Sebastian Siemiatkowski, CEO and Co-founder of Swedish start-up Klarna, speaks to Alistair Crane about empowering customers with more flexible payments.

Can you explain how Klarna works?

The goal at Klarna is to revolutionise the payment experience for shoppers and retailers alike. We are one of the leading global payments providers as well as being a fully-licensed bank in Europe.

Founded in Stockholm, Sweden, in 2005, Klarna gives online consumers a number of options: to pay now, pay later (including ‘try before you buy’ or fixed payments ‘pay in 3’ without fees or interest) or overtime for larger purchases. It offers a simple, safe and smooth payment experience that delights customers and drives value for our retailers. We also offer in-store services, a Klarna card with debit and credit facilities, and additional functions via the Klarna app such as delivery tracking, instant refunds and tools for managing finances.

At Klarna, our philosophy is to give shoppers the freedom to decide how and when they want to pay, providing an experience that not only maximises conversion for our retailers and helps build loyalty but also empowers consumers. This can be the key differentiator in a very competitive retail landscape.

Klarna now works with 100,000 retailers including IKEA, ASOS, Adidas, NIKE, Topshop, H&M, Spotify, Nike, Sonos and Expedia, and has over 60 million consumers across various markets.

What was the thinking behind starting Klarna?

We simply wanted to eliminate the unnecessary friction and complexity that comes with handling payments online – both for retailers and consumers. We knew there was a gap in the market for a more user-friendly experience. What was being offered at the time was inhibiting growth and trust in e-commerce.

How has your previous professional experience informed the work you do now?

I was quite young when we founded the company, but there were many formative experiences; from working at Burger King with Niklas Adalberth, one of my fellow co-founders, to travelling around the world without taking a flight.

My co-founders and I presented our idea at an innovators pitch and a panel of eminent business leaders said, ‘forget about it. It’s never going to work.’ Afterwards, an audience member at the pitching session approached us and told us to go for it and the banks will never understand what happened.

Sebastian Siemiatkowski, Klarna
Sebastian Siemiatkowski, CEO of Klarna

What changes have you seen in the retail market since founding Klarna in 2005?

A consumer-led revolution is transforming retail. If retailers want to stay ahead of the competition, it’s all about putting customers first. The way people shop has changed dramatically over the past decade, with the evolution of e-commerce and mobile shopping. Today’s online shoppers are empowered and their expectations are high – they demand highly intuitive, personalised experiences and the ability to shop anytime, anywhere, from any device.

If a retailer doesn’t meet these expectations, shoppers will move on to one that does. The aim is for customers to be able to move freely between various channels, choosing whether they want to shop and experience the retail offering in-store, online, or via their mobile or social media. When it comes to making a purchase, the payment experience is a critical step in this process. As payment providers, we need to continually challenge ourselves in order to provide the smoothest experience for customers while working with retailers to seamlessly integrate this into the entire journey.

Klarna’s pay-later service, for example, allows customers to ‘try before they buy’. For fashion retailers, in-store customers would likely go to the fitting room and try it and then decide whether to purchase. We apply the same practice for online purchases, where customers can receive and try on the items at home before any money has left their account. Only when they decide to keep the items or not is the transaction officially processed.

Ultimately, retailers should strive to create an easy, inspiring and convenient shopping experience for consumers that helps them attract customers and build loyalty. We help them do just that.

Klarna’s service is built around being ‘smooth’. How do you communicate this with your users?

Over the last couple of years, ‘Smoooth Payments’ has become Klarna’s communicative concept and the foundation for our strategy across all touch points. By removing friction around payments, we want to demonstrate this process in a way that is both fun and quietly delightful in unexpected ways. We then wanted to elevate the concept of ‘smooth’ to the next level, asking ourselves, ‘who in the world would personify smoooth the best’? The answer, in the end, was quite obvious. Snoop Dogg, probably the smoothest person alive, was renamed for the purpose of our campaign as ‘Smoooth Dogg’. The recent campaign, which goes under the name ‘Get Smoooth’, is a natural evolution of the original smooth concept. It refers to the fact that whether you’re a consumer, a retailer or Snoop Dogg, Klarna’s products will make your everyday life a lot smoother.

Can you describe the functions or developments that you have in place that ensure an efficient end-to-end user experience?

Retailers need to keep shoppers engaged throughout the purchase journey in order to attract and maintain custom. This is an end-to-end customer experience that extends far beyond the actual transaction, so therefore not just before a purchase, but at the point of purchase and post-purchase. We work together with retailers on this by facilitating more payment options, creating harmony between in-store and online, offering exceptional customer service 24/7, visualisation of receipts, delivery tracking and pain-free instant returns.

How do you recognise what’s great in your company?

The execution. Ideas and strategy are important, but the quality of the execution is where you ultimately succeed or fail.

How do you want users to feel when interacting with Klarna?

We want to free consumers from all the meaningless time spent managing their purchases and finances, so they can do more of what they love.

What does 2019 have in store for Klarna in terms of expansion and development?

We have a very exciting year ahead – we are entering new markets, our partnerships with many large retailers are going live across more regions and
we are continuing to build on the success we are seeing with our products.