. Surcharge is allowed only on certain payment types, but cash discount is the same across the board. So, we can be more confident in our choice to learn how to sell cash discounting now that there have been studies with good findings.
I love that there is only ONE objection to cash discounting! If you can overcome that one objection, you are golden. Merchants are not likely to refuse a change to save $400 a month – unless they aren’t aware of these report findings. Sales professionals need a processor who is going to provide some marketing materials which display this information for prospects. I plan to work on compiling materials for download which you can use. You should have materials to show merchants they aren’t going to lose business by doing cash discounting.
Hopefully, this information will help as you think more about your pitch and presentation in selling cash discounting. Remember, if you are looking for a processor, go to CCSalesPro.com and click on “find processors.” Fill out the form so my assistant can schedule a 10 to 15-minute phone call with me. I can make some recommendations. I always enjoy connections in the industry. And just a heads up – I might try to sell you my technology solution while we are on the phone! Check it out right now at Instantquotetool.com. Have an awesome day!
Read the next article here: http://bit.ly/2EkVW5Y Per Item or Percentage Cash Discount, Which is Best?