Competition is all about differentiation. For an easy example of this, think about the last restaurant you chose to eat at. Why did you choose it? Why didn’t you go to a different, nearby restaurant? Something about the place you chose to eat at set it apart from the alternatives in your mind. You decided, even if it was an unconscious decision, to eat at the place that most appealed to you in that moment, for whatever reason, and exclude the competition.
That is the fundamental basis of competitive differentiation: one business distinguishing itself from its competitors in some form or fashion. Retail businesses do this all the time. Whether it’s a seasonal sale, weekly specials or other limited promotions, retailers create urgency and interest to pull customers away from competitors and towards their own businesses. They train their staff to deliver a certain kind of service, they upgrade their retail spaces, they pursue the latest tools and technology; the list goes on and on.
The important thing to note here is that differentiation is being done with an objective in mind. It’s not just about separating yourself from the competition; you want the customer to contrast your business with your competitors in a way that positively reflects on you. That can happen through a comparison of absence – in other words, your business offering a product or service that your competitor does not – or a comparison of favorability, e.g., your business offers the same product or service as your competitor, but does so in a way that is more appealing, provides more benefits to the customer, etc.
Consumer Finance and Competitive Differentiation
One area of retail business that is particularly interesting when it comes to competitive differentiation is consumer finance. A comparison of absence can be devastating to a retailer’s chances of securing a customer’s business. Simply put, if one business offers consumer financing and the other does not, the business that provides financing options has a significant advantage over their competitor. The business that does not offer financing will obviously lose any customers who are set on taking advantage of financing options, but may also lose customers who are interested in financing and customer who may be interested in financing. Those losses add up.
But just having a consumer finance program is not enough, because a retailer may still suffer in a favorability comparison. Retailers who offer consumer financing could lose customers from the same groups mentioned above if their financing program is inferior to that of their competitors in any way or if it is equivalent to their competition, and the competition offers any other benefit in any aspect of their business to draw customers away.
When it comes to beating the competition on consumer finance, you can’t assume that parity will be enough to bring customers in, or that all other factors are equal. Location, price, familiarity, general convenience and branding are just a few of the many, many factors that play into customer decision making. If you are losing on the important differentiating factors, or equivalent on most but losing on one (for example, your competitor is closer to a prospective customer), then simply having an equivalent consumer finance program won’t be enough. To break away from the competition (and hopefully overcome any other factors that aren’t in your favor), you need a consumer finance program that stands out from the crowd.
Separating Your Consumer Finance Program From the Competition
Now, you may be thinking, “How do I distinguish my consumer finance program from the competition? Isn’t financing just financing?” At first glance, it may indeed seem like all consumer finance programs are roughly the same. After all, they all fulfill the same basic function: to provide prospective customers with financing options so they have the flexibility to purchase the product or service they need, thereby helping you close the sale.
But, as with most things in life, the details are important when it comes to consumer financing. First of all, consumer finance programs may differ in their deployment. For example, one business may offer financing only to customers its team sees as an ideal fit for financing options (i.e., customers that can’t afford to make a purchase without financing options). But that mindset can by itself put a retailer at a disadvantage, because another business may offer financing to every customer, every time. It doesn’t take a mathematician to figure out that a retailer that offers financing to every customer every time is going to net more financed purchases, close more deals and earn more revenue over time.
Second, there’s the process itself. If the application process takes forever because a retailer has to manually input application information into multiple forms, they are likely to see some customer attrition. A customer might drop out of the financing process altogether, or not return for a follow-up purchase because they got burned by the slow, laborious application process the first time. A retail business that uses a consumer finance streamlining solution like FormPiper, which eliminates duplicate data entry by filling multiple application forms to multiple lenders with a press of a button, automatically has an advantage over the retailer using the slower, outdated process.
Finally, there’s the reporting and optimizing aspect of consumer financing. Retailers that have to manually gather data for their reporting, spend valuable time sorting and compiling it (an especially difficult task for retailers with multiple locations) and figure out how to make that data coherent and presentable, are at a disadvantage against competitors with automated reporting. Here again, you see the advantage of a solution like FormPiper, which provides critical lender and salesperson performance data in a convenient format via an easily-accessed reporting dashboard.
Ultimately, what we see here is how some seemingly small process tweaks can create a significant advantage for one retailer over another in the area of consumer finance. A retailer that offers financing as an option to every customer, every time, while backing up their process with a cutting-edge solution like FormPiper, which automates the consumer finance process, already has a significant differentiating advantage over competitors that don’t make their consumer finance program a priority, and/or have a slow, outdated financing process.
With a commitment to consumer finance and FormPiper making everything easier, any retail business can be well on their way to differentiating their business from the competition, making more sales and building strong customer relationships that will last for years to come.
