All Industries, Operations
Ability to Offer Financing A ‘Game-Changer’ for Trade Industry Leaders
Mike Barnhart and Darius Lyvers are friends.
Though they are in different trades—Barnhart is Chief Financial Officer at The Eco Plumbers in Columbus, Ohio, and Lyvers is Chief Operating Officer at F.H. Furr in Northern Virginia—they are aligned on this: Offering financing drives higher sales for home services companies.
Oh, and that if you’re not offering financing to your customers yet, it’s probably time to start.
“Right now, financing is probably more important than ever,” Barnhart says. “It seems like there’s a lot of uncertainty, whether you’re talking about economics, Covid, politics. There’s just not the same amount of stability in future planning that we’ve seen in the past.
“I think that’s a pretty good sign we need to be offering people flexibility, because that uncertainty is there.”
Among the benefits Barnhart and Lyvers see from offering financing:
Higher close rates
Significantly higher revenues
Consistent wins over company who don’t offer financing
Higher percentage of revenue coming from financed jobs
A company more able to handle uncertainty
“The No. 1 reason I would do it is to further recession-proof your company,” Lyvers says. “With all we have seen, and all that we’re going through with unemployment and what have you, the better suited you are to make your product or service affordable to your consumer, the better suited you are going to be to making it through a recession quicker.”
But to be successful, he says, start now. Trying to get your technicians comfortable with financing during a recession might be too late.
“That is one thing that I can preach to every small business that does not have strong cash flow. And for the most part, that’s most of us,” Lyvers says. “Why not put your company in a better position to handle an economic downturn?”
Help, on a customer’s worst day
Barnhart, who has 50 plumbers in the field, says the average ticket for plumbing jobs is usually about $1,500.
The exception? Sewer lines.
“For us, we get sewer backups and when we go out there we find that we try to push the sewage out the line has collapsed,” Barnhart says. “At that point, whether you use us or you use somebody else, you’re going to be paying a lot of money. And almost every single time, that’s extremely unexpected.
“A water heater is 15 years old, a furnace is 20 years old, that should be expected. Sewer is a different story.”
For that kind of repair, many customers find paying out of their pocket isn’t a viable option.
“Typically over 50 percent of sewers are financed,” Barnhart says. “It’s really expensive and they weren’t planning on it.
“They need that extra flexibility.”
Financing provides that. And once technicians find their comfort level offering it, they can help customers.
“(The technicians) love it,” Lyvers says. “They are able to take care of the customers, even with immediate needs. A major component fails, and the customer didn’t plan for a couple of thousand dollars on their HVAC system, or their water heater leaking or what have you.
“Giving them the ability to take care of that necessity and not come out of pocket today on something that’s not planned, they’re helping customers.”
And they’re driving company success at the same time, Barnhart says.
“We 100 percent win jobs because there are a lot of smaller shops in our area that don’t offer financing,” he says. “It’s very important to have the ability where you can actually use your bathroom, or you have hot water. We don’t do HVAC, but being warm in the winter.
“It’s important to have those secondary options where you don’t have the money up front and maybe have some damaged credit. They’re never going to be able to come up with $10,000 to dig up their sewer.”
“Financing can be a real game-changer.”
Offering financing options drives success
Lyvers was in frontline sales at F.H. Furr for 10 years in the early 2000s, a comfort advisor selling HVAC systems. He says when he started he didn’t believe in pushing financing.
“At the time I had never financed anything of significance,” he says, “I was still driving a vehicle that was given to me by my parents, I was not in my own mind utilizing financing in any way other than credit card usage, and it took me a little while.”
Eventually, he came to understand there were other options. When manufacturers marketed rebates or 36-month, low-interest financing plans, he started pushing them.
Soon, more than 70 percent of his jobs were financed in some capacity—and his sales went up, 100 percent year-over-year.
“Average ticket went up. Rate of conversion went up,” Lyvers says. “My overall success in general went up because I was helping customers afford my products and services.
“Doing right by my customers in terms of giving them what they wanted, in an affordable manner available to them, was the reason.”
Later, in his five years running the sales department, financed sales made up 60 percent of revenue.
“Especially going against other companies that were not offing those options, it was a slam dunk,” Lyvers says “Still today, a lot of our competition doesn’t offer financing, and we continue to take business, day in and day out, with a 30 to 40 percent higher average ticket than they do, with the utilization of financing.”
Barnhart’s experience is similar. More of the revenue at HVAC companies tends to come from financed jobs—60 percent of revenue at F.H. Furr compared with 35-40 percent at The Eco Plumbers—Barnhart says the revenue is produced more efficiently.
“We certainly saw increases in conversion and average ticket,” Barnhart says. “We’re up 70 percent in revenue year-over-year. The cool thing about that is we’ve only gone to 40 percent more opportunities.
“If you’re up 70 percent in revenue and you’re only up 40 percent in people you’ve seen, the end result of that is either you got a yes more often from customers or you were able to provide customers with higher-priced options that work better for them.”
Financing still in play in non-emergency situations
Even when it’s not a customer’s worst day, financing can play a role. Both Lyvers and Barnhart have technicians do a full-house inspection and offer good-better-best options, with low monthly payment options through ServiceTitan’s integrated financing tools.
That brings add-ons such as IAQ, tankless water heaters, new electrical panels, full rewires and more into the equation.
“We follow a system in the home that engages the customer in conversation, engages into things outside the sole reason I’m there,” Lyvers says. “We do basically a full-health checkup of the home, and in doing so bring up recommendations if we have any, given what we find. And if they like them, we give them the ability to afford it.”
The difference when offering financing was evident.
“Within six months of ... rolling that out with my service department, we saw about a 45 percent growth in the department, which is almost exclusively attributable to financing,” he says. “About 12 to 14 percent of our jobs were financed, but the average ticket was two to three times what it was for the unfinanced jobs.
“It represented 30 to 40 percent of the revenue that was being generated in the department. That was the growth we saw.”
Financing, Lyvers says, also allowed his performance-based technicians to make more money. But he stresses the need to put customers first.
“We’ll never offer financing that we don't believe is in the best interest of our customers,” he says. “You’re going to offer what you feel is right for the customer. At that point, we’re just discussing how to pay for it and make it affordable.”
Want to see ServiceTitan’s integrated financing tools in action? Schedule a call with us to learn how ServiceTitan can help your techs close more jobs at a higher ticket.
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