After starting a business, the biggest struggle faced by small companies is to retain their customers. One way is to look for ideas and techniques to offer constantly, And one of them is customer financing.
Customer financing defines providing affordable payment plans to your customers; that way, they don’t have to make entire payments at once. Yes! In installments or other techniques. It’s the most effective technique to retain your customers and not let them leave your platform just after looking at your products. Various brands now offer customer financing to increase their retaining percentage. However, it’s slightly difficult for small businesses as they don’t usually have the required setup to provide customer financing. So, if you’re also providing finance for your customers but looking for ways to improve, we have a solution for you.
We have created a list of ways to improve customer financing for small business:
Third-Party Customer Financing: Third-party customer financing has recently grown popular; it outsources your business’s programs or customer financing providers. Instead of running credit checks, you provide your customers a chance to pay according to their choice, thus improving customer service.
The most important feature of hiring third-party customer financing for small business is that they will handle all the labor work and extra efforts for you. It’s more convenient for small businesses as the customers will pay the amount to your outsource finance provider, and they will pay the upfront amount to you. However, you have to bear additional costs; for instance, third-party customer finance providers will charge an extra fee to hire their services.
Understand Risk And Rewards: The key to successful customer financing for businesses is to calculate the accurate risk associated with it to grow your business. A good question to ask yourself is, what is the worst-case scenario? Knowing what can be the worst case and how you can handle it will help you in the long run. The knowledge about the worst scenario can help calculate the risk associated with offering finance to customers. If your risk outweighs the rewards, then probably you should drop it. Understanding risk involves being smart about your timing. For instance, a business started in recession will allow you to finance your customers or hinder your growth. Calculating risk and rewards at an early stage of small businesses can help prevent them from occurring in the first place.
Prepare For Sacrificing: When you open doors of customer financing programs for small business, you also allow a part of your income to be at risk. You never know when a customer will take you to a dead end. However, you are more likely to attract customers than your competitors who don’t have the same facility when you offer customer financing. Therefore, sacrificing a small amount can be worth it for a good amount of customers. Isn’t it? But, as mentioned above, the cons should not outweigh the pros in any manner.
Layaway: You might not have heard about layaway. It’s an umbrella term used for purchase agreement where the customer pays the partial amount to hold the item for them until they are ready to pay the balance amount for a purchased item. Layaway programs or techniques generally focus on customers with limited income who find it difficult to pay an upfront amount. These are beneficial for owners as there’s an extra payment associated with keeping the inventory or item on hold.
Consistency Is The Key: If you want to provide business financing for customers, you need to be consistent with your services. Like any other technique, consistency is the core element. You can not just offer to finance to some and not to others. Or take down your facility whenever you want to. If you want your customers to confide in you, you need to be consistent with your financing.
Ask Your Customers What They Want: There’s nothing better than asking your audience itself about what channels they would prefer. For instance, would they prefer customer financing or not? If yes, how much percentage is ready to accept these payment channels, and how do they want you to finance shopping like layaway or third-party financing, etc. Surveys and polling your existing customers are a great way to check if your consumer financing for businesses technique will work or not.
Educate Your Customers: when small businesses offer finance to customers, One of the most important elements to focus on is educating them. They won’t know themselves about how it works in what ways you are providing. If you want them to use your services. Educate them regularly. You can either send personalized emails or educate them using banner ads.
Educate Your Employees: Educating your employees is as important as your customers. They are the ones who are going to take care of installments; if they are not motivated or educated enough, it will affect your business later on.
