Retail Sales Financing for 2010: Times Have Changed

As we can all agree, customer financing has always had a huge impact on the bottom line of retail stores. The more customers get financed, the more sales are made- plain and simple. And with the credit crunch of 2009, retail sales have certainly suffered mightily.

You see, it used to be that if someone had a pulse and semi-regular breathing patterns that we could generally find a financing company willing to take a risk on them. But since the economy went south and banks around the world started wiping sweat off their foreheads, financing has often times been made difficult, if not impossible, for many of our customers.

Does this mean we fault the banks? ……Nope

Does it mean we crawl in a hole only to come back out when banks are lending again?……Nada

So what does it mean???

It means that we can no longer just assume our customers will get financed. And because we cannot take financing for granted, it means that we must address the question sooner and with more emphasis than we ever did before. I call this the ‘Finance First’ method.

For example, in the past, most retail sales people would not address financing until the end of the sales presentation. Because retailers naturally assumed that most customers could borrow the needed funds, initial emphasis on the subject wasn’t a top priority.

But in 2010, I believe our approach needs to be much different. In fact, I strongly feel that the subject of financing (depending on the product obviously) needs to be addressed in the initial few minutes of the sales process. As I’ve stated multiple times on this blog, every sales presentation first deserves a thorough sit-down questionnaire/interview with the customer. This questionnaire must include proper documentation and is the absolute key to the highest level of retail sales. In this customer interview phase, it is imperative that the sales person finds out 2 critical sales criteria:

Will the customer being financing or paying cash?
If the customer is financing, how much is available to them?

Although many decent sales people ask their customers if they will be financing the sale, many do not broach the subject of just how much financing is actually available to the customer. In reality, the latter question is the most important one. After all, what good does it do you, your customer, or your business if a person wants to finance your product but can’t get enough financing to make the purchase? Obviously, such moments are beneficial to no one, which is why the amount of financing available to a customer is critical to attain as soon as possible during the sales process. Let’s look at an example:

Sales Person (within the first few minutes of the customer interview): Mr. Jones, most of our customers either pay cash or finance our products. Which were you planning on doing?

Mr. Jones: Although I could pay some in cash, I’ll likely need to finance most of it.

Sales Person: That sounds good Mr. Jones. We have many customers just like you (always show empathy, the customer is never alone) that come in here and plan to finance most of their (your product) purchase. As I’ve already mentioned to you, the goal here is that we find the perfect (your product) for you and your family, but in order to do that, we’ll both need to know what we’re working with. In other words Mr. Jones, I don’t want us looking at the $8000 unit if $5000 is all the financing available to us. Does that make sense to you Mr. Jones?

Mr. Jones: It does make sense that we at least know how much is available to us.

Sales Person: Agreed. In order to allow us to do that, most of our customers fill out this short sheet and within 15 minutes, I can get a pre-approval from our finance company and they can then let us know how much is available to you Mr. Jones and how much your monthly payment will be. How’s that sound to you?

Mr. Jones: That makes sense to me.

Sales Person: Great, let’s go ahead and fill this out now and that way we’ll know shortly how much we’re working with.

As I’ve taught this principle of ‘financing first’ in seminars before, one of the biggest concerns sales people have is that most customers will be resistant to filling out a form. Although I can understand such a concern, it’s frankly almost never an issue when the sales person has used the correct approach. A couple points to remember when using a ‘financing first’ approach:

‘Finance First ‘Keys

The question of financing should not be mentioned until some other, more in depth Q & A has occurred regarding the customer’s needs, interests, goals, concerns, etc.
It’s a great idea to start financing related questions with the phrase, “Most of our customers….” Using this phrase helps put the customer at ease and prevents any nervousness or embarrassment about the fact that they’ll need to borrow money to make the purchase a reality.
Always stress that knowing one’s financing budget will make life easier on the customer when it comes to picking the right product. In other words, you’re doing the customer a favor by taking care of financing first.
The financing form should be short and sweet.
It’s absolutely critical that the retail company work with a quick, dependable, and aggressive financing company when at all possible.

Although there are certainly more issues involving retail sales financing, the main objective here is that we all change our paradigms to a ‘finance first’ mentality. I can absolutely promise that as your customers receive their approval amounts back from you at the beginning of the sale your closing rates will spike drastically. In fact, most customers that finance a retail item won’t even bother looking at the competition when they know they’ve already have financing approved through your company.

So although the credit market was a tough one in 2009, may we all do what it takes to combat credit’s downturn and turn this tough economy into a sales advantage for our company.