4 Revolutionary Selling Tools Available to Small Businesses

Local retailers face an uphill battle when competing against national brands. They simply don't have the money that the big guys do to spend on best-in-class marketing and business technology. In the last couple of years, however, many companies have started developing technology for small retailers that was once only available to large chains. Innovation in consumer financing technologies, payment card acceptance, e-commerce fraud prevention and loyalty marketing services is helping small businesses take on their larger counterparts.

1. Offering consumers financing can increase sales. Consumer financing is an often underutilized tool for generating sales. However, new products are making it an option for more retailers. Consumers buy more when they can pay later. Large retailers, especially those selling big-ticket items like refrigerators, washing machines and home theater systems, use this element of consumer behavior to their advantage. They can often afford to offer interest-free financing promotions, or they can partner with banks to issue their own store-branded credit cards.

Since the financial crisis, consumers have become more aware of the interest rates they're paying on their credit cards. This has made interest-free financing even more important than before. Small businesses, from retailers to service-based businesses, are usually unable to offer consumer financing because they don't have enough cash to make loans to their customers, and credit card programs are too expensive and demanding to manage. Also, their small size makes them generally unattractive to the banks that issue store-branded credit cards.

Bill Me Later, a PayPal service, is an example of a service that helps online sellers offer a financing option to their customers. Customers who pay with Bill Me Later at checkout can qualify for six-months financing (provided by Bill Me Later and WebBank) on all purchases of $99 or more. Merchants can advertise Bill Me Later financing with banner ads on home, product and shopping cart pages. These ads are provided by PayPal, deployed with a simple copy-and-paste function, and shouldn't require any developer experience. Although Bill Me Later has been around for years, the promotional messaging capability is just now being offered to smaller online sellers.

2. Mobile point-of-sale (POS) devices open small merchants to credit card sales. Credit and debit card acceptance is the most well-known example. Until recently, the ability to accept credit and debit cards wasn't available to all merchants. Some small businesses don't have enough sales or a long enough history to qualify for a merchant account. In addition, many small businesses have struggled to justify the cost of card acceptance, even when it's an option. The cost to purchase a POS terminal and the recurring monthly account fees can easily get into the thousands of dollars.

Just within the last year or so, dozens of companies like Square, PayPal and Intuit have developed mobile card readers and apps that make accepting payments affordable for small businesses. These are devices that business owners and store employees can plug into their smartphones and tablets to swipe customers’ cards. They're simpler and much less expensive than large POS terminals (sometimes even free), and even support accepting checks and cash like their POS brethren. Plus, the companies that provide them often charge more predictable fees than some merchant services providers.

Moving beyond simple card acceptance, these providers are working to popularize consumer payment apps that work with their mobile card readers. For example, with the PayPal mobile app, a consumer can walk into any business that accepts PayPal and pay by "checking in," without having to pull out and swipe a credit card.

The development of these technologies is a great benefit to retailers because it enables them to offer consumers the much appreciated, and often expected, convenience of broader and faster payment acceptance.

3. Loyalty programs drive new business and strengthen your customer relationships. Some of the companies that provide the most economical credit card acceptance services combine them with automated loyalty programs. Providers include LevelUp, CARDFREE and Swipely. LevelUp, for instance, has developed a tablet-based card acceptance solution that also tracks and applies the retailer's discounts when consumers make a purchase.

Other companies like Perkville, Belly, Perka and RewardLoop focus entirely on providing loyalty services to small businesses. In general, these solutions are pretty versatile. Retailers can use them to attract new customers, turn occasional customers into loyal customers, and keep their loyal customers satisfied. RewardLoop has developed a digital version of loyalty "punch cards," but it and other providers also have programs with more opportunity for retailers to craft detailed promotions.

RewardLoop merchants use a POS adapter to print QR codes onto their receipts. Customers scan them with a mobile phone to redeem loyalty points on the company's mobile application. The power of each of these solutions comes from their ability to track offer redemption to unique customers. This helps retailers get to know their customers better and allows them to evaluate the effectiveness of their promotions. All retailers want to reward their most loyal customers, and now small merchants have access to technology that can help them manage customer data on an individual basis.

4. Combating fraud to limit e-commerce risks. Fraud is another concern for retailers, especially those selling products online. The internet connects small businesses to customers around the world, but the anonymity creates opportunity for abuse. National retailers spend hundreds of thousands if not millions of dollars every year on technology that helps them detect when a potential customer is using a stolen credit card or is part of an organized crime ring. The risk is perhaps even greater for small businesses. Accepting even one fraudulent order can put you out of business if it's large enough. Local retailers shouldn't experiment with e-commerce without first looking into the number of applications that can help them manage the risk of fraud.

As consumers have embraced online shopping, more businesses are venturing into cyberspace. Fortunately, many e-commerce companies that service small and midsized businesses either sell fraud detection software or provide fraud services as a component of their offering. For instance, CyberSource and PayPal, two merchant services providers, both offer solutions that filter transactions through a variety of screening criteria to help prevent fraud.

Both companies give users the flexibility to customize the filters to target specific threats to the business. Also included is the ability to check for things like discrepancies between a customer's IP address and shipping address, the card code verification (CVV) number (the three- or four-digit security code on the back of a credit card), and when several orders are submitted in rapid succession. Online retailers that use these tools stand a much better chance against fraudsters’ attacks than those that go it alone.

The battle between local and national retailers might never be a fair fight, but there are several ways that smaller shops can use technology to become more competitive. Consumer financing, card acceptance, loyalty services and fraud detection technology are becoming accessible to retailers of all sizes. Not every new technology makes sense for every business, but these innovations are so central to retail operations that business owners should consider them carefully. New card acceptance and fraud prevention technologies both help businesses contain costs, while loyalty and consumer financing services drive revenue. Smaller retailers that take advantage of both kinds of technology greatly improve their chances of successfully taking on their national competitors.

Robert Misasi is the founder and president of the Mercator Advisory Group, a provider of research and advisory services for the consumer payments industry. Robert can be reached at rmisasi@mercatoradvisorygroup.com.