Episode 22 - Why Electricians Need to Offer 2 Financing Options (And How to Do It)

@4:29 - Clay Neumeyer (serviceloopelectrical.com)

It's 2023, the news is in guys, if you don't have this yet you're missing out. We could break that down a dozen ways but in this one we just wanted to skip right to it and say, hey, this is why you should have two options.

So let's dive in. Why should we have two options?

@5:03 - Joseph Lucanie (Fathom)

What's the advantage we're looking for here? All right. There was a concept that I was taught, not entirely sure where I remember it, but I always heard that if there is no money, there is no sale.

You could be the best electrician in the world. You can have the absolute most fire designs that the world could possibly ever see.

You could be the right kind of person who could do the work right now. Their building could literally be on fire.

But if they can't pay for it, what do you do? You can't help them, right? Tough place to be.

And the thing is, is that a lot of electricians, you're similar to you and I, Clay, where the thing is, is that we are in this industry because we want to help people.

No one ever started off thinking, you know what? I'm going to turn wire nuts for a living and I'm going to make $600,000 a year.

Like it's not a get rich quick scheme. We did this because you either took pride in seeing something that was physically done or you did it because you want to have.

help someone. And this allows you to do so at a better level. And I'd love to talk to you about that.

@6:07 - Clay Neumeyer (serviceloopelectrical.com)

Yeah, absolutely. And if I can just hit the 30,000 foot view for a second and really address that, you know, all of this stuff, your conversions up, your average tickets up, if you can convert more of these clients through having better options, I mean, that's kind of the name of the game.

It's effectively lowering your cost per acquisition as well because it's making your marketing then more effective, making your sales more effective.

What's worse than training and investing and having this process and all the hours you invest in making this thing so sweet and so smooth to help people.

And then it just ends up a dud because we don't have the option that matters for this person, which is a little bit of help with the money.

Use someone else's money to pay for it.

@6:53 - Joseph Lucanie (Fathom)

Exactly. So we're gonna kind of skip a little bit here. And the reason is, is let's say, I'm just gonna assume I'm gonna paint a perfect scenario.

Let's assume that you've already designed your choices. You've already put together your presentation. You've met with your customer. You showed them your six options.

And they're like, I love this one. And they're like, I wanna move forward with this. This is the one I want.

And you say, great, well, I have a financing company. We could do 18 months at 0% whether it's Synchrony or GreenSky or all these other great companies that are just coming out, like all these great companies.

And then the worst possible scenario happens where you did the application, you walked through it. You're pretty much skipping hand in hand to that on the yellow brick road.

And then what do they do? They say, unfortunately, your client cannot be accepted at this time. We will send you a letter within seven to 10 business days notifying the client one.

@7:46 - Clay Neumeyer (serviceloopelectrical.com)

Womp, womp, womp.

@7:48 - Joseph Lucanie (Fathom)

Pretty much, right?

@7:51 - Clay Neumeyer (serviceloopelectrical.com)

And it was like letting the air out of balloon. Yeah, what's the underlying reason here?

@7:55 - Joseph Lucanie (Fathom)

Pretty simple, right? Yeah, the underlying reason is that almost every major. financing company goes off the FICO score, which means that most companies require you to be somewhere around 600 to 650 at a minimum.

And that's not a very high score in all things considered, but at the same time that's nowhere near the floor.

So the kind of people that need financing the most are often the ones that are least likely to get it, right?

Because imagine you walk into someone's home and you recognize they called you for a ceiling fan, but then you opened up the ceiling fan and you realize there's aluminum wiring behind.

This is no longer a $300 job. You're talking about whether it's running a new circuit or if they have aluminum, it's probably something more significant.

So they're not prepared for a $17,000 or $20,000 job right now. It's not something they had in their mind.

They just bought a fan from Home Depot.

@8:51 - Clay Neumeyer (serviceloopelectrical.com)

They want to put it up. And just to throw something in there, like sorry to interject, but I can't remember the stat, but I'm going to go ahead and assume it's Pareto principle again.

people really don't have next month's finances figured out, retirement figured out, right? So we just have to accept that that's the situation.

Most of your customers don't have a good financial framework or plan.

@9:17 - Joseph Lucanie (Fathom)

And the problem is what do they do then, right? They you've already tried financing. They're screwed. They either live with an unsafe situation.

They get someone who's less qualified to rig it, or they have to take a home equity, or they have to max out a credit card with 29.9% interest monthly.

They would cut down on anything. They're just living for the next 36 months, just literally on the bare minimum existence of life.

