“6 months same-as-cash.” “No payments for 90 days.” “Payments as low as $49/month.”
Why do you think “Big Box” retailers like Best Buy or Home Depot are always advertising their special financing promotions? Because it works. Actively promoting financing plans helps attract new customers and to get those “on-the-fence” buyers to say yes.
The most successful dealers, whether in water treatment, home improvement, or other in-home sales or retail sales industries, know that financing is a valuable tool in their sales and marketing plan. By following these 3 simple “must-dos,” any dealer can improve sales through the use of financing.
1. Understand your financing programs inside and out. Your salespeople need to be confident in all aspects of their sales pitches … and that includes financing. You also need to understand the pricing of each financing program you will be offering. Most finance companies, like Foundation Finance Company, offer a variety of promotional programs, each of which has a different cost, and some companies (again, like Foundation Finance) offer financing for both prime and subprime customers. This means you may be offered “discounted bids” on some of your riskier customers. You need to know where your margins are and what you can afford to accept on each deal because those costs can’t be passed on to your customer directly.
2. Price your products properly. Very few companies can survive by being the “low-cost leader.” Rather, most companies price their products to reflect the VALUE they offer their customers, whether that is through proprietary technology, exceptional service or something else. Financing is another service you are offering your customers. When pricing products, you may want to consider the average financing cost and build it into your pricing. For example, if you determine that your average financing cost per customer would be 5%, you could increase your prices overall (for all customers) by 5% and then, if you chose to, give a discount for those paying cash. Or you could just use the extra revenue to offset costs on other special promotions you choose to use. What you can’t do is decide to raise the price on a customer after he or she chooses to finance. This is not allowed under Truth-in-Lending regulations.
3. Actively promote financing and offer it to every customer. The most successful dealers actively promote financing in every sales or marketing channel … and they offer it to everyone. You cannot tell by looking at a customer whether he or she will want to finance. If you don’t offer a convenient payment program up-front, the customer may throw out different objections because he or she doesn’t think it is affordable. Here are some steps you can take to make sure you are making the most of your financing options:
– List “Financing available to qualified credit” in every ad, sell sheet and customer presentation.
– Pick one or two special promotions to feature at certain times of the year. For example, around the holidays, people may be concerned about adding another payment to their budget, so offering a “3 months deferred payment” program may make them more comfortable. Make these offers visible in your promotional materials and even on your telephone hold message (“Thanks for calling XYZ Water Treatment, featuring no payments for 3 months on all purchases this month.”)
– Offer EVERY customer at least two positive payment options. For example: “Mr. Smith, the cash price is $4,000 or we offer low monthly payments of $80 per month. What would work best for you?” Make sure to set the tone at the beginning of the presentation that the purchase will be affordable.
– Get complete credit applications from each applicant. You want to give yourself the best chance for approval on every loan, so getting all relevant information from a customer, including listing all sources of income and getting joint applications (when possible) will ensure that the finance company has everything it needs to make a good decision.
Foundation Finance Company offers financing programs for water treatment, home improvement, vacuums, furniture, jewelry and more. These programs are designed to help dealers attract new customers and close sales. We want to be the foundation on which our dealers can build sales success. If you have any questions on how our financing programs can help you achieve your sales goals, give us a call at 1-855-241-0024. We’re ready to help you succeed!