Consumer financing: Knowledge = sales
Are you leaving potential home improvement sales on the table, so to speak?
Evidence suggests that contractors may be missing out on sales because they are not fully utilizing their financing programs. By contrast, contractors who promote financing options may see average ticket sales improve due to the flexibility promotional financing can provide.
Synchrony’s most recent consumer study revealed that 91% of Synchrony home improvement cardholders feel promotional financing makes their large purchases more affordable1. Those customers also are likely to be more satisfied with their purchase because they got the home improvement products or services they really wanted.
MAKE IT KNOWN
Making customers aware of your financing program starts with advertising and marketing. Make sure financing information is featured in your brochures, on your website, in social media and during conversations with the customer. Then train your team to mention financing early and often in the conversation. Customers often rely on the salesperson for this valuable information.
According to Synchrony’s consumer study, roughly 78% of Synchrony cardholders found out about financing from the sales associate. Many customers will walk away without making a purchase if they don’t know about your credit options or they are somehow confused by the offer.
TRAIN YOUR TEAM
It’s essential that you and your team are knowledgeable and informed about all current financing offers. Credit providers such as Synchrony offer online instructional programs to help business owners and teams use financing more effectively. Ongoing training will help your team become more comfortable with financing vocabulary so they can explain credit offers clearly and accurately to customers.
If you have never provided credit training, perhaps it is best to start with some words and phrases that often come up when discussing credit. While some people may be very knowledgeable of financing terminology, others may be confused by these phrases and are embarrassed to ask. It's best to make sure everyone is comfortable with the topic. Here are some of the most common financing phrases you are likely to hear:
- Annual Percentage Rate (APR) — the interest rate charged annually for borrowing money. It is expressed as a percentage that represents the actual yearly cost of funds over the term of the loan;
- Credit rating or credit score — A number, assigned by a credit bureau, that indicates your ability to repay a loan. The scoring model weighs several factors, including payment history and current debt;
- Deferred interest — interest that accrues on a purchase during the promotional period. The interest is assessed if the purchase is not paid in full within the agreed-to promotional period. Minimum monthly payments are required;
- Equal payment, no interest — no interest is assessed on a purchase and equal monthly payments are required until paid in full. The payments are a fixed percentage of the initial purchase amount;
- ‘No credit’ loans — a loan in which the lender does not conduct a credit history check, usually because the borrower may not quality for an unsecured loan. These loans typically have higher interest rates than revolving loans;
- Revolving credit — a line or amount of credit that is automatically renewed as debts are paid off. A credit card is a revolving line of credit;
- Terms and conditions — the agreement (contract) between the borrower and lender includes a description of the payment obligations and duration of the loan period; and
- Unsecured credit — not secured by collateral. Car loans and home loans are secured credit. Most credit cards are unsecured credit.
Overall, financing helps give the customer more options. It helps them make their decision on several factors, including short- and long-term needs. But unless you inform them about financing, they won’t have those options and you may lose the sale.