For small businesses, success is no longer just about “location, location, location.” In a shifting economic landscape, the key to long-term growth lies in building a loyal customer base—one that returns, spends more, and becomes a source of lasting revenue.
But how do businesses persuade customers to buy when inflation and interest rates are causing economic anxiety? A February McKinsey survey reports that consumers plan to “decrease spending across many discretionary categories. This suggests that even optimistic consumers, in addition to consumers who feel uncertainty and pessimism about the economy, may hold back on spending.”
The challenge is especially acute for small businesses that compete with larger retailers, which boast far more resources and deeper pockets. For these giants, selling an item at a loss (a strategy also known as “loss leaders”) is a price they are willing to pay to attract customers to the store.
But small businesses often run lean and cannot realistically absorb lost sales. Some options available to them include targeted promotions and coupons as well as tiered pricing, where the cost per item decreases as the customer increases their spending. There is also a greater focus on loyalty and referral-focused programs.
These are all important and effective, but one tool can be even more impactful—consumer financing. At Synchrony, I work with many small business owners, specifically powersports dealerships, and through these interactions, I’ve seen firsthand the impact financing can have. By offering flexible payment options, these businesses can help break down cost barriers and unlock real, measurable gains that start with getting customers into the store or to the retailer’s website.
In fact, many consumers’ first step when considering where to shop is to assess which retailers offer financing options. From there, the benefits of financing really take off. That’s because with strong financing options, retailers can help increase spending, conversion, and boost average order value.
And the upside doesn’t stop there. Financing helps turn one-time buyers into loyal, repeat customers, and the benefits of that are significant. For anyone curious about the importance of customer retention, consider this statistic from FireWork: “For most companies, 65% of their revenue is generated by existing customers.”
For those small businesses that offer financing today, many embed it directly into the checkout process. That’s an important step because it helps make sure every customer is aware of the options that are available to them as they complete the purchase. But from my personal experiences, this is more table stakes in a successful financing program.
To go a step further, I recommend that companies train their sales and services teams, turning them into financing experts. There are many benefits to this approach. Rather than waiting until checkout, when a shopper has already made their purchasing decisions, teams can make customers aware of financing as they enter the store. This can significantly influence their purchasing possibilities by opening up the potential to buy items that may have been previously price-prohibitive.
Beyond the sale, sales and service staff can educate shoppers about the long-term benefits of financing, including how it can help them improve their credit scores, increase their revolving credit, and lower their credit utilization ratio. Willingness to share this knowledge, paired with the overall financing program, helps maintain customers’ loyalty.
More than 34.8 million small businesses operate across the United States, according to the Small Business Administration (SBA). That’s 99.9% of all U.S. businesses. These companies face tougher competition and more cost-conscious customers than we’ve seen in quite some time. Maintaining success requires them to trade outdated playbooks for strategies that ease cost barriers and drive repeat business. Customer financing isn’t a nice-to-have—it could be a must-have for growth, loyalty, and long-term success.
Susan Medrano is the Senior Vice President & General Manager, with over 25 years of financial services experience, and currently leads Synchrony Outdoors within the Lifestyle platform. In this role, she provides general management and P&L accountability for SYF’s consumer business within the Outdoors industries, which includes powersports and lawn and garden. She leads a diverse, cross-functional team in building and sustaining strategic partnerships that drive market penetration, growth, and brand loyalty across 8k+ dealers and multiple OEM relationships.
The information, opinions, and recommendations expressed in the article are for informational purposes only. Information has been obtained from sources generally believed to be reliable. However, because of the possibility of human or mechanical error by our sources, or any other, Synchrony and any of its affiliates, (collectively, “Synchrony”) do not provide any warranty as to the accuracy, adequacy or completeness of any information for its intended purpose or any results obtained from the use of such information. The data presented in the article was current as of the time of writing. Please consult with your individual advisors with respect to any information presented.
Photo from Kateryna Hliznitsova via Unsplash+
