Consumer Finance: The Benefits for Your Small Business
As a business owner, you have cultivated a base of loyal customers. You may even already have certain incentives in place for them, such as a loyalty awards program or coupons. With that in mind, consumer finance programs could be the next step for your small business. These programs operate by personally offering a line of credit to your customers that is managed by a third party. Big retailers have enjoyed the benefits of a personal line of credit for years now, but small businesses are now welcome to implement that as well. These programs have become friendlier and easier to use for small businesses and boast benefits of increasing sales and improving your relationship with customers.
How Do You Implement Consumer Finance?
Explore your lender options. There are many lenders that require fees, but there are also lender programs that are free to use. Fee-based companies can charge business owners by a discount rate or a flat rate. The discount rate is paid by taking a percentage of every transaction made. This payment method depends on the amount of customers you have. The flat rate is a set rate that is unaffected by the amount of transactions made. It offers coverage for an unlimited amount of customers per month. Companies that are free to use merely require the standard fees you already have to pay credit card companies and thus are much easier to use. It is best to examine your finances now to see which method would work best for you.
How Does Consumer Finance Increase Sales?
Sales can increase by increasing your customers’ average order value or AVG. Consumer finance offers the option of paying for purchases over time with the line of credit instead of demanding cash up front. This encourages your customers to spend more money per purchase. It will also encourage sales by allowing you to compete with big businesses. Having a finance program will already put your small business on, if not equal, then at least higher footing than before.
How Can Consumer Finance Strengthen Customer Loyalty?
Customers that have a personal line of credit with your small business will be encouraged to reuse it over and over again. You can attract customers to your consumer finance program by adding offers to make it unique from competing programs. For example, you can eliminate interest if the debt is paid in a certain amount of time. Other offers can range from special discounts offered only to customers who are in the program which will in turn encourage customers to apply.
Consumer finance may seem like a hurdle to small business owners at first, but their advantages are worth the effort taken to understand and implement these programs. It not only gives your small business a competitive edge over big retailers, but it will strengthen profits and your loyal customer base.