Running a construction firm is a tricky business. The construction business is notoriously competitive and hardly has any ore space. Yet, the number of construction firms has only been growing over the past few years, mostly due to a revived demand for infrastructure, driven by a renewed focus on public infrastructure.
Most new construction firms are bound to start small. The biggest issue that they will be faced with is the fact that most prospective customers are already committed to one established construction firm or the other. This is especially true for large customers that have been dealing with the same firm for a long period of time.
The pool of customers who might be willing to check out a new kid on the block is rather small and deceptively fickle. Given the same, just like in any other business, it is important to be able to either attract customers from competitors or to drag in all uncommitted prospective customers available in the market. Among the best ways to do so is to offer financing options to your customers to avail of your services.
While this idea may seem counterintuitive, there are scores of benefits to offering financing options to your customers. Some of these benefits are listed below.
Improved Sales
Depending upon the quality of customers you have, customer financing can potentially lead to improved sales down the line. There is no doubt about the fact that initially, you will have to put in a significant amount of money from your own pocket. However, as customers buy into your financing plan and become more committed to your services, they are easy to turn into buyers from borrowers.
Offering lucrative customer financing options is a sure-shot way of ensuring that your customer stays with you for a significant amount of time and that the customer continues to use your services over other options. As more and more customers buy into your financing plans, the prospect of you gaining in sales volume by the end of their plans rises as well.
To put it simply, the presence of a long-term financing plan ensures that your customer buys a product that otherwise would have been too expensive to buy. For example, a customer who believes plumbing is out of budget for a single payment may opt for plumber financing and pay over six months or a year.
Increased Customer Base
In business, your main target is always to capture market share. To do so, you must have a greater number of customers than any of your competitors do. To gain this additional number of customers, especially as a new or small enterprise, it is important to offer prospective customers something no other enterprise does.
In the construction business, the financing options that you offer your customers can be an enticing draw. Any type of construction is generally an expensive deal, especially for individual customers and small businesses. These customers and businesses are likely to have to choose between a set of costs and financing options offered by different construction firms.
If your construction firm can offer really competitive prices backed by long-term, low-interest finance options, there will be nothing to stop customers from thronging to your doors. The cost that this will be to you initially is likely to be highly offset by the customer base that you accrue.
Payment In Full
Most businesses don’t offer customer financing options by themselves. The employees of a construction business are unlikely to have the kind of command over the finance sector that might be expected from a customer finance company, and the regulations for such companies are much different. Hence, what companies do is hire a third party customer finance company to collect payments on their behalf.
However, the catch here is that the customer finance companies generally pay the construction firm in full once the consumer finance plan has been selected and signed off on, and then continue collecting from the customer as per the deadline. For the construction firm, this offers a significant amount of security against bad debts, since you get paid in full, and the liability for the collection of instalments is shifted to the third party.
Customer Retention
The golden rule of business is the same across sectors – the best customer is one who returns. Customer retention is among the most closely watched metrics in any industry, and the same is true for the construction industry as well. You can boost customer retention in a number of ways. The most obvious way, at least from the customer finance perspective, is to offer the customer multiple options to afford the kind of product or service that is required.
For a construction firm, customer finance must not be restricted just to new construction. Finance can extend to services as well, and you can provide options such as plumbing finance, flooring finance, water treatment financing, and many more for services that the consumer is likely to use much more frequently. This ensures that even customers who select you for new construction return to you for these services, and the situation is a win-win for both.
Increased Value Of Orders
Just as the presence of multiple financing options boosts the sales of your company, so does it increase the average value of the order for your company. When a company offers to finance expensive products, these products become more affordable for the prospective customer, who might then go ahead and purchase it.
The value of the product remains the same. In fact, if you are using a third-party financer, the value of the product is paid to you in full as soon as the product is purchased. All that changes is the time period over which the value of the product will be paid to you.
Conclusion
Offering financing options to your customers can be one of the most effective ways of boosting your sales and expanding your customer base. The more options you offer to your customer, the likelier it becomes that you attract a significant chunk of the market.