How to Offer Customer Financing to Convert More Buyers

 How to Offer Customer Financing to Convert More Buyers

Contractors, people who work in water filtration, and anyone who sells things that cost more than a few hundred dollars must have a way for customers to pay for them.

Credit cards don’t work for bigger ticket sizes because they have low limits and high-interest rates. And bank lenders are known for having credit standards that are too high and for constantly asking borrowers for more paperwork. If you’re still only able to take credit card or cash payments and would like to offer financing to give your customers more payment options, keep reading.

In this post, we’ll show you the ABCs of how to offer financing to customers to increase conversions.

What is financing for the customer?

Customers who use customer financing can sign up for a payment plan to buy goods or services. It works like a credit card in that customers don’t have to pay the total amount right away. Instead, they can pay the total amount of their purchase over time, with interest and fees included.

What’s the deal?

If a customer wants to use the customer financing option, they will have to apply for it when they check out. Once it is approved, the client will be able to pay the financing company every month. You will give the entire purchase cost to the merchant at the transaction time.

Will there be any costs?

Customers usually pay an interest fee and a management fee to get financing. The percentage varies because it depends on the financing company, its terms, the buyer’s “creditworthiness,” and several other things. There are also costs for a business to pay to get this kind of financing. There are currently two models:

–        You, as the merchant, are in charge of the whole process from start to finish.

–        You can hire a third party to do credit checks and collect payments on your behalf. If you handle the whole process independently, you’ll have to pay for everything, like running credit checks and getting prices. If you select the other option to use a third party, you will only have to pay a fixed amount to the financing company for each transaction or a flat monthly fee to use the service.

What are the benefits of letting customers pay later?

If a business decides to use customer financing, there are many benefits for the company. Here are a few examples:

·   A Sales Boost: 

If you don’t offer enough ways to pay, you’ll lose customers. By letting customers pay over time, you give them more ways to check out their conditions. More miniature carts left behind means more sales.

·   Acquire Customers on The Spot:

Studies have shown that the first purchase is the most important. The research found that only about 5–20% of new customers are likely to buy something. Once you get a customer, there is a 60–70% chance that they will come back to buy something else. By letting customers pay over time, you make it more likely that they will finish their purchase.

·   The money is paid upfront.

Don’t worry about having to wait to get your money. The loan company gives you the money right away. They’ll take care of getting the money from your customer.

·   Customers have better prices.

The product’s price is one thing that makes it hard to finish the checkout process. When you offer to break up a large payment into several smaller ones, you make it easier for the customer to decide what to do—making it easier to buy and less of a strain on your finances.

Choose what types of financing to offer.

When you work with a finance company that already knows your industry, it’s likely that they already have programmes that work for businesses like yours. If not, you might have to work with the finance company to make programmes that work for your business and your customers. Here are a few examples of Customer Financing.

1. Payment Plans for the Future.

Most of you have seen ads for plans that let you pay later. A customer who doesn’t have a lot of cash now but thinks things will get better in the next few weeks can buy from you with a deferred payment plan. Typical examples are people who moved to a new area or businesses just starting and didn’t have any money.

2. Finances with no interest

When you offer interest-free financing, your customers don’t have to pay interest as long as they pay back the loan quickly. This kind of financing could make it easier for you to make more sales. But the finance company will need to make money to make up for the risk they are taking. Since the customer isn’t paying any interest, your company will have to pay a small discount fee to finance the customer. The more time there is without interest, the more your company will have to pay. So, make sure that your prices include any fees if a customer chooses to pay with no interest.

3. Educate your sales staff.

When you start offering consumer financing to your customers, your sales reps need to be trained on the different financing programmes and how they work. They also need to know how to help the customer get financing. The best companies for loans make it easy for people to apply right away over the Internet. But your salespeople should know where the website is and how to fix common technical problems that could kill a sale.

4. Spread the word about the financing option

What’s the point of offering consumer financing if your customers don’t know about it? When you first start selling your product, spend some of your marketing budgets, letting people know about this new way to pay. You could stick to a targeted approach and use email marketing and social ads. Also, if you have a website, make sure that your payment plans are clear on all of the landing pages. The goal is to get in touch with as many potential customers and clients as possible.

Some final Words.

Now that you know how to offer to finance to customers and some of the best ways to work with third-party suppliers, it’s up to you to decide if this financing model is right for your business.

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