Business

Expand Your Business with Consumer Financing, with Mike O’Connell

by Caleb Heck | Last Updated on 09.23.2020

Expand Your Busniess with Consumer Financing, with Mike O’Connell

By Alli Kauffman Rogers | Last Updated on 09.21.2020

Listen to our conversation about consumer financing with Mike O’Connell, now available at Boostpoint Podcasts

In our Small Business, Big Growth podcast series, sales professional Mike O’Connell strips back the complexities of finance as he explains the simple ways that businesses can use consumer financing to increase their sales and grow in scale without lowering their prices or working harder. “I truly believe [consumer financing] is one of the best kept secrets, even though it’s wide open,” O’Connell says.

O’Connell currently works as the strategic account manager for PowerPay, a home improvement financing company. Prior to working for PowerPay, he served in the US Army, studied business management, built a landscape franchise, learned how to use financing strategies to increase sales, and managed large-scale financial lending relationships.

Overview

How Consumer Financing Fixes the #1 Homeowner Concern
Getting Started with Consumer Financing

How to Talk about Financing without Being Offensive or Awkward

How Consumer Financing Fixes the #1 Homeowner Concern

According to O’Connell, the number one homeowner concern is affordability. Homeowners may need to repair their roof, add a new air conditioning unit, or replace the trusty, old Toyota that finally kicked the bucket. But O’Connell argues that the marketing tool that’s going to catch the consumer’s eye and close the deal isn’t a 25% off coupon or free consultation. Instead, the winning move is offering a payment plan that the consumer feels comfortable with.

“When you think about vehicles, appliances… everything else is recognizing the fact that affordability is the number one concern for a homeowner.” O’Connell illustrates this point by talking about a recent purchase that many Americans can relate to. “I purchased a new iPhone two months ago,” O’Connell says. “I have no idea what I paid for it, but I know how much my monthly payment is.”

Consumer financing changes a price tag from $900 up-front to $38 per month (for the next 24 months, of course). It allows a business to hang a massive “0% APR for the first 12 months” sign in their storefront, ensuring consumers that they have an entire year to save without picking up unwanted interest. Most importantly, consumer financing allows a salesperson to listen to the consumer’s financial needs and recommend the financing option that seems best for them.

“If you want to grow in scale, you’re missing opportunities by not offering financing,” O’Connell says. “You’re losing business. In fact, I would challenge to say… whatever market you’re in, the top three contractors by volume that are in your space right now are leading with financial offerings in their market.”

When consumer financing is part of your toolbox, making the sale is no longer about “the race to the bottom” or delivering the lowest common price. It allows the business manager to step back and refocus on their quality instead of their price tag. Equally, O’Connell suggests that “financing not only offers affordability, but also a degree of confidence that comes with the idea that you have a lender supporting your business on the back end.”

Getting Started with Consumer Financing

When considering getting started with consumer financing, O’Connell suggests there are three essential questions that business owners and managers should be asking in order to make the best decision for their business.

QUESTION #1

Am I getting paid?

A business without pay is no business at all. If you’re considering a lending relationship to make consumer financing possible for your business, it’s essential to also consider who’s going to receive payment. Are the payments going to be made directly into your bank account? If not, where will they be going and how will you be getting paid?

QUESTION #2

What’s the cost?

“We know that there are lenders out there that can give us long-term, affordable offers at no cost,” O’Connell says. “I highly encourage we take a look at those lenders.” Compile a list of prime and subprime lenders and assess the costs and risks, or consider working with a company like PowerPay that will use a risk-based model to provide a thorough list that’s specific to your business.

QUESTION #3

How often is my bank going to say yes to my application? 

“This is where it can get intimidating to a contractor that’s new to financing because we’re not a one-size-fits-all industry,” O’Connell says. Business owners or managers are tasked with the responsibility of connecting with a bank or lender that will support their style. O’Connell simplifies his recommendations for this process by discussing the pros and cons of the two most popular lending models: the broker model and the revolver model. 

To learn more about these models and O’Connell’s recommendations, listen to the podcast episode at the timestamp 37:50.

How to Talk about Financing without Being Offensive or Awkward

Talking about money is uncomfortable. “Everyone is worried about the price… that’s the elephant in the room,” O’Connell says. So how can we suggest financing options without simultaneously suggesting that the consumer is cheap and unable to afford our services?

Before mentioning your financing options, talk about your business’s values and the quality you offer to plant the seed that suggests you’re working together to accomplish the consumer’s goal. Then, O’Connell suggests you drop a key sentence similar to this: “We have many affordable payment options that I can’t wait to share with you at the end, once we better understand what we’re doing here today.”

The next step for a home improvement salesperson, O’Connell says, is walking around the consumer’s property with the owner and explaining how your products, services, or systems work. Throw in a statement like, “An integrated air conditioning system can be enjoyed for as little as $30 a month… and that dollar a day is going to significantly increase the quality of your life in your home.” Strategically mentioning affordable payment options eases the consumer’s financial worries and creates a much more comfortable atmosphere to talk about money.

Listen to the full podcast episode at Boostpoint Podcasts.

Mike O’Connell Mike O’Connell is an accomplished sales and management professional currently working as the strategic account manager for PowerPay, a home improvement financing company. Find out more about PowerPay at GetPowerPay.com or find Mike O’Connell on LinkedIn.