Financing works best as a tool for selling
Determining the customer's needs is the key to success
Marc Barnes -- Furniture Today, December 26, 2006
*Also see Retailers rely on variety of methods for communicating benefits of credit
HIGH POINT — Financing helps sell furniture, but the most successful retailers are learning that financing is a means to an end, not the end itself.
Increasingly, today's training of retail salespeople is reflecting that trend, focusing on determining customer needs and finding out early on if financing is a good fit. When it is, it can drive customer traffic into the store and provide a means for future marketing, say industry observers.
Greg Pittman, senior vice president of sales for the GE Money Sales Finance unit, said that his firm provides private-label financing for a variety of furniture retailers, from mom-and-pop independents to regional and national chains.
Because of that variety, training varies from retailer to retailer, depending on size, from telephone consultations to in-person instruction.
But with each, the message is the same.
"When you are positioning a private-label program, you think of it as a tool for selling furniture," Pittman said. "We spend a lot of time on how to position the product and how to overcome objections to financing and the benefits to the financing program. But we offer it as part of a solution."
Usually, customers who walk into a store to purchase a sofa are wondering how it will fit in with the rest of their furniture, said Pittman. The idea is to use financing as a tool to get the customer thinking about adding pieces to complete the entire room with new furniture during that same visit.
But Pittman is quick to caution against drawing the wrong conclusions based on the customer's appearance.
"The worst thing you can do is to make assumptions about people when they walk in the door about who needs credit and who doesn't," he said. "This is a valuable tool. With long-term promotions, you will get very good people with high credit who will take the offer because they see the value in using other people's money."
Pittman said the best training message for using financing is to use less of a pre-planned script and more of pre-set attitude.
"We go through a lot of the basics about selling and one key to that is being a good listener," said Pittman. "You have to understand what people are looking at and what they really want to have as they go through the process."
Tailoring the approach
Catherine Wilson, vice president of marketing at Citi Financial, said that Citi provides retailers with printed materials and access to a dedicated merchant services group to help them train their staffs not only on the technology used to approve and use the product, but also on how to sell credit services.
"Basically, we walk them through the entire sales process of selling the credit and through that process, how to sell furniture," she said.
"Customers have different needs. One might want not to pay interest, another one might want to manage their monthly budget, and you need to know what programs you can offer to meet the needs that the customer might have."
Wilson said that increasingly, consumers are concerned with identity theft — and Citi's products have built-in safeguards to help prevent that from occurring.
The biggest lesson to retailers? Wilson says the best advice is to work toward selling credit, providing it's the best fit for the customer.
"The value is so that they can up-sell and cross-sell and bring the customer back in the store, and so that it helps them increase their average transaction," Wilson said.
Joe Feltis, associate director of retail services for American General Finance, said that retailers are taught that most customers have an idea of what they are looking for and, as soon as it appears that they are serious, that's the best time to explain credit options.
"If we can get them on a revolving credit line, all of a sudden instead of just a bedroom set, they can afford a bedroom set and a dining room, or an extra chair," he said.
"You can demonstrate to them that they can afford more than they thought they could. They can submit an application for $3,000 but the credit approval could come back at $10,000."
Feltis also said that retailers are trained to recognize that the credit application goes well beyond providing a means to make a sale that day.
"We tell retailers that they can advertise to their current customers, by advertising on statements and things of that nature," he said. "You can say on the statement, 'Happy Holidays,' or you can tell them to bring their statement in for 10% off. You can have a sale today and a sale tomorrow, as well."
Hans Kamphowe, director of client sales at Alliance Data, said that in the furniture industry, each retailer is different — and that's the first step in training.
"We first try to understand what the client's everyday approach is," he said. "Do they have incentives? How are they paid and how are they trained? Do they prefer a flip chart or a pocket guide or a PowerPoint (presentation)?"
Kamphowe said that Alliance depends on dedicated account teams whose job it is to know the client well and to tailor training to the company's culture and needs. To drive the lessons home, Alliance uses data that shows that credit customers spend roughly 50% more than non-credit customers — and visit the store more often, at least twice a year.
Going beyond the card
And the range of services extends beyond just offering a card. Sometimes, it involves offering a gift certificate for a customer, an incentive program for a sales associate or store manager, or even a way to predict what the customer will purchase next.
"Some of our retail partners have loyalty programs in addition to having more time to pay without interest," he said. "Through analytics, we are able to get into client data and purchasing patterns and we are able to know what the customer is buying so that we can provide what the next logical purchase would be."
At HSBC Retail Services, spokesperson Cindy Savio said that the key thing in building relationships with retailers is to regard it as a partnership: Her company has the experience in private-label credit, while the retailer knows the product and the customer base.
In many cases, especially in retailers that use stand-alone kiosks, it can be helpful to start the sales process by directing the customers to see how much they can qualify for.
That way, the customer can feel more confident in what they have to spend and can make their choices accordingly.
She said that in addition to conventional training materials, HSBC relies on strong relationships.
"We visit with our merchants on a regular basis, with the sales manager, with the service manager, to make sure they know the program and make sure they understand it," she said. "We walk the sales floor and give the sales associates an opportunity to come and talk to us to ask questions."
In one recent project, HSBC completed 127 store visits as part of a focused training plan with one 29-store chain in the Midwest. Savio said the message is direct.
"We always urge them to find out what the customer needs," she said. "We offer a variety of credit products and promotions. They should look at each customer and determine what the needs are and if credit fits into their needs, offer it to them as choice. It is something that should be available to them."
