Written by Ari Greenbaum, co-founder of conXpros
More than 70% of home improvement and home services projects are financed! If you are not already offering financing options to your clients, do I have your attention yet? 70% is a massive number that represents a huge amount of potential business by simply offering financing options to you clients. Also understand that if you are not offering this option & your competition is, who do you think is more likely to secure the job? Fortunately, the ability to offer home improvement financing for your clients has never been easier. Whether you are a roofing contractor selling a roof replacement for $18,000 or you are a Plumbing contractor selling a hot water heater for $2,500, offering financing and payment options for your clients will be a game changer. More often than not, homeowners are not prepared for the project they need to get done. For example, we do not plan for our Heating & Cooling system to stop working when we budget expenses for the year. However, when it happens, there are not many options other than getting the replacement done or suffer the consequences of living in an uncomfortable environment. Not really a decision in my opinion, rather a necessity. Bottom line, do you really care whether the payment for the project comes by personal check or from a financing company? Most home improvement pros are like me, we just like to get paid for the work we do & money is green regardless of the source.
In this article, I will first offer a few of the many options currently available and the various features. Later I will share some valuable tips (from my personal experiences and from some of our clients) of how financing can be used as a powerful tool in the selling process itself.
Finding financing options to offer your clients
The lending business has drastically changed over the last 10-15 years. In the past, homeowners were typically forced to approach their bank to get a secured loan for home improvement projects, get a home equity line of credit, or explore re-financing existing mortgages to free up some working capital. Both these options still exist today. However, there are too many companies offering unsecured loans earmarked for home improvement projects to name in this article. There are offerings for every level of credit score (it is a good idea to have a few options to help any type of client, not just ones with good to excellent credit), varieties of interest rates and length, as well as my favorite “same as cash” options. Same as cash allows you to offer financing to your client with no interest for the initial term (typically 12 months) before interest starts accruing. This is an excellent option to offer for clients who prefer to keep the money in their account and pay off the loan within 12 months at no cost. Much better than writing a check for thousands of dollars upon signing a contract. Most companies offering financing do so at NO COST to you as the contractor, have immediate approval responses, and often no minimum volume requirements. It really is that easy! My recommendation is that you have 2-3 different options that cover the various levels and situations you may encounter with your clients. Have an option for good or excellent credit customers, another for low or poor credit scores, and potentially one more that has a feature the others do not offer (such as a same as cash option). Here are a few companies that offer home improvement financing. All you will need to do is reach out to them for specifics, find the best options for you and go through the enrollment process.
Do your research and find what is right for your company and offers you the best platform to succeed with your clients. Many homeowners have come to expect contractors to offer financing options. So, if you are not offering what they expect, you are less likely to get hired.
Using financing as a tool in the sales process
Although providing financing for projects will open more opportunity for you, simply offering financing will not close the deals for you. The good news, you can use this as a powerful tool to get the deal done and overcome some common objections. Let me start by sharing that I can count on one hand the number of roofing, HVAC, or window deals I personally sold with homeowners that were paid by personal check. More than 95% of the deals I closed involved financing. Many of these customers had no issues preventing them from stroking the check, rather they preferred the flexibility the financing offered them. There were also many clients that without financing could never afford the project at the prices I would quote, but with the help of financing, we got the deal done and the client was thrilled that they got top quality and fair rates. Here are some cases where financing can serve as a tool to get the deal done:
- You offer a product or service that is priced above the other quotes received: First you must establish the value you bring to the table to justify the higher cost. After building the value, use monthly payment options to remove the “sticker shock”. $229 per month sounds a whole lot better than the idea of forking out $13,000 for a new HVAC system.
- Client wants to wait until they have the funds available: This scenario is where the same as cash offer is practically a lock. Ask questions to determine if the only issue delaying the project or purchase is not currently having the money in hand. Once this is established, ask a question like “if I could offer you the ability to get the benefits of the new _____ today, but not have to pay for it until later down the road with no additional cost to you, can we schedule the installation for next week?” When they give you a positive response, roll out the same as cash offer. It works like magic!
- The homeowner shares that they need to go over each estimate and get back to you: Inquire if the other contractors offered any financing options, or simply provided an estimate. If the answer is no, you have your “in” to build value in the fact that you offer financing to make it easier on the client. Who do you think they will go with?
- Client feels that they cannot afford what you are quoting for the project: First confirm, that affordability aside, they feel that you and your company are the best option to meet their needs. Then nail down that the ONLY hurdle is the cost. Once confirmed, shift the conversation from the total cost to payments. Ask a question like “if I could get the job done and you would only be responsible for $___ per month, would we be able to schedule a start date of _____?”
There are other benefits of the financing offers you can use to your advantage. When I sold HVAC replacements to homeowners, our price presentation always included all options on the screen (I used a tablet in my presentations, but the same can be done with printed material) for cash payments, monthly options, and a same as cash offer. I worked for a company that was priced significantly higher than the competition for the exact same system. Many times, the price I quoted was thousands higher than the next closest bid. I used financing to overcome these “issues” and secure the deal. Often the total price was never discussed, rather the monthly amounts and what was required to qualify. Additionally, you can use it in radio, television, mailers, and email advertisements to gain customer interest and get your phone ringing more frequently. Even if the deal is not closed on the spot, the financing options available should be included in any estimate provided to the homeowner to keep them aware of their options when comparing your bid with others.
If you are not already offering home improvement financing to your clients, what are you waiting for? Take the time to get in the “know” and you will increase your sales and reduce the “no’s”.