fbp
What to Expect in Consumer Finance Programs Post-COVID

Written by Chris Kirk

October 21, 2020

Given the financial uncertainty created by the coronavirus pandemic, it’s understandable that many consumers will make a dramatic shift in behavior with their personal finances. A recent study by Statista shows that 69% of the 800 consumers surveyed had $1,000 or less in their savings. One would hope that the COVID crisis has brought top of mind the importance of savings, and customers will now start working towards creating a more substantial emergency fund.

As such, we expect consumers to manage their expenses better going forward. This creates an excellent opportunity for you and your company to double down on promoting and offering consumer finance options.

As you increase your consumer finance offers, be prepared for more declines. With the unemployment surge created by the virus, you should also expect to see your approval rate (percentage of customers approved) drop below your traditional rate. While we have no confirmed information (as of publishing in June) from the banks that they have or plan to tighten their credit criteria/decision, history and logic will tell us that as losses and delinquencies increase, the banks must react. Their typical reaction is to not approve some of the less credit worthy customers that they may have approved in the past. It is critical that you be prepared for this.

One option is to Implement, if you haven’t already, and offer a second-tier finance or LTO (Lease To Own) solution that will allow those customers to complete the sale. We know that nearly 60% of appliance sales come from duress. We also know that 69% of customers don’t have cash on hand. It’s imperative that you’re able to offer financing solutions to serve these customers.

Another piece to consider in the post-COVID world is your new responsibility to help keep your customers and employees safe. While this often starts with the PPE (Personal Protective Equipment) you have available in your store and for home deliveries, it always ends with the close of the sale. Whether that be via credit card, consumer finance or LTO, we anticipate a change in consumer behavior and their willingness to touch or use any items that are frequently used by others. Do your credit card terminals offer touchless payments? Can your customers apply for consumer finance on their own mobile device using Text to Apply or online applications? Offering these solutions not only creates a safer, better experience for your customers, but we regularly see an increase in credit penetration when these types of options are presented.

 

Connect With Us!

More Podcasts

185: One Year In, Andy Orozco Recaps How NMG’s Custom Integration Division Keeps Innovating

185: One Year In, Andy Orozco Recaps How NMG’s Custom Integration Division Keeps Innovating

While his ambitions would have him and his team further down the road, Year One was an incredibly busy and successful one for Andy Orozco and Nationwide Marketing Group’s custom integration division. Coming off of CEDIA 2023 in Denver, we sat down with Andy to talk about the show, his first year at the helm, and more.

184: Class Is In Session with NMG’s Director of Education and Training Shawn Ashby

184: Class Is In Session with NMG’s Director of Education and Training Shawn Ashby

Coming off of his first full PrimeTime season, we sit down with Nationwide Marketing Group’s Director of Education and Training Shawn Ashby. We dive into his passion for educating audiences, his plans for the Nationwide Learning Academy, early preparations for the program in Las Vegas and much more.

183: Diving Into Pricing and Promotional Trends with Gap Intelligence

183: Diving Into Pricing and Promotional Trends with Gap Intelligence

During PrimeTime in Nashville, NMG’s consumer electronics retailers had the opportunity to hear from Gap Intelligence, a data analytics firm that tracks pricing and promotional trends across myriad product categories – mainly focused on CE right now. Scott Peterson, a senior analyst at Gap, spent time after the session diving deeper into their work and how they get it done.