Financing was once an option reserved as a last-ditch effort for Home Service Companies. Today, it is a necessity of doing business. Gone are the days of low-cost replacement and repairs.
And please don’t blame consulting companies, like ours, for artificially inflating consumer prices. We don’t dictate the market prices of contractors. The cost of doing business controls the market.
As a consulting company, we analyze the cost of doing business, and then help our clients adjust pricing and service to meet the market demands.
Part of the service adjustment that contractors have had to make is offering financing to their clients for Replacements and Repairs.
If you are not offering financing, then you are limiting your client’s ability to do business with you. Consider the following:
The American Saving Situation
The Federal Reserve did a calculation to try to determine the amount of money Americans are saving. They reached a dividing line for most of America. *
*50% of American’s have $4,830 in savings, and 50% have less.
Most major plumbing, roofing, electrical, and HVAC repairs and replacements will far exceed that $4,830 dividing line.
Even if the repair was half of that total, you would be asking 50% of your clients to give up 50% of their savings. For most people, this would be an extremely difficult choice to make.
Let’s look at another study that showed a different result.
According to a 2017 GOBankingRates survey, more than half of Americans (57%) have less than $1,000 in savings.
Wow! 57% of Americans have less in savings than the average repair ticket of most of our Plumbing Clients. And, there is no way those with less than a $1,000 in their savings are going to be able to pay for any major replacements in Roofing, Air Conditioning, Plumbing, or Electrical.
What should be abundantly clear to all that are reading this message, is the following: You must offer financing as a standard payment solution on every job.
When you offer financing, you are offering a way for your clients to have their needs taken care of. In addition, you will be removing a major objection to service, which is, “I can’t afford it.”
National Credit Score Average
Can your client get approved?
Here’s the best part, your client has a very high chance of being approved.
The National Average Credit Score as of September is a 704 FICO score. This score is considered “Solidly Good.” This means that on average, your client will get approved for credit when they apply.
This approval can mean the difference in a “Yes” or a “No.” For your client, it can be the defining line between “Good Service” and “Bad Service.”
If you are not offering credit, it’s time to start!