Why Cash Is Not Always King
Changes are par for the course when it comes to home renovation. That can mean current trends, material or labor costs, or the general housing market. One major change that you may not even be aware of, however, is what methods your customers are using to pay for their projects.
For many of your customers, their renovation may be an unexpected cost. This means they don’t have the cash on hand to pay for it. Homeowners then utilize alternatives, such as a home equity line of credit, or another type of loan to complete their project.
This means you’re missing out on a great opportunity to not only close more jobs and grow your business, but to provide an easier and more convenient way for your customers to pay for their project — and that’s by offering your own financing.
That’s not all — offering payment options carries many other benefits and for the most part, it’s incredibly easy to incorporate into your existing sales process.
Here are just some of the benefits that you may experience from providing financing to your customers:
Improve Cash Flow
When customers utilize cash for their projects, you usually don’t get your money until the project is complete. This can cause issues for the overall cash flow of your business. Especially with rising prices and lingering supply chain issues.
You have a lot going on, and chances are, you don’t have the time or resources to chase down leads. This is especially true when they end up going nowhere. When you advertise a choice of payment options in your marketing materials, you can see a 50% increase* in better-qualified leads, that is, customers who are ready to get their project started now. Plus, more converted leads mean more qualified referrals down the line. Customers appreciate the ease and flexibility that payment options provide. The better experience they have working with you, the more likely they are to recommend you to their friends and family.
Boost Close Rate
We know how frustrating it is to almost get to the finish line of a sale, only to have the price of the project ultimately scare the customer off or have them decide to seek out bids from other contractors. However, when offered a choice between a same-as-cash or low monthly payment loan, you can see your close rate, assuming a 25% baseline, nearly double to 44%*.
Grow Average Project Size
The home renovation industry is busier than ever. This means you may find yourself in a situation where you have more business than you can handle. To help better manage this influx of work, some contractors have found it easier to take on larger jobs as opposed to multiple, smaller jobs. Additionally, nearly a third of homeowners regret not spending more on their project* to get the result they really want. Plus, those who utilize payment options spend 44% more* than homeowners who don’t.
One common issue you may have dealt with is feeling the need to provide discounting for customers who pay cash, eating into your profit margins. Or, once they hear the bid, they may downsize the project. This includes choosing to complete part now and the rest later. When you give customers an easy and convenient way to pay for their project, they can get the result they want without having to make compromises or use lower-quality materials.
Homeowners who are approved for a loan with EnerBank are 94% more likely to complete the project with you*. By offering payment options, you eliminate the need for a customer to look elsewhere for financing. This helps them save time and money. Not only is this great for business, but it also helps set you apart from the competition.
The industry is quickly changing. It’s important that you don’t fall behind the times or miss out on business because your customers have traditionally used cash to pay for their projects. By implementing the ease of payment options, as well as working with a qualified bank that has experience in home renovation lending that ensures that you get paid quickly, you can see tremendous growth in your business. Look out, cash, there’s a new king in town.
*Based on the Brickyard Study, Conducted by EnerBank USA, 2018