Credit: Partners that make a difference

Home Inside FCNews Credit: Partners that make a difference

April 27/May 4, 2015; Volume 29/Number 2

By Nadia Ramlakhan

There are many benefits that come along with a dealer being able to offer financing to his customers. Advertising these offers increases foot traffic in stores, encourages consumers to purchase more or better products, and gives specialty retailers the edge they need to compete with the big boxes and stay in the game. Although independent dealers can offer financing plans to consumers on their own, having the right partner can make all the difference when it comes to building business, whether it’s by providing lower rates, varying options for different customers or generating more leads.

“When a consumer is approved for financing, the question of affordability is taken out of the equation,” said Aaron John, director of Shaw Flooring Network and its retail programs. “It becomes a question of which products she likes and which ones meet her lifestyle. Every product in the showroom is now available for her to choose from.”

Synchrony Financial (formerly GE Capital) understands the importance of building a loyal customer base and works with multiple manufacturers and buying groups to meet the specific needs of floor covering retailers. Having been in the industry for nearly three decades, Synchrony recognizes that special financing programs help dealers attract and retain customers as well as build repeat business.

“We’re committed to helping flooring dealers drive traffic and provide the best consumer shopping experience,” said Glenn Marino, executive vice president and CEO, payment solutions, Synchrony.

According to Synchrony Financial’s third annual 2014 Major Purchase Consumer Study, 81% of cardholders said they always seek financing options when making a large purchase like flooring. “That’s why Synchrony Financial continues to offer access to a range of special financing options including no, low or deferred interest,” Marino said. “We also work closely with our flooring partners to offer promotions throughout the year.”

In addition to providing aggressive rates through its partnership with Synchrony, Shaw offers buy downs which essentially reimburse retailer partners for the cost of financing, so they typically only pay the cost of using a credit card; most dealers have already included that cost in regular pricing. Shaw’s 12-month plan with minimum payments and deferred interest is its most popular credit program and is offered to retailers every day as part of a strategy John calls “all Shaw all the time.” Special deals and rates are offered during sales and promotions throughout the year.

With the help of Synchrony, Shaw’s extensive variety of financing options helped Kurt Duitsman, owner and president of Floors For Living, open 16 locations throughout Texas within three years. “Finance is my best product,” Duitsman said, adding that over 40% of his business comes from credit programs. “Some customers need longer plans while others only need six months, but almost everyone wants no interest money.”

Mohawk is another major manufacturer that looks for ways to help retailers offer financing without incurring the usual costs. “It’s important to find a bank that understands the flooring industry,” said Mike Zoellner, vice president of marketing services for Mohawk. “For example, with electronics a customer finances something for 12 months, puts it in a car and takes it home. In our world, a customer leaves a deposit for materials and the installation is scheduled for some time in the future.”

Through its partnership with Synchrony, Mohawk’s programs allow retailers to get the money on the deposit as opposed to most banks, which don’t pay the retailer until the product is delivered or installed. Mohawk also negotiates with Chase to offer retailers preferred rates on MasterCard and Visa processing as well as low rates for private label cards. It also uses a lead generating system to keep track of cardholders.

“We looked for other things we can do in partnership with Synchrony that give value to retailers, things they can’t do on their own,” Zoellner continued. “All the leads we generate for a specific retailer go into the lead center. We can market to everyone who has bought using a Mohawk credit card, especially if they have an open line of credit. In six months we can go back to them and say, ‘You love your floors and still have some credit left, why not start on another room?’”

Bret Lowder, vice president of The Floor Store, with multiple locations throughout California, is one Mohawk dealer who has embraced financing programs, making sure his sales staff always leads with offers that result in upselling. “The program has proved invaluable to us,” he said. “With high-ticket items, everybody focuses on financing; even the wealthy love free money. When you look at the rates we get from Synchrony, it’s comparable to what Visa will charge us. In reality we increase the sale 67% by using a private label plan and the cost is the same.”

With most consumers researching flooring online before even stepping into a store, financing options have become an expectation as they are ready to buy once they are in front of a dealer. “It certainly drives traffic and by talking about it often and early in the process retailers are meeting that expectation,” said Keith Spano, president of Flooring America. “Retailers can provide financing on their own but the rates may be the same as everyone else’s and they have to foot the bill themselves, whereas we spend significant dollars in buying down rates to make it affordable for our members.”

Spano explained that most big boxes typically offer 12-month plans, which puts retailers at an advantage as they are able to offer up to 60-month plans. Advertising longer terms gives dealers the upper hand.

Synchrony helps dealers provide a consistent experience across all their sales and marketing platforms, ensuring the customer sees the same promotional details online and in-store. “The most successful dealers integrate financing into their sales and marketing plans to help customers understand that the right offer can help them get the flooring they want, within their budgets,” Marino noted.

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