Customer credit for a business is a difficult decision as it may not cater to every business model. However, when you sit and consider the use of customer credit in the current landscape, the number of benefits often out way the limitations. Here, we are going to show you several ways that customer credit can benefit your business.
Boosts Customer Loyalty
One of the main reasons why customer credit is a major benefit for your business is because of the customer loyalty that comes along with it. If multiple customers use your credit system and are satisfied with the repayment rate, then you are likely to have an increase in customer loyalty as well as word of mouth. By maintaining this healthy relationship with your customers, you can ensure an increase in repeat business as a result. Although this all depends on the overall interaction that they have with your business, customer credit can help.
Puts You Ahead Of Competitors
In addition to the boost in customer loyalty, there is also a chance that this will put you ahead of the competitors. Although this is not always the case if your competitors also offer this payment method, this can help to put you ahead of those competitors that don’t. This style of repayment method allows the customer to feel trusted which will help to build the relationship between you and them.
Increase In Footfall
By perfectly advertising this, you also present the chance to have an increase in footfall into your physical store. This is due to some people looking to purchase expensive items now and pay later as a result. This increase in footfall or even customers online can then help to expand your customer database and target more people as a result. This may not be attainable by using a traditional pay in cash method as buyers can be hesitant when purchasing expensive items, such as furniture or electronics. In addition to this, a credit scheme will also help to cater to customers such as first-time house owners, but also students who may not be able to afford upfront costs and therefore more likely to opt for a monthly repayment method.
Incentives To Customers
This is, therefore, an incentive to customers as it gives them the option to buy the items that they want now and pay it back in monthly instalments at a fixed price. This is more common on electrical items, home furnishings and appliances as this is often what costs the most money. This is also beneficial for those that find themselves in a financial emergency as this payment method helps them to get the appliance they need and spread the cost.
Customer Credit Licence
In order for your business to provide customer credit, you may require a customer credit license that needs to be acquired through the FCA and approved by them also. There are some exceptions that can make a business exempt. It’s recommended you seek independent legal advice on how to obtain such a licence, as there is differing legislation depending on the style of credit you are looking to provide.
Once you have applied and have been accepted for your license your business will then appear on the customer credit register which showcases businesses that are allowed by law to provide customer credit. This license can be anywhere between £600-£1000 and will last a significant amount of time allowing you to provide this payment option to every customer that walks through the door.
So whether you are a business looking to make the switch to customer credit or you are a start-up weighing up your options, there are a number of benefits to cater to your market and help your business thrive. Where will you start?