CHALLENGE
Closing sales on high-end merchandise, such as diamond rings and pearl necklaces, is never easy in any channel. So since 2001, Ice.com has been on a mission to deal with customers one-on-one regarding payment solutions to boost their high-ticket orders. They set out to go the extra mile not only to seal the deal, but also to endear customers to the brand.

“Over half of our shopping [carts] hold important gifts for anniversaries, birthdays and other emotional events -- where we need to deliver whenever we and the customer can make it possible,” says Ezzie Schaff, VP of Risk Management. “In 50% to 60% of our orders, you have to keep in mind that there are different shipping and billing addresses and, therefore, a lot of room for order-entry missteps.”

In addition to order entry problems, Schaff and his team added three other categories that they deemed worth targeting with special care and extra payment solutions:

-> People behind in their credit card payments, but still able and intend to make them.
-> Those with a currently lost or stolen credit card.
-> Decent-to-good credit-rated customers who were on hard times, though trying to work.


CAMPAIGN
Even after hearing rave reviews about Bill Me Later from industry friends, Schaff concluded that the service wasn’t the right fit for their product line -- in short, they wanted more control over the process and the ability to choose who could afford to buy diamonds and who couldn’t.

He and his team established a multitiered department to deal with potential and repeat customers in need of auxiliary payment options for single purchases. Here are the three steps they took:

Step #1. Set up the department

Even though company sales were growing steadily heading into 2001, Schaff didn’t want to base such an important new area of business on fancy technology. After all, they decided to target *potentially lost* orders of up to $5,000 -- therefore, human oversight was at the core of their work.

Schaff put together a seven-member team that would make the system work with personal skills and elbow grease. As it turned out, they frequently spoke with customers on the telephone, calling banks to verify accounts, performing credit checks and whatever else was needed to close the sale.

Past experience in credit wasn’t required: the staffers were trained by listening to taped calls requiring credit analysis, upset customers, various types of educational walk-through scenarios and such.

“We are asking them to wear three hats on a lot of days,” Schaff says. “When looking to fill these positions, I went after honest people with street smarts.”

Step #2. Monthly payments

Next, Schaff installed a new shopping cart with a variety of transaction options -- most notably, the ability to pay off big and small tickets incrementally . This way, they use credit cards to gain an edge over jewelers that make customers pay for the product upfront.

By clicking on the monthly payment option on Ice.com’s “Shopping Bag” page, purchases ranging from $50 to $5,000 could be divided into five monthly payments with no finance charge or interest.

At the time of shipping, the credit card would be charged for the first payment plus tax and shipping fees. The balance would then be automatically billed to the credit card in equal monthly payments starting a month later.

In the event of non-compliance or fraudulent use of funds, Ice.com reserved the right to appear at the buyer’s premises and repossess the merchandise without notice. Of course, this was a last-resort tactic for Schaff. But it’s worth noting that there’s no insurance plan backing the monthly payments.

“We work with our customers and respect their [purchase] histories, but [high-risk individuals] are part of the risk involved,” he says.

Step #3. International fraud, canceled orders and paying by check

Due to international fraud problems encountered by nearly all eretailers, Ice.com took global orders strictly by phone. However, a year ago, Schaff implemented a system that let him receive international payments with full protection from fraud chargebacks. After it was put in place, he simply needed to train his staff on customs issues.

Meanwhile, he added a program that sent all canceled orders into a queue where they were looked at within half an hour by his team. He set a goal to reach out to customers within 50-90 minutes to see if their order could be finalized. Many times, customers logged off the computer thinking that the order went through -- when it did not.

“It’s important for us to be watching orders from 6 a.m. to 9 p.m. [Eastern time],” Schaff says. “Otherwise, for every 15 minutes or an hour that goes by, the likelihood of saving the order decreases.”

In addition, his team allowed US shoppers to pay with a personal check by filling out a check order form and mailing them to Ice.com.


RESULTS
Such a significant -- and risky -- initiative is paying off where it counts -- in the sales books. Before implementing the various tactics, Schaff was seeing an overall credit approval rating of 41%.

That figure now regularly floats around the 95% range, and the initiative has achieved exactly what it set out to do -- assist people with payment solutions who might have been rejected by third-party providers.

In addition, Schaff is seeing an average order value of $205 on carts using the monthly payments compared to $120 for regular credit card purchases.

And what about those high-risk customers Schaff was so worried about? “They’ve been well below what we projected. They have not deterred us at all.”

International orders have jumped by 44% in the last year because of the chargeback system. And, last, as if that weren’t enough good news, they’ve lowered their order cancellation rate from 5% to 1.25%.


Useful links related to this article

Creative samples from Ice.com’s alternative payment system
http://www.marketingsherpa.com/cs/ice2/study.html

Paily.com - which provided the overseas transaction system
https://www.paily.com/

Ice.com
http://www.ice.com