Ask the Experts | Offering Financing Options

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Question: Why should we offer financing to a cash buyer?

Drew Cameron; President, HVAC Sellutions & Energy Design Systems, Inc

You should offer financing to every buyer, cash or not. Financing includes credit cards, so let’s not forget about that. Cash buyers might like to put it on a credit card to get the points or the miles or the cash back. So, we offer financing to everyone because we don’t know if they’re a cash buyer. I’d ask the questioner, “How do you know they’re a cash buyer?” I’ve had plenty of people say they were going to pay cash or write a check at the end of a job and then they became aware of the payment options we had available. We show ALL customers, ALL the ways they can pay, ALL the time. My job isn’t to make the decision for them, my job is to show them all their options and let them pick for themselves.

What we find with financing is that people tend to close more readily because you have financing in-house, they don’t need to go outside to get it. Your closing ratio will go up and your average sale will go up. People tend to spend more when they can spend less per month and they don’t have to come up with all that cash up front. People can buy a bigger house on a mortgage than they can with cash, it’s the same principle.

When you get your average ticket up, you get your revenue per lead up. We find that those numbers go up by a factor of almost 30%. So, you want to offer financing to everybody because you don’t know if they’d take advantage of it or not. Once they have that account established and they start to pay the loan down – say they got a $10,000 loan and they start to pay that down, in year two maybe they’ve paid it down to $7,000 – now they have room to buy on account. You can market to those people because you can see how much room they have to buy on their account. You can say, “Hey, you have some room on your account, now you can add that UV light you were talking about or that humidifier you wanted.”

We talk about in the In-Home Sales training, we talk about that perfect home environment over time. You could probably do $80,000 worth of stuff for somebody in their house today. Are they going to spend $80,000 today? NO! Are they going to spend $80,000 on financing? NO! You’re going to have to build that perfect home environment for them over a number of years. Having financing in place with an “on account” aspect will help them do that.

Offer financing every time but also promote it in your marketing. Everyone gets access to all the financing. We don’t give a cash discount to customers – this is my approach to it – because we don’t want to penalize everyone else that needs to take advantage of financing. We say “same price cash or credit” for people because most people today pay for this with a payment program. It’s easy, flexible, and affordable for people to get the system they want today and pay for it over time. If you pay for it sooner than later, there’s no prepayment penalties, so that’s always a great thing.

Interestingly enough, I spoke in Florida last month and a I met the TM who works with a sales company in Omaha, Nebraska and one Warren Buffet chose to finance his system. He took advantage of the 12 months, 0% interest plan. He said, “Why would I put out my money when I could borrow someone else’s money with no interest?” That’s why you should always offer it. If Warren Buffet will take advantage of it, we should be offing it to everybody.

So, definitely provide options. Leverage your expertise to make some recommendations. Either way, find something the homeowner is really comfortable with.

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