Every customer is different. That's true across a wide range of industries and service categories, and it's an important lesson for retailers to absorb and put into practice. While dividing customers into segments can be helpful for marketing purposes, in the daily practice of sales, it is important to recognize and hone in on the unique qualities of each customer. No one wants to be treated like a number, and retailers have to separate their marketing and segment targeting practices from their actual customer care and interactions.
A great example of this dynamic can be seen in the world of consumer financing. It is all too easy for retailers to make assumptions about their customers, particularly as relates to credit and whether a particular customer will be interested in financing. As an example, let's consider this hypothetical day at a retail business that holds to the practice of offering financing to customers based on various factors.
A Day of Assumptions
It's a busy day at our example retail store, and customers are streaming through the door. The retail salespeople have their work cut out for them, and they serve their customers well, asking them questions and discussing what they are looking for. As these conversations with customers evolve, the salespeople begin to make a number of assumptions.
Let's take Customer A for example. Customer A is interested in purchasing a item that falls into the middle tier of pricing. They are confident, they know what they are talking about, and they appear ready to pull the trigger on a purchase. The retail sales associate feels they need no additional enticement and moves to close the sale.
Then there's Customer B. They are interested in a high-price item, but they seem a little on the fence about it. They definitely want it, but the price tag seems to intimidate them a little bit. They need more time to think about it. The salesperson wants to get them closer to that purchasing decision.
Finally, there's Customer C. They are interested in a low-price item, and they indicate they are ready to purchase it right away. The salesperson is eager to move this interaction along and make the sale.
Now, for the sake of our example, let's say the retail team members offer financing as an option solely to Customer B. They are the one who seems most in need of financing, and theyneed that extra push to make the sale. They do not offer financing to Customers A or C.
There are a few ways the scenario could unfold, subsequently. Let's say Customer B finances their purchase. Great! Now, let's say Customers A and B go on to make purchases without financing. All's well that ends well, right?
Not exactly. You see, the salesperson only knows what they know. They're not mind readers. So they had no way of knowing that Customer A has a friend who is interested in that same product. The friend is going to ask about that product later, and will specifically ask if their friend heard anything about financing options. "No," their friend says, "it never came up." What could have been a chance to spread knowledge of the retailer's robust financing options through word of mouth is now a wasted opportunity.
What's more, the sales associate never noticed that Customer C was eyeing the same high-price product as Customer B. The sales team mentioned financing to Customer B, but it never came up to Customer C. They buy their low-price item without financing and walk out the door, and the sales team never even knows that they lost a sale. By all indications, the customer interaction was a success. They remain unaware of the opportunity cost, and the owner never knows about it either.
How do you measure lost sales when you don't even have the information required to know you lost them? We'll get into that, but first, let's get back to the central question of this article.
So, When Should You Offer Financing to Your Customers?
If you haven't guessed it already, the answer to this question is fairly simple: You should offer financing to every customer, every time. If you don't, you are going to lose out on revenue. It's as simple as that. To answer the question of how you measure lost sales without adequate data, the answer is that while you probably can't measure it precisely, you can just assume that any time you fail to mention financing to a customer, you may be losing a potential sale in the near term or a future sales opportunity.
The best way to boost the revenue of your financing program and avoid incurring an opportunity cost is to train your staff to offer financing as a rule of thumb, not based on judgement calls in the heat of the moment. And with FormPiper streamlining and automating your consumer finance process, you can feel confident that offering financing will only be a benefit to your business. You'll maintain a high level of service and a seamless customer experience throughout the financing process and gain back sales you didn't even know you were losing.