Consumer Financing Facts Every Entrepreneur Needs to Know
If you run a small business and offer products to your customers, the subject of consumer financing and how it can help your business has probably come up at some point. You may be wondering if it’s truly worth it or if it will really result in increased sales. Offering credit options to your customers drives sales by providing them with the means to make payments over time. Providing this option can make the difference between the customer completing the purchase or abandoning it. Before you make a decision concerning this important aspect of your business, here are a few useful facts to consider.
It Encourages Customers to Spend More
Offering consumer financing options encourages customers to purchase items they can’t pay for in one lump sum but could successfully pay off over time. Not offering the option to make smaller payments over time leads to the loss of the sale, especially since it’s likely there are other businesses that do offer that option to consumers. Allowing customers to purchase items on credit also encourages them to spend more and increases profit margins.
You Still Receive Your Money Upfront
This is good news for you as the business owner. When a customer makes a purchase using an available consumer financing option, the relationship exists directly between the customer and the lender. You, as the merchant, receive your money upfront while the customer makes payments to the lender. It’s a good system that works out to everyone’s benefit. You still receive your money right away, the customer gets the benefit of making smaller payments over time, and the lender receives money from the customer.
It Helps Drive Online Sales
Internet shopping continues to grow as more and more businesses begin to offer their products online. In fact, many retailers offer products online that can’t be found in the physical store. Providing credit options to your customers helps you make the sale when there are no sales representatives around to make a connection with them. Your lender can really come in handy here, because they often entice customers with incentives like special financing offers on purchases over a set dollar amount. Offering more benefits to the customer helps encourage them to stick around and complete a purchase rather than going to the next website over to look for a better deal.
Doing some research and getting some consumer financing options in place is a good way to encourage customers to make larger purchases or purchase items they couldn’t normally afford, resulting in increased sales for your business. Always look into lender programs thoroughly so you can be informed and pick the one that’s best for you.