Close rates directly correlate with the effectiveness of your marketing and sales strategies. Low close rates or late-term project abandonment signal an issue –– usually a financial hangup with the homeowner. Offering financing options early and often in the sales process removes those obstacles before they cost you the job.
The data backs this up: contractors who offer financing close 11% more estimates than those who don’t. That’s not a marginal edge. Providing financing options makes the difference between winning roughly half your quotes and losing the majority of them.
This article breaks down what the data shows on close rates and ticket size, what’s actually driving the gap, and what it’s costing contractors who haven’t closed it yet.
Financing’s Role in Home Improvement Close Rates
Homeowners want flexible payment options, especially for big-ticket upgrades and home projects. Sticker shock is inevitable when you hand the lump-sum estimate to a potential client. When they see a single payment totaling thousands of dollars, homeowners instantly start second-guessing their decision. But when a large project total is broken down into affordable monthly installments, it’s a different story. Homeowners are much more likely to accept a project quote when they can pay it off over time. Financing options significantly reduce pricing hesitations at the point of sale, even for budget-conscious shoppers, and the numbers prove it.
Contractors who offer financing have a close rate of 49%; contractors who don’t offer monthly payments only achieve 38%. But even with such a significant gap in close rates, only 37% of contractors offer financing on every job.
They don’t understand how much money they’re leaving on the table by not offering affordable monthly payment options to their clients.
Close rate data recap:
- Contractors offering financing have a close rate of 49%
- Contractors who don’t offer financing have a close rate of 38%
- Financing boosts close rates by 11 percent
- Only 37% of contractors offer financing on every job
The Impact of Financing Beyond Close Rates: Ticket Size
Boosting close rates increases home improvement business revenue across the board. But close rates aren’t the only aspect of contracting businesses that benefit from a robust financing platform. Consumer financing makes home remodels feel more affordable to the customer because they can expand the scope of their project for just a few dollars more per monthly payment. Instead of questioning how much they can afford, homeowners can explore how much more they can upgrade or add to their original project.
Home improvement contractors are in a prime position in today’s market. With astronomically high housing costs and interest rates, homeowners are opting for remodels instead of relocations. A recent survey commissioned by Redfin found the following data points on homeowners who choose to stay put:
- About two-thirds of homeowners who recently made renovations chose to upgrade their home instead of moving to a new place.
- Forty-three percent of Americans renovated their homes in the last year.
- Thirty-three percent of Americans plan to renovate in the next year.
This data shows that homeowners prefer and expect remodels over moving. Providing affordable financing options helps home improvement contractors capture more of the booming market and secure bigger, higher-value projects.
Implementing Consumer Financing to Increase Close Rates
The 11% gap in close rates between contractors that offer financing and those that don’t is enough revenue (and momentum) loss to shut a business down. Put in real numbers, that’s roughly 11 more jobs closed per 100 estimates presented. Contractors who aren’t offering financing (or who aren’t offering it effectively) are losing out on a growing market.
How you choose to offer financing –– and who you choose to partner with –– has a significant impact on the revenue your business will see from your financing program. Below are a few “musts” when implementing consumer financing for your home improvement company:
- Introduce Financing Early and Often: Present financing availability from the first touchpoint, throughout the sales conversation, and at the same time as the estimate, not as a fallback once the customer hesitates on price. Contractors who offer financing on every job rather than bringing it up selectively finance roughly twice as many sales as those who only mention it when a customer starts to walk away.
- Lead with Monthly Payment, Not the Total Price: Framing the cost as a manageable monthly payment instead of a lump sum keeps the conversation on the project instead of the price tag, reducing sticker shock and the likelihood that the customer will stall the project.
- Look for High Approval Rates: A financing partner that only serves prime-credit homeowners turns away a meaningful share of the people standing in front of you. Look for a financing partner that boasts high approval rates to customers across diverse credit profiles.
- Operate with a Mobile-First Approach: An application that returns an answer on the spot keeps momentum in the sales conversation instead of giving the customer time to shop around or lose interest. Partnering with a firm that takes a mobile-first approach to financing allows contractors to onboard more clients, speed along approvals, and book and complete more projects in less time.
United Consumer Financial Services, a Marmon company, a division of Berkshire Hathaway, has been providing consumer financing services to businesses across the U.S. for nearly 50 years. We have the resources and expertise to help contractors implement consumer financing programs that help increase close rates, boost average ticket values, and establish their reputation as a customer-focused company.
The payment options you offer matter to both your business and your customer base. Choosing a proven financing partner like UCFS ensures you’re making the most of every sales opportunity with conversion-driving financing options.
Improve Contractor Close Rates with Consumer Financing from UCFS
The numbers make the case on their own: contractors who offer financing close more deals, and financing itself pushes homeowners toward bigger, better projects. UCFS gives you the tools to put financing in front of every homeowner, at every price point, so more estimates turn into signed contracts.
Don’t lose another job because you didn’t provide the payment options your clients needed. Contact UCFS today to learn how home improvement businesses can leverage financing to improve close rates, increase average ticket sizes, and boost customer satisfaction (and retention).
