Benefits of Offering Consumer Financing
Some large brick-and-mortar and online stores offer consumer financing. You may have a Walmart, Best Buy, or Amazon card in your wallet. These financing options allow consumers to purchase something today and pay for it over time. You may think your company is too small or new to offer to finance, but this is not always the case, and offering credit has several benefits.
Increases Customer Acquisition
When you offer to finance, you will attract new customers. Forester found that sales increased up to 30% in businesses that offered consumer financing. First, your products are more affordable because they can be paid for overtime. Second, customers rarely carry much cash on them, so offering credit on large purchases encourages their purchases. Third, those who may not earn enough to buy your products outright will be able to afford them.
Boosts Cash Flow
When you offer credit to your consumers, you are paid for their purchases immediately. You typically have a third-party lender who approves your customer’s credit accounts. Then, within a few days of each credit sale, you receive the money in your bank account. This means that you don’t have to wait the months it may take your customers to pay off their purchases. You also avoid the risk of providing financing yourself by going through a third party.
Increases Individual Sales
Because your customers can pay over time, they tend to make larger purchases. Available credit also gives you a great opportunity to upsell and cross-sell additional items. You can also encourage them to upgrade their purchases. For example, if you own a flooring retail store, you may convince your client to upgrade to hardwoods instead of LVT by showing them the minimal difference in their monthly payments. If the small increase in monthly payment doesn’t ruin their monthly budget, your customers may be more easily swayed to purchase more profitable products and services.
Builds Brand Loyalty
Consumer financing also increases brand loyalty. You see, when your clients purchase something from you and pay it off, they will be more willing to go back to your store or company when they need additional products you sell. They will see their transactions as easy and quick. They also recognize the benefits of using the financing you offer. Therefore, your clients will return to you when they have another purchase, especially if your competition does not offer the same financing benefits.
A financing program can increase your sales, brand loyalty, and cash flow, but it also helps your customers get what they need when they need it.