According to a 2019 Harvard Report, the U.S. market for home improvement and repair, including HVAC jobs, has been on the rise over the last few years, with American homeowners spending over $400 billion annually.
The study also reports that the share of projects paid for with cash steadily shrinks from 78% of improvements costing less than $10,000, to 60% for those costing $10,000 to $49,999. The most common source for funding these projects then becomes lines of credit or cash-out refinances, that make up 19% of projects, though the study also noted that homeowners were much less likely to use their savings to pay for major professional projects that needed technical expertise.
It is therefore not surprising that a post by The News also highlighted that financing was chosen as the preferred method of payment by 50-80% of the customers of HVAC contractors who offered this tool.
As these numbers make clear, if you’re not offering financing to your customers, you are missing out on a big opportunity to substantially increase the number of jobs you close and your ticket size.
Let’s take a closer look at why lending is such a great tool for your business and go over 3 important reasons you need to start offering financing right now.
- Buyers look at payment options as a way to increase their spending power
Most homeowners do not have a well of cash to pay for big ticket items like HVAC replacements and repairs. And even the few that do will probably not want to part with that cash all at once.
Financing provides consumers an opportunity to buy more. This may translate into buying a higher-efficiency unit or adding accessories they would shy away from if they had to pay for it in one go.
Buyers look at payment options as a way to increase their spending power
2. Contractors can use financing as a tool to provide options and help close the deal
There’s a big difference between using payment options as a way to help close the deal as opposed to using financing as a way to pay for your customers’ projects.
What is the difference, you may ask? The answer is psychological.
When you’re using financing to help close the deal, you’re helping customers overcome the anxiety of not having all the cash necessary to pay for the job upfront. You are also giving customers the freedom not to have to make compromises to their home comfort because they don’t see any other choice to pay for what they really would want for their home.
This way, your sales consultant will have an easier time having a productive discussion with relaxed customers on the details of the job. And he’ll also have the opportunity to increase the scope of the job by giving them access to money they can invest in the home comfort they’ve always wanted now.
If you take advantage of financing as a tool to help offer options to your customers, you’ll get way better results in closing and upselling than if you present it to your customers as a last-ditch option to help them pay for a needed repair or a project they can’t afford to pay for upfront.
3. Contractors can use financing to increase customer satisfaction and recommendations
Word-of-mouth recommendations from happy customers are one of the most powerful ways your business can increase its customer base and revenue.
Offering financing could really work in helping you win your customers over. If they use your financing offer to fund their dream job, it’s very likely they’ll be telling their friends: “Go with this company, they did a great job and offered us a no interest/no payment plan with interested waived as long as we paid the balance within 12 months.”
With unexpected expenses such as HVAC repairs, customers need flexible payment options. And since there are plans available for all kinds of customers, financing gives you a way of providing great customer service.
So, if you have been on the fence about offering financing, it’s time to take the leap into integrating financing into your HVAC business.
Don’t wait. Start providing financing today.