Consumer financing is crucial in helping direct sellers increase their sales numbers.
But for distributors to reap all the benefits consumer financing offers, they must find ways to improve their consumer financing approval rate. The higher the approval rate, the more sales, revenue, and positive customer experiences you can deliver.
This post from United Consumer Financial Services explores the unique benefits financing brings to this market and how direct sellers can improve their consumer financing approval rate.
How Consumer Financing Helps Direct Sellers Sell More
Before we explore how to improve approval rates, let’s examine why it matters. In the points below, we’ve outlined how consumer financing positively affects your direct sales business.
1. Increased Purchasing Power
Consumer financing allows customers to make purchases they might not be able to without flexible payment options. By breaking down the cost into manageable monthly payments, direct sellers can attract a broader customer base and increase their sales for the product or service they need.
2. Boost in Sales Volume
Customers with access to financing options are more likely to make their purchase. This can lead to an overall increase in sales volume for direct sellers, contributing to higher revenue and profitability.
3. Competitive Advantage
Consumer financing sets direct sellers apart from competitors who may not provide such options. This can be a crucial differentiator, especially in today’s market, where consumers actively seek convenient and flexible payment solutions.
4. Overcoming Price Objections
Some customers may be interested in a product but hesitant due to its price. Consumer financing helps overcome price objections by spreading the cost over time, making the product more accessible and affordable to a broader audience.
5. Facilitating High-Ticket Item Sales
Consumer financing becomes particularly important for direct sellers offering high-ticket services or products. It allows customers to make significant purchases without 6. straining their budgets, making expensive and urgently needed services or products more attainable.
6. Adapting to Economic Fluctuations
Consumer financing becomes even more important during economic downturns or periods of financial uncertainty. It helps direct sellers adapt to market conditions by providing customers with financial solutions that suit their current circumstances.
How to Improve Your Consumer Financing Approval Rate
Based on the information above, you can see why increasing the approval rate of your consumer financing is crucial to your business. Increasing approval rates translates to a greater volume of customers served and more sales, including increased average order volumes.
Recent research found that only 12 percent of merchants see consumer financing approval rates of 80 percent or higher. Additionally, 29 percent of retailers report that their consumer financing approval rates fall below 60 percent. This means that for almost one-third of sellers, at least 40 percent of their potential customers walk away from the sale and leave with a poor experience.
Improving your consumer financing approval rates isn’t an exact science, but direct sellers can strategically approach financing to target the right audiences at the right time. Below, we explore practical methods for improving your consumer financing approval rates.
1. Sell to Homeowners
Specific customer segments are more likely to receive approval for consumer financing than others. Homeowners are statistically more likely to have a higher, more stable income than those who rent. That puts them in the category of shoppers with an increased probability of receiving approval for financing.
Many direct sellers have the unique opportunity to engage with prospective customers in their homes. As you create your sales map, target single-family houses, so you know you’re engaging with individuals who are paying a mortgage and likely have a more predictable, higher income that will contribute to their approval status.
2. Collect Automatic Payment Upfront
Direct-to-consumer businesses offering consumer financing can optimize the process by requiring Electronic Funds Transfer (EFT) payments to the financing company. EFT payments involve the electronic transfer of funds between bank accounts, providing businesses with a reliable means obtain repayment of a loan.
Businesses should tell consumers during the selling process that EFT is a requirement. Suppose the consumer readily accepts that EFT repayment is required. In that case, their banking information is entered into the credit application, and their credit application may have a higher chance of being approved.
Finance companies prefer EFT payments because consumers don’t have to remember to make payments, streamline transactions, and enhance the overall customer experience.
3. Partner with the Right Consumer Financing Firm
Point-of-sale financing is an effective means to increase direct-to-consumer sales. Finding the right financing partner for your business is essential to maximize your revenue and customer approval rates.
United Consumer Financial Services provides full-service financing to businesses like yours, empowering you to expand your reach and sell more than ever.
Offering financing through UCFS helps you:
- Maintain and improve cashflow, a crucial factor for healthy, sustainable businesses
- Increase sales by providing an additional payment option for your customers, allowing you to add needed add-on services or products to benefit the buyer
- Expedite the sales process because it’s easier for a customer to envision low monthly payments rather than a large up-front sum
UCFS offers a fast, straightforward application with prompt notice of approval. From there, you can commence with the sale and provide clear instructions for loan repayment. Here are the steps:
- Enter the customer’s credit application, or have them enter it themselves
- Receive near-immediate communication of credit application status
- For approved credit applications, customer eSigns the contract right from their phone
- Move forward with the sale
- Get paid by UCFS within 1-3 days after the transaction is complete or the service is complete
- Consumer makes payments through autopay for the life of the loan, starting 30 days after the contract is executed or the service is complete
With UCFS, there are no surprise fees for your business, consistent rates/APR for your customers, and high approval rates that translate to success for your direct-to-consumer sales.
Conclusion
High approval rates are central to the efficiency of your consumer financing program. The more customers you can approve, the better their experience and the higher your sales.
If you’re ready to explore how to partner with a financing firm that helps you improve your consumer financing approval rate, contact United Consumer Financial Services today.