Offering financing options to customers has become a huge trend in the business world. With competition as fierce as it is in the business industry, many companies offer financing as a way to keep their customers happy and loyal. Financing options help customers in multiple ways. It helps customers that are not able to pay for goods or services immediately. It also allows the customer to offer flexible payment plans which many times leads to larger sales volume and more business opportunities.
Many business owners search for a way to offer financing programs to their customers. If you also want to learn about offering financing options to customers and grow your business, then you are in the right place. In this blog post, we will discuss how to offer financing to your customers. So, read on to learn about it.
Offer The Right Financing Program
Before you offer a financing option to your customers, make sure to offer the right option. Various financing programs are available that offer different benefits to customers. The primary goal of any financing program is to enable potential customers to purchase the product easily. However, not every financing program is suitable for all businesses. So, offer the right option to your customers that can help you in increasing sales and improve customer loyalty with you.
Decide When to Offer Financing Option
While offering financing programs, make sure to offer them when selling high-ticket items like appliances or furniture because most of them cannot afford these types of products due to their limited budget plan. But do not offer it when selling something low-value like stationery goods. So, offer financing options only when they are buying expensive products which might be out of their price range.
You can offer a financing option at different stages of the buying process. For example, you may offer it to customers before they make their final purchase decision or after seeing your product for some time. Offering finance options at various stages of the selling cycle helps boost sales and generate good ROI.
Help Customers Analyze Their Financial Situation.
You can also help them understand their financial situation by providing an analysis of how much they can borrow based on what you know about their income level, expenses, credit score, etc.
This will give them an idea of how much they might be comfortable spending per month when considering different borrowing options available at various interest rates with varying terms which vary from one month up to 60 months. Many tools can offer a snapshot of where they stand financially and if this financing option is the right choice for them or not at this stage in life.
Offer Flexible Payment Plans
Offer flexible payment plans that suit the needs of customer’s budgets without putting much pressure on them financially. If you offer three monthly installment payments instead of six, then it will reduce stress from your customer’s financial situation while still earning revenue for yourself at the end of the day.
Offering flexibility in terms of monthly installments also allows customers who may not be able to afford an entire purchase price upfront, but who can pay in installments. For example, offer a low-interest rate financing program if your product is affordable but of high value for money. Offer zero down payment options with no extra cost or no-interest offer to attract more customers and increase sales volume.
Check Whether Your Customer Qualifies for Financing or Not
Check whether the customer qualifies for the loan or not. Some financing programs require specific credit score ranges, income levels, and other qualifications. The criteria for getting financing assistance enables you to sort out the customers that are not eligible for repaying the money. Customers who do not qualify with the loan offer can be reached out via some other financing programs that require no or less qualification.
If a customer qualifies for a financing program, ask them if they would like to get a financing option or not. If yes, ask how much and for what period. Then offer a couple of different options from which they can choose based on their budget needs. You will be surprised at the number of people who are willing to take advantage of this great opportunity.
Make offers that You Can Easily Manage
Offer a payment plan which you can easily manage because if you offer a plan that is not easy enough to handle then it will fail repayment from the customer’s side resulting in a bad credit score, bankruptcy, etc. It will make other lending companies avoid working with them again due to the risk involved in offering loans to such borrowers.
Offer only those types of offers that you are comfortable managing even after getting late payments from one or two customers without affecting the company’s performance otherwise you may end up losing a few of your customers. You can employ a CRM system to manage your finance and good relationship with customers. CRM for contractors offers various features such as managing risk involved in offering loans and keeping track of invoices sent for payment.
Tell All Terms to Your Customer
Different financing options have different terms and conditions. Some offer a fixed amount of money for a specific period while others offer an interest rate on the loan amount as well as a monthly payment to be made over a certain period. Put all the terms and conditions in front of your customer before he signs on the dotted line.
Presenting all the terms and conditions to your customer is necessary for avoiding any misrepresentation later on part of both parties. It also enables the customer to be well informed before agreeing and offers him an opportunity for better understanding.
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