Each spring, over 250,000 music lovers travel to Coachella, a two-weekend festival drawing a predominantly Gen-Z and Millennial crowd. With general admission passes starting at $649 (up from $429 in 2020) and cost of attendance reaching over $1,000 per weekend, Coachella is a financial commitment. This year, around 60 percent of Coachella attendees purchased their tickets using the festival’s Buy Now, Pay Later (BNPL) payment plan. This is a significant increase from 18 percent in 2009.
Coachella’s BNPL service is provided in partnership with the ticketing company AXS. This is a financially sound and low-risk plan, another indicator in the shifting payment preferences of next gen consumers. The payment plan can be accessed by festival attendees for $41 in advance, which equates to around 8 percent of the ticket. Compare this to a credit card with its average 20 percent interest rate, the installment payment plan makes financial sense. There is no added interest. BNPL’s upfront clarity and short term nature also appeals to the two generations known for valuing experience, digital-first solutions, and financial flexibility.
For traditional financial institutions looking to attract and relate to next gen consumers, Coachella’s BNPL model provides several interesting strategies in driving engagement and increasing customer loyalty:
Unlike traditional repayment schedules that can feel like lingering IOUs, Coachella fans are given the option to pre-pay in monthly installments up until the month before the festival. Attendees are aware that their tickets can be canceled if they are unable to pay in full prior to the event, and are incentivized to stay on track with their payment schedule by the event itself.
Shifting the role of purchase financing to pre-purchase has become increasingly popular as consumers appreciate the earlier access to cashflow, which gives them more decision making power throughout their shopping journey. For the provider, engaging the consumer earlier in the purchase-to-payment process also gives more opportunities to gain wallet share.
Next gen consumers appreciate financial programs that are low stress and supportive of their financial goals. For Coachella’s BNPL system, consumers have up to ten days to make up for missed payments before the ticket is cancelled. Providing flexibility in repayment within reason is well received by next gen consumers, and lowers anxiety of financial engagement.
Having automatic withdrawals, upcoming payment notifications, and a single source to view and manage loans can be helpful for users keeping track of their finances. Many banks and credit unions currently have services such as skip-a-pay in place for account holders that need just-in-time support.
For those who ultimately are not able to pay off their tickets in time, Coachella’s BNPL model offers a fallback. The amount that you have paid to date is available as credit for 12 months, and can be used toward next year’s ticket. It turns a missed opportunity into a future promise, and begins a step toward customer retention: fans who miss this year’s festival can already be invested in next year’s.
Coachella’s approach to installment loans is designed to appeal to and meet the needs of next gen consumers. It also offers strategies for financial institutions looking to stay relevant with Gen-Z and Millennials. Here’s what we can learn: