It’s common knowledge that providing credit at the point of sale helps consumers spread payments for big-ticket purchases such as flooring and home improvement projects over a longer period of time. But that’s not the only benefit that in-store financing provides. Credit also paves the way for consumers to afford more expensive goods and services while opening up higher margin opportunities for specialty retailers.
That’s according to Synchrony, a leading provider of credit, financing services and all the requisite financing tools to help retailers and consumers alike execute big-ticket home improvement transactions. The most essential component in all this, according to Curtis Howse, executive vice president and CEO, Synchrony Home & Auto, is having access to the right information.
“At Synchrony we stress the importance of having marketing insights, and our consumer purchase study programs show customers who utilize financing spend more money,” he explained. “Typically, a Synchrony flooring cardholder reports spending roughly $3,200 more on a flooring purchase than non-cardholders. The second thing is 51% of flooring customers report using some sort of financing, and that’s a number that continues to creep up over time. Lastly, 48% of flooring customers who finance would’ve either shopped at a different retailer or not made the purchase if financing was not available. So, financing not only drives traffic into the store, but it also drives engagement, sales and, over time, loyalty to a brand.”
Synchrony, which counts CCA Global Partners, Floor & Decor and Mohawk among its broad corporate clientele, provides a host of services and options to help its retail partners establish and/or improve their in-store financing programs and leverage credit to drive higher sales and close a higher percentage of deals. One of the more popular options, according to Howse, includes deferred interest, which provides consumers with an opportunity to enjoy 0% interest financing over a specific period.
“That helps them in a number of ways: One, when you think about just budgeting expenses and managing money, it gives consumers a tool that they can use. And certainly when you think about just the utilization of that tool, if the flooring is paid off within that promotional period, which typically ranges from six months to 12 months to two years, then there’s no interest. That’s a zero-cost process for that consumer and helps them to manage their budget.”
In terms of benefit for the floor covering retailer, offering financing is another way to promote the dealer’s brand. “Inviting customers to get a private-label credit card with the retailer’s business name on it keeps that brand top of mind and top of wallet, which prompts repeat sales,” Howse explained.
At the same time, credit programs can help retailers better predict sales cashflow and manage their inventory planning and budgeting while lowering potential objections from the consumer. “When presenting shoppers with the credit option, we find there’s less price contention when using financing,” Howse said. “Consumers tend not to push back on the price because they’ve got a credit vehicle that allows them to actually make that transaction happen.”
To help their retailer partners navigate through these computations and forecasts, Synchrony offers financing “calculators” to help them demonstrate to customers how much they will be able to take on that particular purchase based on the shopper’s budget. “As a retail sales associate or manager, you get to really manage that process,” Howse explained. “You put the power of the decision-making and the actions within the consumer’s hands.”
Use the tools
Research supplied by Synchrony shows more and more floor covering retailers are leveraging the many credit/financing tools it has to offer. Case in point is Floor & Decor, the large-box format retailer that has been rapidly expanding its footprint across the U.S. By leveraging Synchrony’s services, according to Trevor Lang, Floor & Decor president, the retailer is able to offer its customers tailored payment and financing solutions they need for small and large purchases alike—whether that occurs digitally or in-person. “By partnering with Synchrony, we expect to continue to provide a dynamic financial ecosystem with a broad range of products and services, attractive value propositions and seamless experiences that meet our customers’ needs,” he said.
The ongoing adoption of Synchrony’s tools and services, according to Howse, is a reflection in how consumers in the market for flooring shop today. “We’re operating in a time where our partners as well as the consumers are more educated than ever,” he explained. “That’s why digital utilization and the tools we offer to help consumers make financing decisions are so critical. What’s great about the tools that we have in place today is they help those consumers make decisions quicker on their own terms using their own devices, whether they’re in the store or at home. Just looking at credit applications within Synchrony, roughly 70% of all of our credit applications are completed digitally.”
One of those tools is prequalification. This essentially enables retail customers to determine if they’re approved for credit within seconds without potentially impacting their credit score.
“We think it’s a great tool and it’s becoming more important within the industry,” Howse said. “The other tool we have is a patent-pending digital technology that provides contactless experience for consumers using their own smartphones. That technology essentially enables the transfer of data between the business and the customer’s mobile device in store.”
