CCS Finance Article for KBB Review Magazine
If you’re looking to generate more enquiries, encourage customers to make quicker buying decisions and help your designers to up-sell, then offering finance could be the answer.
Benefits of Finance
The key benefits of offering finance are three-fold. Firstly, it’s a great sales message that improves led generation and helps grow market share by securing new customers who would otherwise go elsewhere (recent research by Hitachi Capital found that retailers can lose 44% of customers if they don’t offer finance).
Second, it provides an opportunity to upsell as Phil Croak, Sales Director at Kutchenhaus, found. “After we started offering finance we saw our average order values increase. Once customers know that low monthly repayments are available to them, they are more likely to upgrade their appliances or their choice of worktops. Finance enables them to step up from having a good kitchen to having the kitchen of their dreams,” said Phil.
Finally, given the expense of generating new leads it’s vital to secure as many customers as possible. Finance provides a real competitive edge and positively impacts conversion rates. It allows you to offer the great personal and bespoke service customers look for in an independent retailer, and combine it with the flexible repayments typically offered by larger nationals.
Getting Started with Finance
Before providing finance, businesses need to be authorised by the FCA. This is a legal requirement and takes a few weeks to obtain. Once authorised, and subject to your business being approved by a lender, setting up a finance facility can be completed within two weeks.
Clark Rotheram, Sales Manager at Panorama Kitchens, found the process easy; “Incorporating finance into our customer service has been straightforward. Our designers and showroom staff were trained on the benefits and features of the different credit products, and they were shown how to complete loan applications. The online application system provided by our lender is very easy to use and the customer gets a decision within minutes which means there’s no delay in completing a sale.”
As part of our service, we ensure all retailers’ sales teams receive regular training so they can offer finance effectively and compliantly, and more importantly feel confident when discussing credit with customers.
It’s also important to have regular management reviews with your credit provider to ensure you have the right finance products for your target market. For some businesses offering interest free or 12 months ‘buy now pay later’ is very effective. For others, a low interest rate such as 4.9% or 5.9% over 5-10 years will work much better. Some businesses offer variations on all three finance products so customers have a choice to suit their monthly budget.
How Finance Works
All of CCS’ lenders provide online application systems that work on PCs, Macs or tablet devices. Applications can be processed within a few minutes either in a showroom or customers’ homes.
Some lenders will approve the amount the customer wants to borrow and indicate the maximum amount they are prepared to lend, and this can enable customers to upgrade aspects of their new kitchen if they want to.
Our lenders pay-out within 24 hours of fitters completing an installation (or on delivery if there’s no installation) so cash-flow is maintained. It’s true that finance products can carry subsidy payments and this has led to a perception that it erodes profit margin. However the subsidy on some finance products is comparable to credit card fees, and some carry no subsidy at all.
At CCS we advise on how to incorporate any subsidies into your margin. If offered correctly, finance is not a net cost to the business as it drives better sales conversions, fewer cancellations and higher order values ― ultimately contributing to a higher turnover and increased profitability for your business.
For more information contact CCS Head Office on 0845 120 6666