Gaining customers can be difficult, especially in this unprecedented time we are in now. Business are struggling to keep cash on hand and earning their business can be tough. To succeed, you must adapt your business’s needs of your customers. Budget wants and needs of you’re the businesses you serve. That said, based on the kind and cost of your merchandise, offering credit to customers could be an effective option to boost sales and build customer loyalty.
What is Customer Financing?
Customer financing allows businesses to sign up for a payment plan to purchase items or services. Similar to credit cards, the seller receives the entire payment upfront. The purchaser receives the merchandise immediately but can pay overtime. The buyer is usually charged interest for the financing, and the seller may have to pay a tiny fee for each financing transaction.
How can you Convert More Buyers by Providing Financing for Your Clients?
As I’ve mentioned, the term “Customer financing” allows customers to purchase the product or service without paying for the whole amount in advance. When they sign up for this payment option, the customer can divide the amount into several cost-effective and practical segments and spread it out over time.
Research has proven that consumer financing can help improve the conversion rate of businesses and increase the average size of orders of customers. It is possible to make expensive products less expensive for customers by using this payment option.
You can pick two options to offer your customers financing options. First, you can conduct all credit checks and then provide financing to the customers you serve. Finally, you can manage all payment collection procedures by yourself.
This could save additional cash since there is no need for any payment cost to any finance company. This option requires significant amounts of time. Additionally, it would help if you took on legal responsibility as you need to manage customer credit information.
Another option is to depend on a third-party financing company to provide the financing. The third-party firm is responsible for checking credit scores, funding, and collecting payments. With the Consumer Financing option, you’re not required to fulfill any legal obligations. However, you must pay a fee to the company to finance every transaction.
Most businesses opt for the second choice because it is more efficient and time saving. If you want to offer consumers financing at your customer’s expense using an outside financing company, it is necessary to adhere to these guidelines.
When purchasing an item or service that the customer wants and needs, they must select the option of financing when making a purchase. It is essential to ensure that the customers you are selling know about the payment options, and this means you must do some advertising at the beginning.
If the customer selects finance, details and the details of the customer will be securely transmitted to the company financing the loan to decide if they qualify.
The third-party financing company will review the customer’s information and conduct credit checks to determine whether the customer is eligible to receive the loan or not.
Within a matter of minutes or seconds, your customers will be able to tell when their request has been approved or not. If the request is approved, your company will get the item’s total amount immediately.
Your customers will then be able to get their items. The third-party financing company you collaborate with will supply your customers with details of the various installment options and the down payment amount they must make. Customers pay the finance company based on the installment option they choose.
Customers will be required interest payment on loans, and you will have to pay a certain amount each time your customers select this payment method.
This is how you can provide the option of Consumer Financing at your customer’s disposal. This can benefit your customers and you as they can avail of lower-cost discounts, and it also helps you, as it will increase sales for your business.
How to Improve Conversion Rates of Your Business
Make sure that your visitors have a great experience. With online visitors – the website will allow you to present yourself in the best light, even if selling primarily through a store. It’s where potential customers can learn about the experience they’ll enjoy while doing business with you. The first and most important thing is that your website must be responsive, which means it can be used on any mobile device of all sizes. As per Retail Dive, at least 25% of shoppers conduct their window shopping and research on their phones.
Ensure you have the right website that loads fast; otherwise, customers may be hesitant to purchase. A long loading screen could lead to carts being abandoned because of a lack of patience or confusion. One strategy to increase trust is to put reassuring text on your loading page.
However, you can also speed up your website faster by:
- Utilizing a scalable hosting platform with enough bandwidth to support your traffic.
- Optimize each image on your website for dimensions. Large images take the longest time to load.
- Utilizing a content delivery network (CDN) to store your website locally (for your user) to speed up loading when you load your site internationally.
Provide Financing and Payment Options to Suit any Situation
Based on Column Five Media, at least 56 percent of customers believe they’d have a higher likelihood of finishing their online purchases if provided with various payment choices. Making full payment for any high-end item is a challenge for many customers, and the fear of paying for it is one of the main reasons your customers leave their carts.
The tools they require to establish, grow or expand their business aren’t cheap, and their resources could be minimal. Clicklease allows your customers to purchase immediately despite these obstacles. A lengthy procedure characterizes traditional B2B lenders, not to mention more complex requirements for financing. Clicklease provides immediate approvals to every customer, even those with credit issues.
SMBs, startup companies, and weekend warriors with no other place to get funding. Our unique underwriting algorithm determines the eligibility criteria based on more than credit scores, and our payment model breaks the expense of equipment into small installments to provide more affordable.
Buy Now, Pay Later – This is a tried and tested strategy to Increase Conversions.
Buy now and pay later (BNPL) Solutions allows customers to make purchases on the internet instantly and spread the payment across time in installments.
For businesses, this method could reduce abandon cart rates by offering an alternative payment option at the time of checkout. A study by a researcher suggests that checkout friction caused over 34 billion in unreturned revenues within the U.S. This is the equivalent to nearly 7 percent of US digital sales in 2018.
For those who are shopping, installments offer an economical alternative to credit cards with an 18.61 percent interest rate. In the current financial instability and record low unemployment, the fear of credit drives consumers toward BNPL solutions.
Best Third-Party Lenders to Provide Customer-Based Credit
Many companies offer Consumer Financing to stores and merchants. Here are a few of my top choices that you could associate with.
Viable:
Viall is a finance company that allows small-sized businesses to offer customer-based financing. After you have integrated Viabill within your eStore, you’ll need to pay a 2.90 percent fee per transaction.
PayPal:
PayPal is a renowned finance company that assists businesses in providing Consumer Financing. PayPal’s credit service is free for companies who have already opted to use PayPal as their payment method.
Financeit:
Financeit is a finance company that offers customers financing to purchase items or services for up to $60,000. It is a beneficial option as they don’t charge fees for transactions. After you have been approved, you’ll get the money within 24 hours.
Conclusion
I hope that this article has helped you learn to attract more customers and understand the benefits that Consumer Financing can bring to your store and how you can provide the options to customers. By implementing the correct methods, you can transform your customers, who are your potential customers, and improve your business’s conversion rate. I’ve also provided a list of well-known third-party financing firms you can partner with.
Autor Bio
Aline Huseby is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.