And is that what we want for our clients? Of course not. So the second company you need is what's known as a second look financing company.

Now I'm not promoting anyone in particular, but I can only say the companies that I've worked with. Right? So there was a company we had and it was called Turns Financing.

I remember really liking them because they did what's known as the second look. They would apply to people who are much, much lower than 600.

I think the lowest I ever saw approved was something like 415. Like it was like really, you had to be really bad to ever get a score that low.

Yeah. But the reason why it works is because they don't look at your credit score. They instead look at assets owned.

Do you own a house? Do you own a car? Do you have a significant amount of monthly income? There are a lot of people who have low credit scores because of previous bad decisions.

But have we all pulled ourselves out of those decisions before? We've all been in there.

@10:43 - Clay Neumeyer (serviceloopelectrical.com)

I have. Yeah. 100%. My first company was a concrete company. I sank it, lost my shirt, had bad credit for seven years.

Had to claw my way out of that. Thankfully, I was young.

@10:52 - Joseph Lucanie (Fathom)

I was a teenager when I went into business for the first time.

@10:56 - Clay Neumeyer (serviceloopelectrical.com)

So it takes some time, but I've done it personally. I know exactly how it works. I know exactly how to climb back up from that.

And I'm worthy at this point, I've got hundreds of thousands of dollars of honestly, unleveraged credit available to me.

@11:14 - Joseph Lucanie (Fathom)

And that's amazing. It's amazing that you were able to pull yourself out of that.

@11:17 - Clay Neumeyer (serviceloopelectrical.com)

And if nothing else, you have my respect for being able to pull it off. Not that it's about me, but that's the situation.

People learn, this is about timing. We've talked about this in positioning and marketing and everything else. People aren't just this one decision this one moment in time.

They're the collective of all decisions, of all moments, everyone's on a journey. And it's our job to represent them the best we can in the current position that they're in.

@11:43 - Joseph Lucanie (Fathom)

Correct. So this is how we can utilize this technology to make it work for us. So I'm gonna walk you through this scenario and I'm gonna explain how we would function.

So you've gone through the project, the customers picked a choice. You tried financing them initially, they got declined. You can picture your...

at least I can, where you can picture the customer now suddenly looking at deflated balloon. And they're like, what are we gonna do?

This is the time when you can actually save the call by being the source of encouragement that they need.

And you can say, that's not a problem. Cause here at Serviceable Electrical, we already prepared for those kinds of scenarios.

What we'd have is we have what's known as a second look financing company. To where instead of looking at your credit score, they understand there are other reasons that people can get loans.

So what we're gonna do is we're gonna do a soft check on your credit. And then if this company can approve you, then they'll give you a separate term.

You can turn how you wanna get it taken care of. Now it may not always be the best. Like I understand that, you know, the best companies are giving 18, 24, 36, 0% interest.

But sometimes the customer can say, you know what? Give me 12 months at 9% interest. Because what they can do is now they've got the ability of funding your job.

And now you can do that emergency repair. But if this customer takes out a credit card, all they need to do is say, why don't we do this?

Get any credit card with 0% intro APR, pay the loan with the credit card. And then they now have a 0% loan.

It's just smart thinking where you're able to say, how can I leverage the systems in place to make sure that my client doesn't have to eat cat food?

That's really what it comes down to. So the benefit is, is then when you can sell it to your client in a way that benefits them on every personal level, you become someone they like, trust and respect.

Because what are the odds if you didn't do this, that they would have once again, a licensed reputable electrician in their home?

@13:45 - Clay Neumeyer (serviceloopelectrical.com)

I mean, they could just go unserved honestly.

@13:48 - Joseph Lucanie (Fathom)

And unfortunately, that's how a lot of these helms, yeah, I mean, I'm sure everyone, if you're listening right now, I want you to close your eyes and picture the worst house you've ever seen.

And you know what? A lot of times those houses are the way. they are because not because people want to live with tarps on the roof, but it's because no one will give them money when they're living paycheck to paycheck.

But that doesn't mean that their electrical needs need to be neglected. And you're doing a major disservice to your clients if you're not able to serve everyone at that level.

Because in addition to this, it's not just those kinds of people who are in the lower income brackets. Warren Buffett actually used an example I've heard called golden handcuffs, where what ends up happening is even people at higher income brackets, they continually raise their lifestyle to meet their income.

@14:37 - Clay Neumeyer (serviceloopelectrical.com)

So glad you're touching on this.

