Payment options and payment methods
“Always deliver more than expected”, Larry Page, co-founder of Google.
This statement, now more than ever, is essential for the service industry. Customer expectations are extraordinarily high and are not going to drop anytime soon. When customer expectations are exceeded, when perceived value exceeds price, business wins.
To deliver more than expected, businesses must always look for new and creative ways to generate sales and cash flow. Consider this: in 2020, credit cards accounted for 38% of transactions in the United States. Debit cards 29% and good old cash 12%. Mobile wallets accounted for 10% and each of payment card, prepaid and point-of-sale (POS) financing accounted for 4%. (statista.com)
While credit cards are clearly the dominant player in the method of payment, “40% of your customers are not eligible for traditional financing*”
Source: Board of Governors of the Federal Reserve System. (2021, May). Economic well-being of American households in 2020. Excerpt from federalreserve.gov/publications/files/2020-report-economic-well-being-us-households-202105.pdf (page 4)
With the average repair order at tire and auto stores quickly approaching $300 and likely to be $350 by the end of the year, consumers need options.
Purchasing repairs, whether tires or auto parts for the consumer, is considered a double-negative purchase. First, it’s not something they usually want to spend money on and they certainly haven’t anticipated the cost. Second, it is often a push product, which means consumers know little about the product and brands and need to be educated. Pull products, like iPhones, don’t have this problem.
Think of the difference between when a customer buys a new 80-inch TV and two new tires. Few neighbors are jealous of the thick treads on your SUV’s rear wheels.
This creates hurdles that need to be overcome in the industry to serve different types of customers. For the consumer who doesn’t have money in the bank or space on their credit card, point-of-sale financing may be the bridge a consumer needs to get to work, pick up the kids, and babysit. money for gas and groceries. Some consumers need point-of-sale financing, others simply want it to have leeway on their existing credit cards, or perhaps because they can take advantage of aggressive 0% repayment terms. .
One of the most important steps in introducing all of your company’s options is to do so early, before the topic of repair pricing comes up in discussion. “We have a wide variety of tires to choose from, as well as a wide variety of payment methods.” This, or something similar, should be standard language for all customer transactions. When it comes time to present the price to the customer, a Service Advisor may simply add, “And I’d be happy to walk you through the steps of our in-house financing if you’re interested.” Today’s modern customer is interested in choice – the idea that solutions can be tailored to their individual needs. Withholding choice or the strong weaponization of a particular solution is often one of the biggest offenses counselors commit. Just as a customer would be educated on the right tire for their vehicle and then be free to choose the brand, so too are payment options.
In today’s modern world, there are myriad options to offer the consumer, and you need to understand all of these different options and how they affect your bottom line. Be sure to review the different costs that may be associated with offering each of these different payment plans. For example, one of the added benefits of some options like lease-to-own is that there may be much lower fees or no dealer fees compared to credit cards.
So while cash is still king, its availability is what counts. The world of payment options and payment options is growing at an incredible rate. Modern retailers need to stay alert and make sure it’s easy for customers to say yes to business.
For more information, visit snapfinance.com.