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Revolving Credit Programs - Part 2

Furniture World Magazine


Looking at the built-in marketing features that most programs offer.
H aving a revolving credit financing program is an essential, key element to be competitive in today’s retail furniture environment.

It allows consumers to make a furniture purchase today, rather than taking the time to save or deplete other cash reserves and credit accounts needed for those unexpected emergencies, college tuition and the like.

A private label revolving credit program allows you to close more sales and increase your average sales amount, as consumers have a tendency to buy more when they are able to finance their purchase.

Unfortunately for many home furnishings retailers, that first credit sale to a new customer is often their last sale to that customer. Why? Because they fail to keep lines of communication open so that the purchase on credit can be consistently remarketed.

The largest, most successful furniture retailers in the country effectively utilize their retail financing programs to build customer loyalty. Their customers return again and again to make repeat purchases rather than doing price comparisons and visiting the competition.

Let’s take a look at some of the built-in marketing features that most revolving credit programs offer. They are subtle features that provide a cost effective way for you to remarket and communicate to your captive credit customer base keeping them aware of special sales events, product offers, and announcements.

Billing Statement Messages
The standard monthly billing statement that your lender sends to your credit customers allows a specific amount of space for you to provide a text message. There is usually no additional cost to use this feature. An example of a billing statement message might be “Please visit our showroom over the Labor Day weekend and as a valued credit customer, you’ll receive (an additional 10% off), (six months same as cash) on your next purchase”. Twelve times a year you can communicate a special message to your credit customer base at no cost, yet many furniture retailers do not take advantage of this capability.

Billing Statement Inserts
Most lenders that offer revolving credit programs allow you to “stuff” their billing statement with a promotional insert. A full color, tri-fold insert, used in conjunction with a statement message, will generate a higher response rate to your promotional offer. As a rule of thumb, lenders either charge a nominal fee or no fee at all for this service as long as the insert does not increase the postage for the billing statement.

Open To Buy Reports
When retailers are asked what types of reporting their lender provides, the typical answer is zippo, nada, none. Yet good reports are usually available, at no cost. So what is an Open To Buy report? It’s a report that lists each of your credit customers by name, what their credit line is, what their current account balance is, and their available credit or “open to buy”. Successful furniture retailers use this report in a number of different ways. Some give the report to their sales associates so that they may personally invite their credit clientele in for a special sales event. Others use the report to target their more affluent customers for a private sale. It also works as a quick reference point in defining an up-sell opportunity. Most lenders will provide this report on a quarterly basis, but will also update it for you more frequently if requested.

Call your lender and take advantage of these subtle, yet extremely effective methods in communicating with your customer. Staying in front of your customer frequently and consistently fosters loyalty resulting in more sales and repeat business. If your current lender does not provide these services, you may want to consider searching for a new relationship with one who does.

In the October/November issue of FURNITURE WORLD, Scott discusses revolving credit promotions: what works and what doesn’t?

Scott Stanberry is the President of Summit Financial Services Inc., a consulting firm whose primary focus is the retail financing segment. The organization represents both lenders and retailers in negotiating and structuring retail consumer financing programs. Questions on any aspect of retail financing can be sent to Scott at stanberry@furninfo.com.