Customers financing is the process where customers enrol themselves for paying for a long time and purchase a product instantly. Consumer financing shifts your customers from browsers to buyers and creates huge profit for your business.
How to offer Customer Financing
Follow the steps to offer customer financing-
- Show your customers Products both online and in-store. They may browse and they like products but couldn’t buy for the price tag they can’t afford. Encourage your customers to see the products they want.
- Then make them aware of customer financing. Make sure you advertise properly about customer financing of your store.
- For seamless transactions, you can introduce a third-party provider, Financeit. You will receive the payment altogether. Often buyers skip the rest of the price. But Financeit manages this risk and offers its own financing programs and applies a credit check on them according to their convenience.
- The application for this financing will be checked and decided whether the customer is approved or not for this flexible paying. If approved, the store will receive full payment right then.
- Then the lending financer and customer will discuss and decide how much they are going to pay per instalment, considering which service the customer is talking about.
- Customers have to pay interest per instalment as they are paying for a long time. You will also have to pay a minimum percentage for transactions.
- Explain to your customers how this process of customer financing is best for big-budget purchases.
Why apply Customer Financing
To generate more revenue
The main purpose of your business is to increase sales and grab more customers to generate more revenue. But if customers leave your store while being online or in-store shopping, you will not gain your profit. Often it happens when the price is high. But letting customers buy those expensive products with their flexible paying, reduces the number of customers leaving stores. And thus they tend to buy more expensive products in more numbers which increases your sales well and generates good revenue along with huge transaction size. According to a study, sales increases 15% after introducing customer financing.
Payment at once
In this process of customer financing, the store owner introduces a third-party lending provider who pays the owner upfront the money of the products a customer is purchasing and later on takes the payment in instalments with an interest. This helps the owner to have the whole money upfront. Which they can utilise in expanding their business well by making more stores, buying more products, hiring more workers etc. Also, this reduces risk and the financing provider is working as a risk manager by taking responsibility for customer’s payment. This is a good way to run your business smoothly with proper cash flow.
Gain more customers
When you offer customer financing you are already attracting your existing customers. The high price product purchasers get satisfied when they come across your flexible plans of paying. Refrigerator, air conditioner, sofa set etc. buyers are more likely to be passionate about their products but think about the high price. You can help those potential buyers by discussing customer financing. They tend to come back to your store later on as they know about your services and they will be approved for this payment flexibility. Also, they will spread the word to others and you gain more customers by free advertising. 93% of potential customers come back to use customer financing. When they find the service and products are better than other stores you automatically win in competing with your competitors in the current market. Thus you increase your sale.
How to choose the best providers for customer financing
As you are the owner of your store, you must be wanting to expand your business. Here the financing provider is a very important tool. If they propose a good, fair and budget-friendly deal, the customers will come in more number.
Not all finance providers are best for all sizes of businesses. Small business and large business deals should be different. So be careful while choosing the provider. They may charge a good percentage or a minimum number of customers who want customer financing.
That is why choose the best provider for your small business to make it bigger quickly and make a fair deal of no expensive charges and targets.
One more advantage of this method is you can provide the customers both online and offline payment flexibility of their choice. PayPal, Financeit, Afterpay, LendPro, Viabill are some names of finance providers you can tie up with.
Some customer financing payment methods
This is a good method where customers get to know about the amount before checking out while shopping online. The e-commerce stores show all the details of the payment before purchasing the product. The instalment Number, per payment amount, the minimal interest etc. all are decided to be customer friendly and they buy the product.
Buy Now Pay Later
Buy now pay later is the most popular method around the world especially among millennials. 78% of customer financing was via Buy Now Pay Later in 2020. It increases the Average Order Value ( AOV ) of the business. Customers can enjoy zero or no interest payment convenience for a certain time and the payment schedule is also very simple.
Credit or personal cards
Credit cards and personal cards are also used by customers. Especially for small to medium purchases buyers use credit cards and pay within a certain amount of time. Private cards retain previous potential customers.
Follow the methods of customer financing and choose the best financing providers to increase your sale and potential customers.