Top 4 Reasons to Offer Customer Financing

More and more home service businesses are recognizing the benefits of offering their customers an option to finance in addition to the traditional cash, check, and credit card payment methods. That’s because consumers are increasingly choosing to finance their purchases vs. paying with cash, and there are several reasons for the shift:

• Flexibility to spread out the cost of their purchase over time, easing the financial burden compared to making a lump sum cash payment upfront.
• Budget management is more effective when larger purchases can be broken down into manageable monthly payments, aligning with cash flow and spending patterns.
• Affordability of financing options can make it possible to invest in higher-quality products or additional services that might otherwise be too expensive when paying with cash.
• Savings preservation so safety nets for unexpected financial needs stay intact and they still get their needed repair.

Having a financing option in your tool bag can lead to bigger profits, more customers, and increased brand recognition. Need more reasons to offer customer financing? Here are the top four:

 

#1: INCREASE AVERAGE TICKET SIZE

Having the option to pay over time with financing makes customers more likely to say yes to a higher-priced, better-quality HVAC system or to add an additional service.

In fact, companies that offer a Good, Better, Best approach to selling may have more customers opting in for the Best level when they aren’t faced with a daunting amount to pay upfront.  The customer benefits from getting the proper fix for their broken equipment, and the business enjoys an increase in profit.

Jacob Schlegel, the director of marketing and operations for One Hour Heating & Air Conditioning in Medina, Ohio, shared that they offer a similar choice of repair options – Need to Do, Should Do, and Complete Solution. Once they started offering consumer financing with BuyFin, they saw a 61% increase in HVAC sales. “More of our customers are now choosing the Complete Solution, which has meant an increase in average ticket size,” Schlegel said.

 

#2: CLOSE MORE JOBS

By offering financing, you are giving customers the option to make affordable monthly payments on repairs that may be too costly to pay for all at once. Your sales will see a boost when more people feel confident and comfortable closing the deal with you to get the work done.

Look for an option where your customers get a lengthy purchase window for their loans, which can really help you and your customers if they have additional work that comes up within that time period. For example, they may replace their HVAC system and then several weeks later decide they want to go ahead and clean their ductwork or buy more filters. With a generous purchase window on the financing, they can easily work with you for those additional jobs and pay with the initial loan.

Even better, when customers have funds left on their loans, you can proactively market to them for any other equipment purchases, repairs, or services they can take care of during that window. Schlegel at One Hour Heating & Air Conditioning sees great possibilities for this in the future, saying “The customer financing options we’re now offering will help us bridge the gap between the busy and slow seasons by allowing us to market to customers who still have funds available.”

 

#3: DEVELOP CUSTOMER LOYALTY

Offering a financing option can help your business increase the number of satisfied customers, and everyone knows a happy customer is more likely to be a repeat customer. They are also more likely to provide you with a positive review and recommend your company to their friends.

One way to ensure a great customer journey with financing is to offer a completely digital experience. When techs are empowered with the tools to skip the paper and send a link to your customer’s phone or email directly at the job site, they can get more done in the field with less reliance on the back office. In turn, customers are able to use their own devices to fill out the application independently. The technician can focus on completing the job they were called in to do, making the customer happier and your wallet fatter.

 

#4: STAND OUT WITH A COMPETITIVE ADVANTAGE

Offering financing is an easy way to help your business stand out from competitors in your local market. Customers are more likely to choose a company that offers financing options to ease their financial burden rather than one that requires upfront payment. Be sure to advertise this distinction so you don’t miss out on potential customers.

Also, look for a financing partner that has a multitude of loan options to offer so you can tailor choices for each customer’s individual needs. Ideally, your techs in the field should be able to send the customer a customized application showing the loan option that best aligns with their situation. Customers will appreciate that you are presenting them with a payment plan that fits their budget, and you’ll win more business.