According to the Home Improvement Research Institute, more than a third of homeowners who completed a home-improvement project within the last year regret not spending more on their project. This finding comes from the Regret Factor Study, led by Brenda Bryan, executive director of the Research Institute for Cooking and Kitchen Intelligence (RICKI).
According to Brenda Bryan, “Regretters are more likely to have used a wide range of inspirational sources, especially television, magazines, and social media.” To no surprise, the study also found that the home improvement market isn’t slowing down anytime soon. So, what does this mean for your sales team, and more importantly, your business growth goals over the next 12-months?
It’s a great time to be a contractor—but it’s up to you to grow your business
Let’s look at two businesses: Business A and Business B.
Business A is experiencing rapid growth. In fact, they’ve increased their close-rate by more than 50% and are closing larger projects. Their average ticket size has increased by over 43%! Their sales team is confident and hungry for new project opportunities. In addition, their sales team is trained regularly to offer a choice of payment options to 100% of their customers.
Business B is in the same industry and market as Business A (in fact, they are a competitor), but Business B is struggling to close sales. Business B’s sales professionals are losing their confidence and are unable to meet their sales quotas. They feel that they can’t catch a break and have begun offering cash discounts to their customers. When customers are unsure, they offer a loan option to save the sale. This helps with their already embarrassingly low close-rate, but they aren’t making any money as they’ve eaten into their margins. Also, the owner of Business B is subtracting the loan fees from the sales rep’s commissions. Because of this, there’s been quite a bit of employee turnover costing the company even more money!
Which business would you rather be leading? Business A is the clear winner.
But, why? What is Business A doing that is making them so successful?
The answer is simple. Business A understands the home improvement market and ensures their entire team is trained on what truly influences a homeowner’s decision during the sales process. They recognize that payment options provide value to their customers—even cash paying customers! In fact, market research suggests that homeowners who have cash-on-hand prefer Same-As-Cash Loans because they allow them to use their money elsewhere, and also use the bank’s money interest-free instead of their own. On the other side of the coin, Business A also knows that some of their customers prefer to pay for their project over time with a low monthly payment loan. And, guess what? They know that contractor-provided financing is a better option than a high-interest credit card or often a cumbersome and complicated home equity line of credit.
Contractors who offer a choice of two payment options, such as a Same-As-Cash Loan and a low monthly payment loan, can expect about 50% of their customers to choose the contractor-provided financing—without discounting their project cost.
Business A knows that homeowners value contractor provided financing and are willing to pay for it. Therefore, Business A never penalizes its sales team and doesn’t offer cash discounts. They employ good business practices and build a portion of their dealer fees into their general overhead for all projects. This protects their margins and keeps its sales team confident and happy. Also, they can develop better relationships with their customers and generate new leads because they promote a choice of appealing payment options in their advertising and marketing material. In fact, they were even able to gain some of Business B’s accounts because of it!
So, what can you do to ensure your sales team is confident to offer a choice of payment options to 100% of your customers? Start by teaching them the value of understanding homeowners buying decisions. Help them recognize the size of the home-improvement market and that contractor-provided financing is valued by the homeowner—even if they have the cash-on-hand.
Contractors enrolled in EnerBank USA’s payment options program can request training for their entire sales team in both an on-demand and live webinar-based training venue. It’s recommended that business leaders ensure their entire sales team is frequently trained on best practices for when to offer a choice of payment options.
To learn more about EnerBank’s payment option program and contractor training courses, visit us at info.enerbank.com/contact-us.