Be The Boss You Need To Be
Seal the deal with financing
Would you like to close more jobs and make more money? How many times have you walked away from a big-ticket plumbing sale because your customer didn’t have enough cash saved up to pay for it? Do you think you could sell more big-ticket items and make more money if your customers had a financing option? Allow me to answer those questions for you – YES.
I’m not going to waste your time on what financing options you should not offer. Instead, I’m going to talk about the offer on which you NEED to focus. I’m going to tell you why you need to present financing and then take you through the stages of how to present it.
Create a Selling Price
I recommend that you offer your customers 60-month financing. Depending on the financing company you use, it will cost you in the range of 16- to 20 percent. Don’t panic. You will understand why I’m recommending this option after you understand how to “sell financing.” Let’s start with this example:
- Selling price = $9,000
- Financing Cost = 18%
- No. of months = 60
- Monthly Payment Equation
- Step 1: $9,000 (selling price) / 0.82 (1.00-18%) = $10,975.61 (selling price including financing cost)
- Step 2: $10,975.61 / 60 months = $182.93 per month
How to Sell Financing
When you present financing options to the customer, present the monthly payment only. For example, present the premium model with all the extras at “183 per month”. Go ahead and present all your package options from regular to premium models, but I repeat, ONLY present them as a monthly payment. Many customers will just say, “OK” and never ask anything else. Others will ask, “How much is the TOTAL price?” That’s cool, too. When asked about the total price, have a second page ready to show the customer that will look like this:
- Premium model with all the extras = $183 per month for 60 months
- Total payments equal = $10,975.61
- Cash discount of 18 percent with no financing = $9,000
Then present it like this: “Mrs. Jones, if you choose the 60 month payment plan option; your total payments will be $10,975.61. The finance company charges us 18 percent to offer a 60-month payment plan and we have built that cost into our price. However, if you choose not to use the financing option today, we offer a cash discount price for $9,000. That saves you the 18 percent financing cost, or $1,975.61. Which options would you like to go with, Mrs. Jones?”
Why Present a Monthly Payment
Most of our customers cannot write a check today for $9,000, but most of them can afford a payment of $183 per month. Ask yourself this: Do I want to present an option most of my customers can afford or do I want to present an option most of my customers cannot afford?
Set yourself up to win. Be the casino and put the odds in your favor. If most of your customers can afford a $183 per month, then sell them financing.
This strategy also speaks to salespeople who may be saying, “We’re $1,500 higher than everyone out there!” Let me be clear, my first reaction to that kind of attitude is that these are bad salespeople, and generally I’m right. A salesperson that complains about the price definitely needs training (or replacing) because clearly, he has never answered these five questions for his customers:
- Is this company right for me?
- Do I trust this salesperson?
- Is the timing right?
- Is this solution right?
- Is the price right?
That being said, if your salespeople are presenting monthly payments as outlined above, you can’t be $1,500 higher because the offer is $183. But always remember, when a customer asks about the total cost, you need to be honest.
When the options are explained correctly, you may have some customers who will think out loud and say, “I’m not getting that kind of a return from my bank.” The result is they decide to write a check for $9,000. Think about what just happened. The customer is now focused on the investment of her cash. She is not thinking about whether she wants the system or not – she is way past that. She’s already bought “in her mind” and is now thinking about the best way to pay for it.
Selling financing pushes customers past the sale, into “how to best carry out this purchase.” I want to say this again…selling financing pushes customers past the sale, into “how to best carry out this purchase.”
If you start selling financing the way I’ve laid it out for you:
- You will close more jobs;
- You will make more money;
- You will grow your business;
- You will not be perceived as more expensive than your competition; and,
- Your customers will love you
And, always remember the real key to managing your business is to focus and keep smiling.