You run a print shop, not a bank. Why, then, is it worth considering offering your customers finance options?
Finance is a part of everyday life. If you own a credit card, bought your TV on buy now pay later or used Klarna (or similar) to split the cost of your recent fashion purchase, you’re using finance. So why is it so many printers overlook the potential of finance to help grow their print business? In this post, we explore why you should consider offering finance as part of the way you work.
Benefits of print finance #1: Increase sales & average order value
The single most powerful reason to offer finance is also its most immediate result. The moment you introduce financing options to your print shop, the more customers are likely to:
- Commit to buying where they were previously hesitant
- Commit to buying a greater volume of products
- Commit to spending more in an individual purchase because they have the ability to spread the payment. It relates to retail B2C spend rather than B2B, but credit company Affirm claims average order values increase by 85% when you offer financing options
- Choose premium, more expensive print materials (because the immediate cost is less of a concern)
By encouraging a larger spend, offering finance builds greater profit into your business, which should significantly outstrip the cost of offering the finance in the first place.
Benefits of print finance #2: Expand your customer base
Every print business wants to distinguish itself from its competitors. Often, you may do that through the print services you offer. Perhaps you offer a larger wide-format print service than anyone else locally. Maybe speed is your USP. Perhaps it’s your low costs.
Another powerful differentiator can be the offer of finance. Faced with a choice of having to pay for a large order upfront or spreading the cost, the option to split or defer payments can set you apart from the competition and bring more customers your way.
Benefits of print finance #3: Build loyalty, relationships and referrals
Offering finance gives you the opportunity (and valid reason) to build stronger relationships with your customers.
It starts by offering a finance solution that makes life easy for your customers. It continues when happy customers recommend you to their connections. And it comes full circle when, having completed their finance payments, the customers return to you for their next print purchase.
Offering finance also puts clients on your mailing list, so its easier to engage with them in future.
And if you offer finance via trade credit (see below) it can also increase trust, because customers know that you’re shouldering the cost burden of their finance.
Benefits of print finance #4: Protect margins
When budgets are tight, customers are more likely to negotiate harder for discounts. Offering finance takes the pressure off their budget, cutting the risk that you’ll need to reduce your profit margin and reducing the stress of haggling.
Benefits of print finance #5: Increase ‘experimental’ purchases
A tight budget also has an effect on customer risk. It encourages your print business’ clients to play it safe. They may be tempted to try your new outdoor flooring material, or that new air mesh but, as they haven’t tried it before, they’ll stick with what they know.
Finance can make customers bolder. With less pressure on the budget, they have the room to experiment a little more. That could prove to be a huge benefit to them as they discover new print materials with new product offerings, but it could also result in a financial boost for you.
There are several ways for your print business to offer finance.
You may work with a third-party provider, with the advantage that you will receive full payment immediately, but with the disadvantage that you’ll have to pay fees for the service. You may also find that some finance providers require your business to have a certain turnover (£1 million+ is common) before they will work with you.
An alternative is to offer the finance yourself via trade credit. This is a B2B arrangement through which you will offer your customers goods with the facility to pay over 30, 60 or 90 days. The advantage here is simplicity (according to the WTO, 80-90% of world trade relies on some form of trade finance). The downside is that although you provide goods upfront, payment arrives in instalments, potentially creating cashflow and defaulting risks.
If you can absorb the risk or cost, however, offering your customers finance can be a powerful way to bring more customers to your print business.
More business means you’ll also need more print materials. For that, talk to us.