Ask the Experts | Offer Financing to Cash Buyers?

Question: Why should I offer financing to a cash buyer?

Drew Cameron; President, HVAC Sellutions & Energy Design Systems, Inc.:

I love financing, one of my favorite topics. Sales and financing and everything marketing/sales-related, it’s a passion, I study it every single day of my life. I don’t think I’ll ever know it 100%, but I always like to be a better version of myself than I am today.

This is a topic near and dear to my heart that I was talking about last week and the week before visiting two different clients in two different markets. I’ve heard this exact question so many times and I say to the questioner and to the salespeople: How do you know they’re a cash buyer? Just because they say it doesn’t mean it’s true.

You need to have a process, follow your process, don’t let whatever customers say or don’t say or how they act knock you off your game per se. That’s why we standardize the process.

So I would say how do you know they’re a cash buyer? We offer all the ways a customer can pay to all people. I don’t care what house they live in, what car is in the driveway, the zip code of the home, the investment, or what the customer says. By sharing it with all customers, it provides perspective that all options are affordable and make economic sense, because you can show a customer a number that gets them down into that $100-$150 range for basically a $15,000 purchase. If you think about that, that is less than most homeowners pay for having a cell phone, for having cable, internet and landline phone at their house. That’s usually less than most people pay for utility bills, car payments. You can see where I’m going with this.

By showing them a monthly number, it’s a number that they deal with on a regular basis, they pay for other things and spend a couple hundred bucks. And I don’t care if you live in the house on the hill or the house in a bad neighborhood, you know, where values are depressed. People put their pants on one leg at a time, so people pay their bills exactly the same way. They’re used to what they pay on a monthly basis, because we live in a payment society more than anything. Nowadays even if they have the money, they still make monthly payments for things like mortgages and insurance and cars and utilities and whatnot, and showing that this is relative to that makes it make sense.

This also will yield increased closing ratios and average tickets. Many people, even with money, will spend more [if they use a monthly payment], meaning they’ll buy a better grade of equipment, or add-ons, or whatever, if they see that it makes sense. Payment options also offer money flexibility and free up the cash. So even if they may have the cash, why go ahead and sink all of your money into an investment like this, which actually pays for itself through energy and repair costs?

If you’re thinking about doing something with the pool in the back, or refinishing the driveway, or working on the windows or gutters, or remodeling the kitchen or basement, all those types of things – none of those pay for themselves. Windows don’t pay for themselves. So I would pay cash for those types of things, don’t pay cash for the types of things that actually pay for themselves through energy and repair costs.

And lastly, if these people were to talk to others, these people may be cash buyers, but maybe they have friends, family, coworkers, people from church, whoever. If they were to talk to others, they can talk to the affordability story that you have available, because what I know is most contractors don’t offer financing, or are horrible at doing so. So if you’re the company that shares it in a very compelling way, and they know someone who is not a cash buyer, they can relay that information that your company is affordable to somebody else.

And bottom line: If they insist on giving you a stack of cash, take it. So I’m not against taking cash, but make sure you offer financing and offer all the ways you can pay to all people.

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