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Credit: How to help the customer every time

By Ken Ryan

Volume 26/Number 19; February 4/11, 2013

With statistical evidence pointing to an uptick in new home sales and residential remodel activity, it stands to reason that flooring sales would be poised for a rally as well. To help sweeten the pot for consumers, flooring dealers have been using credit as an effective tool in their overall sales strategy.

In these still-challenging economic times, retailers say credit is critical, from qualifying the customer to closing the deal. “Most people don’t have $8,000 sitting in their bank accounts to spend on flooring,” said Matt Biediger, CFO of CW Custom Flooring, Ft. Worth, Texas “Flooring is something they want to pay for over time. If we didn’t offer financing, there would be a significant reduction in our sales.”

Other dealers agree that consumer financing allows them to help customers spread the cost of their flooring purchase; consequently, the customer gets what she wants. “If the consumer wants to redo her whole house, financing allows her to do that, if she is approved,” said Steve Lipp, owner, Carpet One Floor & Home, Fort Wayne, Ind. “She can break up the cost into manageable payments that fit her budget. Instead of saying, I just spent $12,000, she can say, ‘Hey, I’m spending $150 a month’ and be able to redo her home and feel good about it.”

Bruce Cumming, owner, Cummings Carpet One Floor & Home, Springfield, Ill., said consumer financing allows his customers the option of purchasing more square footage or to buy a higher quality floor while bringing the cost down to manageable levels. “Total price is very important to the normal customer, but she also wants to know how much it is going to cost per month,” he said. “Financing is one of the reasons customers buy from us.”

GE, which has provided consumer financing for more than 80 years and served the flooring industry for 25 years, said financing is mutually beneficial for consumers and retailers. “For customers, financing gives them more choices, including the flexibility to get the flooring they want, be more selective and obtain better quality products,” said Stephen Roe, general manager, floor covering, GE Capital Retail Finance. “For retailers, it is a business-building tool, enabling them to sell more flooring and a wider range of options at affordable prices. Ultimately, that leads to greater customer satisfaction, loyalty and referrals.”

Kelby Frederick, co-CEO, My Flooring America in Denton, Texas, often extolls the benefits of consumer financing through showroom displays and advertising offers posted on his store’s website. These messages say a lot about his company’s commitment, he believes. “Even if the consumer isn’t interested in using the credit offer, she sees us as being aggressive in the market and expects us to also have great pricing and service.” Frederick, who also operates ProSource and additional My Flooring America stores in Texas, added, “We promote our finance offers early and often in the selling process.”

Having financing options in the back of your pocket has worked well for retailers like O’Krent’s Abbey Flooring Center, San Antonio. For the past three years, O’Krent’s has required all customers to put down 100% on all jobs before installation. “If they balk, that’s when we bring out our consumer financing programs,” said president Sam O’Krent, whose store runs various 6-, 12- and 18-month programs. “It’s worked wonderfully for us. Our approval rate [for consumer credit] is over 90%. I wish the rest of the industry would adopt that 100% upfront requirement, but we’re in a unique position being a family-run company that has been in business for nearly 100 years.”

Financing options

Some independent dealers with single or even multiple locations do not generate the sales volume to justify a private-label program of their own. That’s where companies like TD Retail Card Services come in with programs like Renovate Card.

Marc Sczesnak, president of TD Retail Card Services, said the Renovate Card allows retailers to offer customers a range of special financing options, including six no-interest programs as well as low-APR programs. “These options provide a distinct competitive advantage to merchants selling high-ticket items for the home.”

Upselling the customer has worked well at CW Custom Flooring. Noting that flooring is typically the third-largest purchase a customer will make—behind a home and automobile—Biediger said, “When you’re looking at putting a large amount of flooring into your home, that purchase can be a significant amount. Without financing, many customers would not even consider the purchase. Financing helps them buy what they need.”

Closing strategy

While consumer financing is an important element throughout the selling process, it is perhaps most valuable in closing the deal. Frederick said broaching the subject of credit early in the sales process makes it an easy topic of conversation.

In the end, “customers are more willing to consider [financing] versus offering it at the end of the sales process,” he said. “Many customers will consider upgrading to the flooring of their dreams or adding other areas when they realize they can use no-interest credit. Everyone seems to be hanging on to cash, so this is a great closing tool for all consumers—those who need it in order to make a big-ticket purchase as well as those who would rather hold onto their cash and use someone else’s money for free.”