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An Urgent Plea From Your Customers— Offer Me Financing!

If You Offer Financing Right Up Front, I Promise You’ll Close More Deals, For More Money

If You Offer Financing Right Up Front, I Promise You’ll Close More Deals, For More Money

No Matter How Rich Your Customers Are, Pulling Huge Chunks Of Cash Out Of Their Pockets Is Painful.


My wife couldn’t think of a good way to deliver the shockingly bad news: She’d just gotten the quote from the dentist; to fix all the things wrong with my family’s teeth was going to cost more than a decent used car.

Eight-thousand two-hundred and fourteen freaking dollars!

And seventy cents!

After switching to an insurance plan that our previous dentist didn’t accept, it took nearly two years to finally get around to finding a new one. Sure, you’re supposed to go to the dentist every six months, but what’s the worst thing that could happen after two years? A few cavities?

Well, when you have six kids, the answer is a lot more than a few cavities. I was informed that two teenagers needed their wisdom teeth out. Another one had a gap in her front teeth that needed to be closed. An assortment of fillings, root canals, and extractions were needed. And, the dentist warned, I really needed to get my old 1970’s-era silver fillings replaced before they cracked and fell out of my face.

Because, you know, you wouldn’t want your fillings falling out of your face.

My immediate instinct was to prioritize: Which kids had the worst problems that needed to be fixed the most urgently?

Then my wife handed me a brochure from the dentist stating that they offered multiple financing plans, including, among others, twelve months, no interest—if paid in full.

I pulled out my iPhone and did the math: $684.56 a month. A really nice car payment—but all things considered, doable. To be sure I wouldn’t hit the dreaded “interest kicks in” part of the plan, I rounded the payment up to $750 a month for 11 months and told her to “GET ALL THE WORK DONE.”

Here’s what you need to know about my financial situation: I’m no Bill Gates, but I live in a nice home in a nice part of town. I drive reasonably nice cars, and I take vacations with my family. In other words—I look a lot like YOUR TYPICAL HOME IMPROVEMENT CUSTOMER.

As we shift the discussion to financing of home improvement projects, and how it greatly helps overall home improvement marketing efforts, let me dispel a couple of myths right up front. Please keep an open mind. There’s a good chance you believe one or both of them:

Myth #1: My Customers Don’t Want/Need Financing.

Fact: Either they’re lying, or you’re making bad assumptions based on faulty logic. First of all, cash is a lot harder to borrow than it was five years ago. Home equity? Just a memory. Second of all, nobody—and I mean nobody—wants to take $8,000 to $40,000 out of their savings to buy new windows (kitchen, basement, siding, whatever). Nobody. Just because they don’t ASK for it doesn’t mean they won’t be THRILLED when you offer it. According to industry statistics, 38% of homeowners said they would not have made their purchase without financing, and 42% chose a contractor primarily because of promotional offers.

Myth #2: Financing costs too much, so I’ll only use it as a last ditch option.

Fact: Financing doesn’t cost you money, it makes you money. Check out these mind-blowing stats from a major home improvement company:

  • $5,519 – Average sale with “no interest if paid in full in 12 months” offer
  • $6,804 – Average sale with “no interest if paid in up to 36 months” offer
  • $7,466 – Average sale with longer term, low APR finance offer

Stats are unavailable on what the average sale is when no financing is offered at all, but let’s all use our noggins and common sense and assume it’s lower. For sake of argument, let’s conservatively guesstimate $4,500. That’s about a 67% increase in average ticket (with long-term, low APR) over no financing. Assuming the cost of financing to you is about 5.5% to 6% (about $450 on the a $7,500 sale), can you afford NOT to offer financing?

But just offering financing isn’t enough. Commit to financing. Instead of using it a last-ditch effort to salvage home improvement leads that slip away, start with this discussion:

“Mr. & Mrs. Prospect, we offer several financing options to make this project affordable. How much money do you feel would fit comfortably into your monthly budget to make this project happen?”

The tension is immediately diffused, and instead of sticker shocking your customer at the end of the presentation with a price tag of $12,500 for new windows (and trust me, they were expecting a MUCH lower number when you walked into their house), you simply work the terms of the financing to fit their pre-agreed-upon monthly payment.

One-call closes go up. Overall closing ratios go up. Average sale prices go up. And best of all, profit margins go up. YOU MAKE MORE MONEY… with the exact same prospects you already have!

When I discovered this gem, I immediately started encouraging my clients to PRO-ACTIVELY offer financing. A good-size closet organization company told me their average sale was about $2,800… DOWN from about $3,300 before the recession. They signed on with Monopolize Your Marketplace’s preferred finance partner and reported that their FIRST attempt to use it resulted in a $7,700 sale. That’s nearly THREE TIMES their average. According to the client, their customer said “Well, since the payment is so low, let’s go ahead and do all three closets right now instead of one.”

Just like my dental work. Extraction, anyone? It’s on me!

© 2015 – 2016, Rich Harshaw. All rights reserved.

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