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Consumer Financing 101

We've been hearing from more and more outdoor and winter sports retailers that customers are asking for financing when they come into their shops. Now is a perfect time to cover the key fundamentals of consumer financing, and uncover some of its myths:

Customers Use Financing At Other Retailers...And Expect You To Offer It Too

Customers are used to having financing offered to them when they shop at other stores, whether it’s by a sales associate, advertisement or signage.

When customers come to your store, more of them are expecting that you will have financing options available, particularly if they are planning to make a large purchase. If a customer walks in planning to buy a new kayak, backpack with tent and sleeping bag, or a pair of skis and expects to be able to use financing but you don't offer it, at best you've disappointed them. At worst, you've lost the sale.

Financing Incentivizes Customers To Return To YOUR Store

Why? When customers get approved for financing through our private label card program, they receive a card with your store's name on it.

Retailers have been offering store cards for decades because they know it encourages loyalty. The next time a customer plans to make a purchase, they are far more likely to go to the store where they have a line of credit and whose card is in their wallet.

You're Not Putting Your Customers In Debt By Offering Financing

In fact, you’re actually putting them in better financial position than if you accepted their credit card instead. With a credit card, the customer has just one month to pay off their balance before the higher rate on their outstanding balance kicks in. With financing, you’re giving your customer the opportunity to pay off that balance over an extended period of time, without penalty.

Let’s be frank - if you’re choosing not to offer financing because it’s a moral issue for you, then you really should not be offering credit cards as a form of payment either. Plus, why limit the payment options you accept? Give your customers more ways to pay and they will thank you.

Don't Assume Your Customers Will Not Want To Use Financing

"Our store is in a wealthy area so our customers don't need financing." We hear that one a lot. Sure, your customers may be able to afford a high-ticket purchase with cash or credit card, but don't assume that's how they would prefer to pay for it.

If given the choice, many customers will use financing so that they can make their money work for them, by putting it in an interest-bearing account, an investment, etc. For example, a customer who could easily afford a $3,000 kayak purchase may instead choose to use 12-month financing so that they can get their kayak (and accessories) now while earning interest or dividends on that $3,000 over the course of the year. They will make the required payments each month, pay off the balance at the end of the 12 months, and now have extra income earned on that $3,000 by not having spent it in one lump sum.

The key is giving your customers the ability to make that choice. By offering them another way to pay with consumer financing, you are increasing the likelihood that they will buy from you.

CCA Sports Retail Services helps independent retailers maximize their profitability through combined economies of scale and through business savings, marketing and operations programs. These retail services include a private-label consumer financing program with the lowest rates in the active lifestyle industry. For information on becoming a CCA Sports Retail Services member:

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