How to Start Offering Finance to Your Customers
Monday May 18th, 2020
We discuss the many benefits of offering finance to customers in various other articles on this site. There are a great many advantages to consider, both online and in store – which is why up to 42% of shoppers believe that more retailers should offer finance options!
If you’re already convinced that your business will benefit from offering a range of more flexible ways to pay, the next step is getting to grips with exactly how to go about implementing a financing program.
Things to consider before you get started
If you’re new to finance, there are various important considerations to bear in mind when thinking about setting up your new range of customer payment solutions.
Selecting a provider
Unfortunately, many credit providers on today’s market still display something of a ‘one size fits all’ approach to offering finance. Given that no two businesses are the same – much less any two customers – this doesn’t make a lot of sense to us at Duologi.
That’s why we’re focused on working more closely with our clients and partner businesses to really understand what makes each company tick, and developing a range of bespoke finance options tailored to suit your individual business model.
We pride ourselves on being a forward-thinking, tech-savvy, digital-first provider with decades of experience in the financial sector. Our unique all-in-one approach means there’s no need to triangulate between brokers, technology providers and banks in order to offer finance to your customers – we handle all aspects of application and management in-house.
Deciding what type(s) of credit you want to offer
There are numerous different types of financing options available, so it’s always important to pick the ones that will work best for both your business and your customers. Among the finance options we offer at Duologi, for example, are such solutions as:
This enables the customer to spread a financing loan repayment across several smaller and more manageable payments at an interest-free rate. This is usually done over a set period of 12 months.
Buy Now, Pay Later
Under this model, the customer enjoys a 0% interest window in which they don’t have to make any payment whatsoever. Instead, the full payment must be paid by an agreed future date – after which, if there is still a balance outstanding, a monthly payment plan begins at a set interest rate. Buy Now, Pay Later is a highly attractive finance product for many customers in the process of weighing up more substantial purchases.
Manageable repayments on a loan are scheduled at regular intervals over a set period of time (again, typically 12 months), at an agreed rate of interest.
Multi-tier lending models are a more flexible suite of options that ultimately allow us to accept more customers, which in turn means that you can make more sales. For example, in a scenario where a potential buyer applies for 0% finance but doesn’t have the required credit score, a multi-tier approach enables us to assess their profile and see if we can approve them for a different rate or term, rather than declining their application outright. If we find there’s an appropriate set of terms we can match them with, then you get to go ahead and make the sale rather than missing out.
Things to consider once you’ve decided to offer finance
Advertising credit options in store and online
Having decided to make the move forward into offering finance to customers, you’ll want to let them know what options are available. One of the most powerful ways to do this is by promoting the offer at Point of Sale. Whether you’re talking about online or physical point-of-sale advertising, a few well-chosen, smartly positioned marketing materials and digital assets can go a long way towards changing buyer behaviours.
For one thing, customers are inherently more likely to make higher-value purchases if a range of flexible payment options are clearly signposted beforehand. Moreover, being able to offer a variety of payment solutions gives you the best possible chance of converting buyer interest into a completed transaction. It also keeps you one step ahead of any competitors who aren’t able to offer the customer any such flexibility.
When you decide to partner with Duologi, you’ll be given full access to our extensive range of digital and physical point of sale materials, including:
– Digital banners in a various shape, sizes and styles, for use on your homepage, category page, product page and at checkout
– Posters (A2,A3 and A4)
– Perspex signs
– Swing tickets
– Tent tickets
Subsidy options and rates
Duologi works with you to give your business the option to offer finance to your customers. In return you pay us a contribution known as a ‘subsidy’, and the subsidy costs ultimately depend on the type(s) of finance product you decide to offer your customers. These payments can be handled in one of two ways:
1. Passing on the cost of the subsidy to your customers – in this scenario, the customer pays some (or all, depending on the arrangement) of the interest on their loan. This means that your margins are protected, but it’s understandably a less attractive option for most prospective buyers.
2. Subsidising the cost of 0% credit options yourself – using this model, you’ll cover the cost of the interest on a customer’s loan, either in full or in part. Broadly speaking, the more of it you’re willing to cover yourself, the more likely it is that a customer will choose to buy from you. Either way, it’s easy to factor the subsidy cost into your margins from day one, because we charge you the cost of it as a single upfront payment.
For more information on getting started in offering finance to customers, feel free to contact us today with any credit-related questions or queries.