When you offer to finance – also known as payment options – to your customers, you are meeting their expectations. That’s because payment options are an integral part of every shopper’s experience. Whether you are shopping at a big box store or the mall, retailers are giving their shoppers a way to buy. More importantly, it’s a way to buy more.
Buyers look at payment options as a way to increase their spending power. It’s important to understand that this is also true in the home improvement industry. The reason is that homeowners do not have a well of cash to dive into to pay for that remodeling job all at once.
Consumers are counting on you to help provide the payment options they need to help get the job done. Your customers have used payment options in the past at big box stores, which creates an expectation that they are going to be presented with payment options going forward.
Financing helps close the deal if you use payment options as a way to sell, as opposed to using financing as a way for your customers to pay for their project. It’s important to understand that there is a fundamental difference between those two concepts: Using financing to sell, versus using financing as a payment method.
When you offer payment options, you’ll actually see your customer’s shoulders relax. They will become more comfortable because they know that they don’t have to pay out of pocket and write a check today. They don’t need to give you their credit card today. It makes your sales consultant’s job easier. It also helps your sales consultant increase the scope of the job.
For example, help your customer upgrade to marble countertops, or do the entire house with new windows. Because your customer expects to be offered payment options, they will be happier. They will also help spread the gospel about your business. They will tell their friends, “Yes, I bought from this company because they offered me a no-interest*/no payment plan with interest waived as long as I paid the balance within 12 months.”
If you currently do not offer to finance to your customers, there’s a good chance you are losing deals you could be winning and missing opportunities to increase the size of many projects.
Counting on customers to obtain their own financing can be risky. They may change their minds during the loan process, or the next contractor they meet with may offer to finance and get them to sign on the spot.
Some customers may simply assume you will offer financing as part of your pitch. And, if you don’t, you may put yourself out of the running to get the project.
OK, say it again: Offering financing to every customer on every sale can increase close rates, average job size and overall sales. However…
When offering consumer financing, it is important to provide enough choices to meet the needs of different customers without causing confusion. JO1N Loan Program offers merchants dozens of plans to choose from; however, experience has taught us that the way to be successful is to carefully select a few plans, then offer them every time you present a proposal.
• No interest, no payments (interest waived if the purchase balance is paid in full within the promo period) – This allows customers with cash in hand to “use your money” for the project and retain their own funds to add options and special touches.
• Extended payments – These plans are ideal for buyers who do not have the cash to begin their project immediately but prefer to use affordable financing to move forward and, in many cases, add options to enhance their new living space and increase the value of their home.
By carefully selecting the plans you will offer, promoting the availability of financing, then offering your selected plans every time you meet with a potential new customer, you stand the best chance of closing the sale, increasing the size of the project and growing your business.
Think about this:
Currently, you average 3 orders for every 10 customers you meet with. This means you are spending £3,500 (10 leads) to make £6,000.
If by offering to finance, you could increase your win rate by one, to 4 of 10, the same £3,500 investment will make you £8,000. Keep in mind your results could be even better.
Now, let’s say that in addition, you are able to use financing to increase the average order size to £12,000. Now, you will make £9,600 (Remember: With JO1N, customers can be approved for more.)
If you include your financing offers in your marketing materials, on your website and in every email offer, you’ll attract customers who would not have called otherwise, which could reduce the cost of each lead.
Offering financing has the potential to significantly improve three critical elements of the profitability equation: Lead Cost, Win Rate & Average Sale.
Do not call it “financing” that is the “F” word and has a negative connotation. Use Exciting Offers, Special Promotions, Great Payment Options, etc.
Promote payment options just like you do special pricing or free upgrades, etc., including financing in marketing materials, on your website, in your showroom or anywhere you promote your brand. Use financing offers to increase orders and make extras affordable.
Make financing a part of your standard sales process. Mention it early and often. Do not wait for the customer to bring it up. By then, you may have already offered a discount. It’s a difficult situation if you offer a discount, then they say “So, what kind of financing do you offer?”
Sell affordability, not price. Example: You may average 10K per order installing windows. As a part of the sale, you usually try to upsell a £1,500 door. Now, instead of trying to sell £11,500, sell a monthly payment. Or, use no interest/no payment (interest is waived if paid in full within the promo period) financing. In that case, you might ask, “Can you come up with £1,500 in 12 months?” Either way, you are selling affordability.
Treat merchant fees as a marketing expense. You should promote financing offers in your marketing programs to attract new customers. This spreads the cost among all of your customers, just like the cost of direct mail, print advertising, events, emails, or any other promotion.
Spread merchant fees across your entire pricing structure. For example, if you assume that 50% of your customers will use financing and your average merchant fee will be 5%, you could increase all prices by 2.5%. In this way, those who pay cash will help cover the cost of those who accept your financing offers.
Find new operational efficiencies, beginning with financing. Many contractors have taken a queue from the JO1N and increased their use of technology, such as CRM, estimating, visualization, presentation, etc. Not only does this reduce costs, your customers will be impressed.
JO1N us and sell more