Financing 101
Offering financing options can help your business stay more competitive
How many times has this happened to you? During a customer sales call, you recap the product and service details only to hear the homeowner pause, take a deep breath, and respond… "Let me think about it, I’ll get back to you!" That response isn't an objection — it's a deflection.
Your proposal may be right on but you never presented an offer of a financing alternative. That little phrase "Let me think about it, I’ll get back to you" has cost many a dealer a sale because what homeowners are really trying to do is —figure out how to pay for it.
Purchasing an HVAC system is a big investment for most homeowners. Many comfort advisors and dealers will tell you that typically only 10 percent of homeowners have cash on hand to pay up front.
Financing can provide dealers opportunities to work with more homeowners by offering better options, and more financial flexibility.
Did you know:
- 50% of Americans cannot afford a $5K emergency.
- 38% have $25K in non-mortgage debt.
Benefits of financing, for HVAC dealers:
- Increased average ticket price (25% higher ticket when compared to cash and credit card).
- Helping increase closing rates (replace over repair).
- No chasing after payments, and healthier cash flow.
Financing is common in many industries outside of HVAC such as:
- Automobile: 86%.
- Housing: 85%.
- Education: 71%.
- HVAC consumer financing makes up only 18% of sales.
Want to win more business?
Offering financing for homeowners greatly increases, the chance of a sale and in some cases can lead to approximately 65 percent higher ticket size. On average, homeowners who pay in cash spend approximately $5,000 for a unit, while homeowners who finance their purchases spend almost $9,000 for a unit on average.
Since most homeowners cannot pay for HVAC services with their savings, they are going to need options tailored to their current financial situation. To help your business stay competitive, financing could be the boost your business needs. By giving homeowners an average monthly payment around $149.99 a month or less, you could greatly expand your customer base and do more business.
Many dealers are hesitant about offering financing because of some common misconceptions such as:
- It’s too expensive.
- Only homeowners that are strapped for cash need financing.
- It’s too complicated and involves too much paperwork.
- My customers always pay cash and don’t need financing.
Financing today is quick, easy, no paperwork and supports the needs of consumers and dealers alike. As a Lennox dealer, Service Finance can help you profitably grow your business to whatever level you desire.
In the U.S., Service Finance is the preferred financing partner of Lennox Industries, SNAP is the Home Finance company for Canadian customers. If you're not offering financing solutions, most likely your prospects will find someone else who does.
Do you want to learn how to integrate financing into your pricing strategy? Join us for Operations Accountability, a two-day workshop on improving your business’s financial performance.
Want to learn how to talk to customers about financing during sales calls? This is one of the advanced sales skills covered in three-day Master $elling.