Should Your Business Offer Consumer Financing?
Consumer financing puts money in your customer’s pocket and generates revenue for your brand. It is a winning strategy for businesses of any size. In the past, the complexity of setting up a lending program locked many small business owners out of this great opportunity to grow their sales. Customers expect a full-service shopping experience, and now it is easy to offer.
Consumer financing works like a credit card. After successfully completing a brief screening, your shoppers will be extended a line of credit. Although the purchaser has months to pay, you receive your all money in a matter of days. There is no need to worry about collecting receivables. The lender shoulders that responsibility, leaving you free to focus on what you do best. Research suggests that shoppers who use credit for the first time are highly likely to finance a future purchase. It’s a home run for everyone.
Studies have found that financing can increase sales. Consumer financing gives your customers buying power to realize their dreams, and it can help build your business. Monthly budget constraints put the breaks on spending. It’s a good bet that your average order size could increase when you adopt one of the new easy-to-use financing options. With more time to pay, shoppers can feel comfortable buying the whole package at once. Instead of leaving your site with just a bedspread, they are more likely to add the matching throw pillows to the cart. Your financing program could actually be an important lifeline to a customer by providing buying power to address an emergency situation.
Everyone loves a great deal. Some lenders offer even more favorable terms for larger purchases. Being able to give customers a bargain when they buy big makes you memorable. Special incentives build customer excitement and loyalty. A stand-out financing offer can also drive new business to your brand.
You might wonder why many lending programs do not charge a monthly fee for their services. What does the lender have to gain by providing this opportunity to you? When shoppers have a positive experience with a lender, the lender gets important brand recognition across your customer base. That exposure is a valuable commodity that you bring to the bargaining table. So, think twice if you are asked to pay fees for this service.
Close the Deal
For shoppers who are on the fence, the ability to pay over time can tip the scales on making a big purchase. Offering your clientele consumer financing can help you gain new customers and turn them into repeat business.