Garnett Vance, owner of The Vance StoreBy Steve Gibbs
Garnett Vance owns three outdoor power equipment stores and has 40 years of experience in the business. He speaks with great conviction when the topic is consumer financing.
“Most dealerships don’t understand the importance of retail financing. Almost 80 percent of our sales are financed, and the net margins are 6.8-percent higher on financed sales,” said Vance, owner of The Vance Store, a chain of three outdoor power equipment dealerships in Kentucky with locations in Glasgow, Bowling Green and Madisonville. Clearly, he is a businessman who is sold on the value of consumer financing.
“We live in a pay-by-the-month society,” he continued. “Financing makes selling so much easier, and it creates loyalty to your business. Cash customers can buy anywhere, and they beat you up on the price. Customers who finance their purchase will likely come back and buy from you again.”
Most OPE retailers would agree that consumer financing is vital to their success, but few of them use financing as effectively as they could. How can you get more impact from your financing program? Experts say there are two important keys — sales training and marketing your program.
“We found that the most successful dealers are those who do a good job of teaching their sales team to sell with financing, and those who promote their financing program consistently,” said Gary Slagle, general manager, OPE industry for GE Capital Sales Finance. “Most consumers want financing options, and if they are presented with those options in the proper way, sales and profits tend to increase.”
Financing can be a delicate subject, depending on how it is presented to the customer. Promoting your financing program in your advertising and in your store introduces the topic without you having to say a word. In fact, promotional financing can be an effective magnet that attracts customers to your store. When they arrive and see banners announcing your financing plan and signage with financed prices on individual items, it expands their thinking regarding what they need and how much they can afford to spend.
OPE purchases tend to be expensive, so the opportunity to pay for an item over time is very appealing to most customers. It helps in their decision-making process if they can see the monthly price of every item, without having to ask.
“We have signage on virtually every mower we sell,” said Vance. “And every ad we do, both in print and on TV, mentions our financing program and specific financing offers. Our goal for 2011 is to become the home of the $59-a-month zero-turn mower. That’s the approach we’re taking this year. If a customer comes in and determines they can afford more than that, that’s great.”
Once the customer is in the store, the sales team at Vance has been carefully trained to use the financing offer skillfully to help close the sale. Vance said the sales team’s goal is to establish a relationship with the customer through conversation before bringing up the subject of credit.
“It takes training and practice to bring up financing with a customer without possibly insulting them,” he said. “We try not to use the words ‘retail financing.’ We offer a payment option so the customer can use someone else’s money rather than their own, if they prefer to do that. Most of our customers do prefer to finance their purchase.”
Members of the sales team at The Vance Store participate in a 30-minute session each week in which they learn about new financing offers and regulations, and they practice “selling” to each other to hone their skills.
Most consumer financing lenders offer sales training and in-store promotional materials to their retail partners. For example, GE Money offers online sales training videos that teach retailers how to use financing as a selling tool, as well as in-store signage and other promotional tools to convey the financing message to consumers.
When used effectively, consumer financing can be one of the most powerful tools in your marketing kit. To get the most from your credit program, you have to promote it aggressively and offer it consistently. Consumers appreciate options, and the option to pay incrementally over several months is a powerful incentive to buy now.