How to Encourage More Sales through Credit Incentive Programs
One of the first things you learn when joining a credit team in the home furnishings industry is how to balance the push of the sales team with the pull of making smart credit decisions. Being able to navigate this environment can lead to sustainable growth for your company.
Is higher sales volume with lower risk tolerance even a possibility? By combining industry leading data reports to mitigate risk with an attractive credit incentive program for the sales team, you will be on the right track! With a strong credit incentive program, you will able to take an active role in supporting sales growth while at the same time decreasing the risk side of your business.
A Powerful Motivation
There is ultimately one thing that motivates people in business to take action – money. Sure, they may have goals related to other things in and around their business, but it all comes down to the bottom line in the end. Especially for the sales department. If you offer something to your sales teams that will boost their bottom line, even if it does so indirectly, you’ll immediately have their attention.
That’s why it is important to consider implementing a credit incentive program. There’s only one problem with increasing sales through credit incentive programs – without the proper information on retailers, it’s risky. But there are solutions for this.
Aligning the Right Credit Incentives
So, now that you are tapping into the financial motivation of your sales team, it’s crucial to position your offer just right to make sure it brings the retailers value as well. If they aren’t compelled by what you have put on the table, you’ll be right back where you started and realize the potential sales growth possible with a healthy program.
There are plenty of different possibilities for how you can incentivize the retailers, but the list below is a good starting point –
- Extended Credit Terms. Sending accounts to collections takes a bite out of the bottom line, so getting extended payment terms will appeal to many retailers.
- Market Incentives. Extended terms to credit-worthy accounts for new introductions at furniture markets. These terms can help get the latest product appropriately displayed at each retailer’s location, and they are becoming a norm in the industry.
- Align Incentives with Organizational Goals. Offering special credit terms on specific merchandise your company is looking to move will attract increased sales. Pricing is the motivating factor for getting rid of overstock, discontinued, or obsolete inventory. Offering extended terms in conjunction with discounts can help sell damaged or defective goods returned by customers or carriers.
- Waived Fees/Finance Charges. When invoices are not paid a set number of days beyond their terms, you may charge your customers a Late Fee or Finance Charge. Not all companies charge these, but if you do, you can offer to waive these fees as yet another way to deliver savings and make your incentive program more enticing.
Balance is Essential
Building a solid credit incentive program is a great start, but it isn’t going to do anything on its own. In fact, by implementing a credit incentive program, you may support sales growth, but it is only by using industry-leading credit reporting that you will be able to balance risk. FMCA is the go-to reporting software for top credit managers in the home furnishings and accessories industry.
Let’s Get Started
The best way to get this program moving is to have direct conversations with your sales team and other leading credit managers in the industry. Networking and getting the word out are essential! Let others know what your credit department is offering and make sure they understand how the program works. Providing this information will emphasize how serious you are about the program. Between a carefully planned program and a proactive rollout campaign, you will have a robust growth tool on your hands.
Smart People + Good Data = Better Credit Decisions
Sign up for FMCA! We’re a community of credit professionals who motivate and help our members succeed in their credit careers- whether just beginning or sharpening the axe with decades of experience.
We provide comprehensive credit reporting, collection services, industry leading educational opportunities, and a network of like-minded individuals to learn and grow with.
If you liked to see what we’re all about, sign up for a free trial to see for yourself! You get 3 free reports.