Once you have started your business, the main thing that you need to do is to find effective ways to gain and to retain your customers; and so, in order to do so effectively you should make your business compatible with the need, wants and also the budget of you current and potential customer base. And so, Consumer Financing can be considered as a great way to gain the loyalty of your customers and also to bring about an increase in your sales. So the basic question here is, what is consumer financing? It is like an option that helps your customers to register themselves in a payment plan while they are purchasing any goods or services from you, in this process, the customers gets the goods or services at the same time but makes payment for it over a period of time. Both large companies offer consumer financing as it is a great way to convert browser or viewers into customers and also, this process of payment makes them want to come back to your place and purchase more, ultimately increasing sales and revenue for you and your brand. The entire procedure of consumer financing is pretty simple and there are mainly two ways of offering it to your customers, the first one being that you set up your own structure for consumer financing and also look after everything like repayment, interest, whether it will be on website or in-shop and may more decisions, and the second one being, partnering with a third party financing firm in order to offer consumer financing to your customers. Since the latter is proven more efficient and risk free for the business men, let’s see how it works:
- The customers decides what good or services they want to purchase from you, it can be in-store as well as online.
- The customer might apply for financing, if he or she is not able to but still want to purchase the product. At this stage, your financing firm may run a background and credit check on your customer.
- The customer will know within seconds if they have been rejected or have been accepted to gain financing. The business will receive full payment, all at one, if and once the customer is approved.
- The customer will get the desired product, but also will make payment to the finance firm in a span of time in the form of instalments.
- Mostly, the business has to make small payments as a fee to these firms on the basis of every transaction they make. Also, the customers have to pay some interest to these firms, unless, they provide an upgrade to them.
So now we know that consumer financing is a safe and effective and strategic way to increase sales and customer loyalty. Here are five simple steps that the business should consider while they decide if they want to make consumer financing available to its customers:
1. Knowing if Consumer Financing is the right option for you:
You need to know and make sure that consumer financing is the right option for your business keeping in mind the strategy that you have for your business. To begin with and to know that it is the right option for your business, you can ask yourself the following questions:
- Is your business qualified enough? You need to ensure that your business firm is qualified enough to offer consumer financing as an option to its customers. Also, is most commonly used by retailers and business that deal with selling products that have heavy price tags. Also, if a majority of the products and services that you offer are on the lower-end, it will be better off if you go along with the traditional methods of debit and credit card payments.
- Is your business qualified enough? You need to ensure that your business firm is qualified enough to offer consumer financing as an option to its customers. Also, is most commonly used by retailers and business that deal with selling products that have heavy price tags. Also, if a majority of the products and services that you offer are on the lower-end, it will be better off if you go along with the traditional methods of debit and credit card payments.
- Is your business qualified enough? You need to ensure that your business firm is qualified enough to offer consumer financing as an option to its customers. Also, is most commonly used by retailers and business that deal with selling products that have heavy price tags. Also, if a majority of the products and services that you offer are on the lower-end, it will be better off if you go along with the traditional methods of debit and credit card payments.
2. Research, Evaluation and Selection of Financing Company:
You need to carefully choose the company that you with to partner with. There are a number of companies that provide for businesses for all sizes. You should consider the following; associated fees, a minimum transaction and the order size, also you need to know more about the clients that have benefitted with the financing firm that you are considering to choose. There are also different types of financing programs that such firms have to offer to business like you, and you need to choose which amongst them is well-suited for your business. They are: regular financing, interest free financing, invoice financing and self-managed financing.
3. Training your Staff:
It is appropriate and applicable to businesses that provide consumer financing in their physical stores. The customer has to do everything by himself on website; but in physical stores, the staff has to be involved. Your staff will therefore will be responsible for the following.
- Education and informing your customers about the financing program the you tend to offer to them.
- Assisting the customers and telling them the details that are important for the application process.
- Insertion of information in the system and telling the customers if they have been approved or rejected for the same.
All of this requires a definite level of training, and so a financing company can be of great help to assist you for the same.
4. Promotion and Advertisement of the Financing option that you have to offer:
The consumer financing will be of no use for your business if even your existing do not know and are aware of it. It completely dependent on your budget, you can make use of several marketing and advertising options like; pay per click, social media marketing, email marketing, flyers, brochures and many more. The main objective here is to gain as many customers as possible.
5. Evaluate the Usage:
And finally, you need to ensure the effectiveness and efficiency of your consumer financing program. You don’t have to be dependent on KPI’s to evaluate it; you can see how the conversion rate has increased since you have started this program. You should never hesitate to ask your financing company about the growth and tracking the success of this program.
One might think, what are the benefits that a firm that offers consumer financing has to offer in comparison to the firms that do not offer the same? Here are a few points that may make it a little clear for you:
- The user experience is better: getting point of sale is very convenient for the customers
- They are easy to apply for: the application, evaluation and granting of the consumer financing is easier and keeps the customer protected.
- Flexibility: for sure, launching such a program in your business requires a lot of additional efforts but it for sure is all worth it. It for sure gives a significant growth and adds for great revenue in the business but also at the same time, it makes you more attractive in the eyes of the customers and makes them want to come back again and again to you for desired gods and services.
- Driving repeat business: you will surely be in touch with your customers once they have signed up to pay for the instalments for something they have already purchased. You should build great human relations with your customers in order to create a great image of yourselves in the eyes of the customers and which will bring loyalty in them and thus make them want to make more purchase from your business.
- Building credit score: consumer financing loans are usually small and so can be paid off very easily, so your customers can also build their credit score, which is very helpful if and when they wish to gain big loans fron financial institutions.
- Competing with larger business chains:Â it is an age of globalization, and so it is not at all easy to compete with the big brands and business who offer products to their customers which is almost equivalent to the wholesale prices. And additional offering like that of consumer financing, you may be able to gain the advantage that will help you gain way more customers.
- Increase in the order value: the buyers tend to purchase more when they are not supposed to pay everything at the same time and instead have to pay in instalments and so, the decision for purchase becomes way easier. Customer financing is a great option and a good ideas because it helps you keep the interest of your consumers intact and in addition also attracts more potential customers.
To conclude, we can say that there is no doubt in the fact that consumer financing can indeed be a an important asset for your business and so, making use of it in your business will for sure will be a win-win condition for both you and you customers. And it is so because, your customers will be able to attain the goods and services that they desire and keep coming back for more. And it is a winning situation for you as it will help you make increment in your sales and revenue and ultimately help you reach your goal. So, if you have not thought of consumer financing, it is high time that you consider implementing it in your business.