Consumer Financing: How is it valuable to your small business?
Despite news to the contrary, consumer financing remains an important part of business. After the Great Recession, some people became reticent to purchase things on credit, but most consumers still want the option to “charge it.” As such, offering credit remains valuable to your small business, as it helps to grow your company and build consumer loyalty.
Shout it Out
The ability to finance a purchase is always mentioned in automobile sales ads, and there’s a good reason why. Many people will make a decision to go shop for a car or truck even when they weren’t planning on it after they’ve just seen “zero percent financing.” Leveraging this influential power is part of why many auto dealerships are successful. They reach customers that weren’t thinking about buying a car simply by offering them credit on a TV or radio spot.
From the get-go, you must shout to the rooftops that your business offers consumer financing. Make certain the option to purchase your goods using credit is discussed in your marketing materials, your TV and radio spots, your online presence, and at your stores. People want options, and the ability to pay with either cash or credit brings more customers through the door. In fact, some consumers won’t solicit a business unless it offers credit options.
They Spend More
It’s been established that if a customer can charge it, he or she will spend more. This makes sense. You cannot spend more cash than you have, but you can charge your credit to its limit. People who can purchase things through financing have a tendency to do two things that will benefit your business: either buy more goods, or buy a better quality good. When someone isn’t handing over physical cash to pay for the purchase, how much it actually costs doesn’t register.
They Keep Their Cash
Saving for a rainy day is taught to little ones, and when they transition into adults, they realize the importance of having cash on hand in the event of an emergency. Offering credit gives the peace of mind that the money remains in the bank for other expenses or that unanticipated need, which is why some consumers prefer to do their shopping via financing. They feel in better control if they pay off a monthly bill rather than spending their cash up front.
Finally, businesses offering consumer financing have stated that it encourages their sales associates to do better. When an associate knows how to present your financing options, this provides additional leverage to encourage the sale.