Overcoming “too good to be true:” designing a financial program for small businesses
Loretta has always wanted to own a boutique in her close-knit community in Kentucky. When I called her, she had been in the middle of painting her new shop, a cocktail-themed boutique. She had just finished curating her inventory and was excitedly waiting for items to arrive for her grand opening next month.
For new business owners like Loretta, cash flow is one of the most challenging problems in opening a store. On top of start-up costs such as rent, store fixtures, and payroll, owners have to stock an entire store with new inventory. It’s a major expense, but absolutely vital: You can’t open a store with nothing on the shelves.
Faire, a launch pad for small businesses
Faire is an online wholesale marketplace where over 15,000 independent brands sell to over 150,000 retailers across multiple countries. I was calling Loretta to get her feedback on a new program we created called Open with Faire, which gives new retailers up to $20,000 to buy inventory on our online marketplace. These small businesses have 60 days to pay us back — traditionally known as “net 60 terms” — which gives them time to build up the revenue needed to cover their costs. With no hidden fees and an application that takes less than 10 minutes to complete, it can almost sound too good to be true.
Luckily, Loretta loved the program overall. “Open with Faire is a financial kick-starter for brand new boutiques, and offers a helping hand as they get things underway,” she told me.
But the program wasn’t perfect when we launched it. We learned so much about how to design and promote Open with Faire by talking to customers like her. It was like building a startup within a startup — driven by intuition at first, then rigorously refining our designs as we saw how people used and responded to what we created.
Starting small and scrappy
Creating an MVP (minimum viable product) for Open with Faire required two components: a marketing channel and an application form.
We first marketed the program manually through email, which drove interested retailers to an application page built on Airtable. Since these were early days, these channels weren’t integrated into our full website just yet. Applications came flowing in as soon as we sent out the emails, in addition to retailers’ questions and concerns.
Seeing a clear appetite for the program, we began to productize the sales and discovery experience. Bringing this into the product meant automating our emails and creating a more seamless online experience. Our first goal was retailer education to show how Open with Faire could help lower the financial barrier for every aspiring shop owner.
Our designed emails that underperformed when matched with plain text
Emails: to design or not to design?
The new automated emails we created were beautifully designed. We chose colors and images that would invoke excitement and overall tried to make an impression that felt more professional and legitimate.
However, once we released the new emails, we saw a significant drop in apply rate. We compared the new emails to the plain-text version, and realized the new ones had lost that personal touch. They had a generic reply-to email, didn’t address the retailer by name, and worst of all, lacked a feeling of exclusivity.
By contrast, the plain-text emails we’d sent in prior weeks felt personal and trustworthy. When we spoke to retailers who received them, they said they liked how the offer didn’t sound “super sales-y” and that they “knew there’d be someone at the other end of it” The plain-text emails were addressed to the retailer and they came directly from our product manager. For some retailers, this added legitimacy to an offer that at first sounded too good to be true.
Reminded that communication is so much more than words, we quickly reverted back to the plain-text emails.
Messaging that resonates more with new retailers
The power of words
As we brought the Open with Faire experience into the product, we focused on retailers who had yet to apply or just weren’t interested. Our key finding from these calls was that they didn’t understand our message.
Across our promotional surfaces, we had headlined our offer with “Get up to $20k in net 60 terms.” But our target audience was so new to retail they weren’t familiar with industry lingo like “net 60 terms.”
By talking like insiders, we were accidentally excluding our core audience, and they were missing the concept of the offering.
To help increase our apply rate, we experimented with messaging that clearly communicated the net 60 terms offering and educated new retailers on what the terminology meant. Since new brick-and-mortar retailers were a small subset of all Faire customers, running an A/B test wouldn’t generate significant results required for fast iteration. Instead, we conducted an A/B test purely to make sure that our new messaging wouldn’t negatively impact our application rate. Given this process, we turned to rely much more on retailer sentiment and intuition.
Our findings
We found that “Get up to $20k in new inventory” worked much better for this audience than “Get up to $20k in net 60 terms”. This subtle change spoke to one of their biggest concerns — the cost of startup inventory — and clarified what the offer could be used for. Across promotional surfaces, we reinforced the meaning of net 60 terms by pairing it with more descriptive language, like “buy now, pay 60 days later” and “60-day payment terms.”
The homepage banner and exposed checkout entry points
Promoting where it matters
Another breakthrough in our promotion strategy came from observing how customers found their way to the Open with Faire landing page. The Faire website has four main entry points to this page:
a large homepage banner
a top navigation link
an exposed cart empty state
a promotional banner post-checkout
We figured the homepage banner would be the most successful entry point. It was the largest and loudest promotional surface. However, we were wrong.
We saw a nearly equal number of retailers go to the Open with Faire landing page through an empty state on our exposed shopping cart. This cart appears when a retailer shops for products on a brand’s inventory page, but has yet to add anything to their cart. Our promotion on this surface wasn’t very prominent, however, it brought large amounts of traffic to our Open with Faire page because the retailer’s intent to buy was high, and the cost of inventory much more likely to be on their minds.
After learning that our empty cart was an impactful promotional space, we refined the messaging to show retailers how much they had left to spend in net 60 terms — a reminder that was both informative and highly relevant.
What’s next?
The process of creating Open with Faire opened our eyes to the needs of new retailers, as well as the role we can play in supporting them. The list of opportunities goes on and on. From educational resources that teach retailers the ins and outs of starting a retail store, to merchandising their assortment with high sell through products. We have lots ahead of us as we continue to support small businesses past this pandemic.
In the meantime, we continue watching and listening to these customers so we can continue improving the program. Huge thank you to the many people on the Faire team who contributed to this work.
