Article Number : 1914 |
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| Date | 4/18/2007 8:58:22 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=1914 |
| Abstract | By Sarah Zimmerman Consumers like to buy on credit, especially when it comes to big-ticket items like flooring. However, purchases on standard credit cards do little to increase a dealer’s bottom line... |
| Article | By Sarah Zimmerman Consumers like to buy on credit, especially when it comes to big-ticket items like flooring. However, purchases on standard credit cards do little to increase a dealer’s bottom line. But credit and financing programs offered by companies like GE Money, CitiFinancial and Wells Fargo are a different story. “The most important advantage a retailer has to providing shoppers with financing and credit options is the difference in average sale,” said Gary Frankhouse Jr., secretary of Prints & Paints in Galion, Ohio. When a consumer purchases flooring with cash or a check the average sale is approximately $750. Likewise, when using a credit card, such as MasterCard or Visa, the average sale is about $800. However, when buyers use consumer finance programs the average sale jumps to more than $2,600. Why? According to many retailers, when finance programs allow consumers to defer payments, they purchase either more flooring or more expensive items. Many credit companies offer multiple plans—no interest and/or no payment for various time blocks, no interest financing with credit cards, branded credit cards, special promotional benefits, etc.—and work with dealers to provide their businesses the best options for their customers. “We listen to what our retailers are trying to accomplish for their businesses and work with them to design a program that will meet that specific need and appeal to their customers,” said Cristy Williams, GE Money’s vice president of communications. “Financing is a service the retailer offers that helps consumers get the flooring they need and want.” Jim Smith, co-owner of Smith’s Furniture in Pittsburg, Tex., agreed that most people need financial help when taking on an endeavor such as buying new flooring. “Though most people know what they want when they walk through the door, credit options are usually still necessary for purchases, especially on big jobs.” Joe Stalzer, director of marketing for Flooring Gallery in Urbandale, Iowa, added, though it might seem passé or be a no-brainer, “it’s a must for dealers today selling bigger-ticket items to operate with financing programs.” Frankhouse also noted the four main areas of interest for dealers are: sales, gross margin, average ticket and closing rate. He said credit plans help with each of these areas. “[Upselling] with credit increases sales and profit, which gives you a better gross margin. It also has been proven statistically to triple the average sales ticket, and financing programs often help close the deal,” allowing people to purchase today and pay tomorrow. He warned, however, that such programs only help dealers when customers are made aware of them. GE’s Williams noted for financing to be effective it must be communicated to customers. “The customer needs to know how financing will make a difference for them.” Several retailers also said buyer knowledge is key and advertise their credit plans regularly. For Smith, local news and radio advertising has helped growth of knowledge and sales. “Fortunately, we’ve been busy for quite a while now.” Frankhouse, aside from in-store signage, trains salespeople to speak of credit options right off the bat. “This tends to perk customers’ ears and commit you more to their memory than your competition. Also, when you bring up financing during a deal closing, you run the risk of insinuating the shopper cannot afford her product, insulting her and possibly losing the sale.” Many of the credit companies will train salespeople how to sell confidently with credit, introduce it early in the conversation and how to overcome objections. “We find that training the sales staff on how to explain credit and be comfortable with the topic helps them be more successful,” Williams said. |