Consumer Electronics + Consumer Financing = Retail Success

It’s no secret that online retailers are changing the landscape of the consumer electronics business.

“Consumer electronics retailers with walk-in locations have to work smarter to maintain market share these days,” explained Rob Krause, SVP & General Manager, Payment Solutions of Synchrony, the largest issuer of private label credit cards in the U.S. “You can’t just open the doors and expect to attract consumers. Incentives and payment options are more important than ever.”

More and more, traditional retailers turn to consumer credit programs to attract and keep customers. Research explains why. In Synchrony’s major purchase survey of consumers, they found that consumers respond to promotional financing offers when making significant purchases.

• Nearly two out of three big-ticket shoppers (making a purchase of $500+) said they are comfortable financing through a retailer credit card. That number jumps to 87 percent for those who already have a store card.
• 58 percent of major purchase consumers said financing makes large purchases more affordable.
• 57 percent said they would consider in-store financing if it means they can bring the product home that day.

Financing Works

American consumers we surveyed are generally comfortable using financing for major purchases, and the availability of financing creates more opportunities for customers who come in. Another benefit of promotional financing is the advertising power it creates for business.

“Retailers can use promotional financing as the focal point of their marketing program to attract consumers,” said Krause. “A special credit offer attracts the attention of deal-oriented shoppers. Convenient monthly payments help make it possible for the consumer to get the item they want and get it within their budget.”

For financing to be effective, retailers must promote it aggressively. Many stores also offer online sales, so financing works to help generate sales through both channels. For the in-store experience, it is essential to train sales personnel to offer financing early and explain it clearly. For a retailer’s website, it is critical to optimize their site by promoting financing throughout, making it easy for consumers to find these offers.

Whether you sell in-store, online or both, make sure to highlight promotional financing in your advertising. Twenty-four percent of in-store buyers researched financing options online before making their purchase. Furthermore, 26 percent said they would not make a purchase, or they would purchase elsewhere, if a retailer did not offer financing.¹ Without advertising financing, you are probably losing sales.

Knowledge Sells

If financing is central to your marketing plan, it becomes essential that your sales team be knowledgeable and informed about your financing program. Credit providers such as Synchrony offer online tutorials to help dealers train their staff to use financing effectively. With training, your sales team will be comfortable with financing vocabulary so they can explain credit offers clearly and accurately to your customers.

It's important that everyone on the sales floor has a conversational knowledge of financing vocabulary. Here are some common words and phrases associated with financing:

• Annual Percentage Rate (APR) – the interest rate charged annually for borrowing money. It is expressed as a percentage that represents the actual yearly cost of funds over the term of the loan.
• Credit Rating or Credit Score – A number, assigned by a credit bureau, that indicates your ability to repay a loan. The scoring model weighs several factors, including payment history and current debt.
• Deferred Interest – interest that accrues on a purchase during the promotional period. The interest is assessed if the purchase is not paid in full within the agreed-to promotional period. Minimum monthly payments are required.
• Equal Payment, No Interest – no interest is assessed on a purchase and equal monthly payments are required until paid in full. The payments are a fixed percentage of the initial purchase amount.
• ‘No Credit’ Loans – a loan in which the lender does not conduct a credit history check, usually because the borrower may not quality for an unsecured loan. These loans typically have higher interest rates than revolving loans.
• Revolving Credit – a line or amount of credit that is automatically renewed as debts are paid off. A credit card is a revolving line of credit.
• Terms and Conditions – the agreement (contract) between the borrower and lender includes a description of the payment obligations and duration of the loan period.
• Unsecured Credit – not secured by collateral. Car loans and home loans are secured credit. Most credit cards are unsecured credit.

Change the Conversation

It can be difficult for consumers to focus on quality and features when they hear the price tag for a new computer or TV. It helps if your sales team can change the conversation. It’s not about cost, it’s about affordability while getting exactly what you want.

The cost of a consumer electronics item may seem daunting at first, but when you explain that the item can be financed and paid for over time, the cost seems more manageable. Convenient monthly payments over several months allow the buyer to get the technology they really want, not just what they can pay for at the moment. They also can take the item home that day and begin enjoying it immediately, and they will have an established line of credit at your store that they can use the next time they need to make a purchase. Synchrony research indicates that 68 percent of customers with a store credit card are likely to use it again.¹

Financing helps attract consumers, helps close the sale and encourages them to come back. That’s a marketing equation that works!