OEMs should offer point-of-sale (POS) financing to their dealer network for several strategic reasons. Providing POS financing solutions can enhance sales, improve dealer relationships, and ultimately drive growth. Here’s why it’s beneficial:
1. Increased Sales and Higher Conversion Rates
- Benefit: POS financing enables dealers to offer flexible payment options to customers, which can remove the upfront cost barrier for expensive home improvement products.
- Impact: Customers are more likely to proceed with large purchases, such as HVAC systems, appliances, or home renovation projects, when financing is available. This leads to higher conversion rates for dealers and increased sales volume for OEMs.
2. Larger Average Order Values
- Benefit: By offering financing, customers are more inclined to opt for higher-end or upgraded products, as the cost is spread over time instead of requiring full payment upfront.
- Impact: Financing increases the likelihood of upselling and cross-selling opportunities, allowing dealers to move more premium products. This drives revenue growth for both dealers and OEMs.
3. Improved Dealer Competitiveness
- Benefit: POS financing empowers dealers to be more competitive, especially when dealing with customers who are comparing offers from different suppliers or brands.
- Impact: Dealers that can offer financing options stand out from competitors, enhancing their ability to close deals. This strengthens their business, making them more loyal to the OEM that provides the financing solution.
4. Stronger Dealer-OEM Relationships
- Benefit: When OEMs provide financing solutions, they become a more integral part of the dealer’s business operations and success.
- Impact: Dealers are more likely to continue partnering with an OEM that actively supports their ability to close sales, improving long-term relationships and loyalty.
5. Improved Cash Flow for Dealers
- Benefit: POS financing ensures that dealers get paid upfront by the financing provider, while the customer repays over time.
- Impact: This improves cash flow for dealers, reducing their financial risk and allowing them to invest in more inventory or expansion opportunities without waiting for customer payments.
6. Expanded Customer Base
- Benefit: Offering financing options allows dealers to cater to a broader range of customers, including those who may not have the cash on hand for large purchases but have the creditworthiness to finance them.
- Impact: By reaching a wider customer base, dealers can grow their market share, benefiting OEMs through increased product sales.
7. Facilitates Faster Decision-Making by Customers
- Benefit: Customers often take longer to make purchasing decisions when they need to secure external financing or save up for large expenses.
- Impact: With instant or near-instant POS financing, customers can make purchase decisions on the spot, reducing delays and increasing the likelihood of a sale.
8. Reduces Price Sensitivity
- Benefit: Financing shifts the focus away from the total cost of the product and instead emphasizes the monthly payment, which is often easier for customers to manage.
- Impact: Customers become less sensitive to price, making it easier for dealers to sell higher-margin products without needing to offer discounts or promotional pricing.
9. Boosts Brand Perception
- Benefit: Providing POS financing as a built-in offering signals that the OEM is focused on creating a customer-centric and dealer-friendly experience.
- Impact: This elevates the OEM’s brand perception as a full-service provider that understands and addresses the needs of its dealer network and end customers.
10. Data and Insights for Marketing and Product Development
- Benefit: Offering financing provides OEMs with valuable data on customer purchasing patterns, credit profiles, and product preferences.
- Impact: This data can be leveraged to optimize marketing strategies, identify trends, and inform future product development, giving OEMs a competitive edge in meeting consumer needs.
11. Enabling Dealers to Offer Promotional Financing
- Benefit: POS financing allows dealers to provide promotional offers such as 0% APR for a limited time or deferred payments, which can be a powerful sales tool.
- Impact: Promotional financing attracts more customers during sales events or peak buying periods, further driving revenue for both the dealer and the OEM.
12. Better Customer Experience
- Benefit: With integrated POS financing, customers have a smoother purchasing experience without needing to seek out external lenders or apply for financing separately.
- Impact: A seamless customer experience improves satisfaction and increases the likelihood of repeat business, benefiting both dealers and OEMs.
By offering point-of-sale financing to their dealer network, OEMs can boost sales, enhance dealer loyalty, and provide a competitive advantage that benefits all parties involved. The ability to offer financing aligns with the broader trend toward more consumer-friendly purchasing models, making it a powerful tool for growth and differentiation in the marketplace.
