Here’s a simple strategy most entrepreneurs overlook: Offer customers financing.
Just take a minute to think about the following scenario: Part of your customers are working with a tight budget. They simply can’t spend all they have now in your product or service. But if you could eliminate for them the question of whether they have the ability to pay you or not, the only question that remains is if they want it or not.
Now you can finally close the sale, and your conversion rate goes up. Heck, you might even be able to cross-sell or up-sell your customer, increasing your AOV. Not to mention the possibility of introducing even more expensive product or service options.
And let me tell you what’s even better: when you offer it to your customers, many of them will listen to it and will end up paying with their credit card anyway. The fact is, when you start talking about financing, you already got their commitment to buy your product or service. How the customer ends up paying for that product doesn’t really matter.
Now, financing is a great offer only if implemented correctly. I recently interviewed Darius Lyvers in my podcast, the COO of a company that is doing $ 50 million in revenue this year. Darius also happens to be an absolute wizard when it comes to financing.
Here are the three best pieces of advice that I’ve learned from him:
1. Do not use the term “financing.”
Customers hear the term “financing”, and they automatically put themselves into defensive mode. They are conditioned to say no because they feel like they are protecting themselves of making a bad decision.
So here’s how you do it:
Instruct your team to avoid the term “financing” at all cost. Instead, get them to tell customers that purchases may be spread out over several payments (a $ 400 service, for example, might be split up into monthly payments of $ 18, $ 27 or $ 80).
Because you don’t use the term “financing”, your customers’ guards aren’t up, so all they have to do is to make a decision — how much they want to pay.
2. Get your team’s buy-in.
Your financing plan is only as good as your team of reps. Why? Because they’re the ones on the front line, selling it!
You can’t simply tell your reps that you’re putting these new financing plans into place, and expect to get on with it. Instead, sit down with them to explain the new strategy, how this is going to make their lives easier, and get their buy-in.
And don’t make the mistake of coming up with 10 different plans, pushing them out all at once. Most people don’t like drastic changes, so you need to introduce this idea slowly. Have just two or three plans to get started, dummy them down, and make sure they’re structured in a way that’s easy to explain and understand.
3. Track performance and constantly improve.
This is probably the most important piece of advice: Make sure you have KPIs (Key Performance Indicators) in place.
You want to assess your team’s performance by tracking how they’re using your financing plans to sell to your customers.
Some reps might be struggling with this, while other reps might find it a piece of cake. So call the reps who are excelling, and get them to share their processes and best practices with the rest of the team. That way, you can help everyone get the hang of it, and improve the team’s overall results.
Setting this up is fairly straightforward: just make sure you have CRM system that can track these results, and then organize a monthly or weekly meeting where your team can discuss and share techniques.