@14:39 - Joseph Lucanie (Fathom)

Yeah. So you can make two, $300,000 a year, but if you've got a Lambo in the driveway and you've got a $2 million house, suddenly you're living paycheck to paycheck again.

And as a result, your credit score could go down. But a second look financing company would say, wait a second, you've got all these assets.

You're clearly making a good amount of money. There's no reason why we shouldn't lend it to you. In fact, we'll lend it to you at interest.

Yeah. But now they can get their needs taken care of. So the thing is, is that I never want any of you to simply look at someone in a lower income bracket and say they need financing.

I want you to look at all of your clients and say, I refuse to judge you by what you look like, what car you drive, what house you live in.

I will equally offer financing to every single one of my clients. Non-negotiable every single time. I love that.

@15:31 - Clay Neumeyer (serviceloopelectrical.com)

I love that, love that, love that. And my mind is blowing up with things that I want to engage with there.

But I'll start with the last, which was really not making assumptions about our clients no matter where they live or what they do.

Yes, there are some telltale signs that you would say, okay, that person's a little too low income, maybe not right now.

But also keep in mind, we talked about this with one of our clients, Jason's with us now, right? Doesn't that also mean that everyone else is a...

@16:00 - Joseph Lucanie (Fathom)

ignoring that person? Mm-hmm.

@16:02 - Clay Neumeyer (serviceloopelectrical.com)

Wouldn't it be an advantage for you to hyper-focus on the people that are being ignored or people aren't being creative to actually meet their needs?

@16:11 - Joseph Lucanie (Fathom)

Mm-hmm.

@16:12 - Clay Neumeyer (serviceloopelectrical.com)

Wow, like what a dismal life to be part of a situation, a timing right now where no one will serve you?

That's insane. That's insane. So I think this really comes down to just a couple of things. There's a couple of types of service providers, electricians in this group, and it's either they don't have financing yet and they're still just kind of waiting.

They're on standby. They're trying to justify it and decide if it's even ethical to push people in the direction of getting financing to do a project.

Let me first stop and say, what do you think of that?

@16:46 - Joseph Lucanie (Fathom)

The ethics boundary and the question around that. So the thing that it comes down to is who are you to spend someone else's money for them?

Realistically, if you think about it from an ethical standpoint, if. I don't serve them and I trust myself to be a damn good electrician.

I know I'm not going to cut corners. I know I'm going to respect their family. I'm going to respect their home and I'm going to treat them with the dignity that I know they are entitled to.

Can you say for a fact that someone who is going to offer a lower price, who then they could likely afford, would treat them with that same service?

@17:22 - Clay Neumeyer (serviceloopelectrical.com)

No, no, no, no, no. That's how we know that you are the only right option.

@17:27 - Joseph Lucanie (Fathom)

So as a result, if you know that you are the right fit, why are you not taking every opportunity to assist your clients?

That's not really, you're not selling them on something because realistically, if they're choosing to finance, they've already said, I want that choice.

Joe, please help me find a way to make this happen. That's what they're trying to say. Sometimes they'll ask you and they'll say, do you have any payment options?

Or they'll come to you and be like, I really want this, but I just don't think we could swing it right now.

We'll have to wait for our tax return. And the- The best way of answering that is, well, have I given you an impression that you had to pay for this today?

I love that.

@18:42 - Clay Neumeyer (serviceloopelectrical.com)

I'm sorry, did I give you the impression? I love that. It's very non-threatening and stealthy and back to, as you said, side-by-side.

Something else I wanted to touch on was you mentioned the golden handcuffs, and I love that principle too because we've even learned this.

at a master of business level in university, even learned about it in really in economics 101. Everyone is working to earn this currency for which they live by.

And the reason they're earning that currency is to increase the quality of their life. There's really nothing else. It's the only reason for why we're doing this, for why the rat race exists in the first place.

You're doing it, I'm doing it, your clients are doing it. We're all trying to find a balance in that quality of life.

And the concept is I need to earn enough to maintain that quality of life and everything I desire within it so that I'm not just affording it now, but also saving and affording it in the future.

And that's where credit comes in. When there's things we know that impact our quality of life and we don't have money set aside for it, how could they, by the way, they're not electricians, they don't understand, right?

But if you come in as the doctor of electron flow and show them a new way, a life that they could have, safe, secure, otherwise better, then again, who are we to decide?

Really important distinguishment, because that ties into that golden cuff scenario. The more we make, the higher our expenses seem to grow.

I'll tie in one last little quote there. Einstein said that compound interest was the eighth wonder of the world.

Earn it, understand it, those who don't pay it.

@20:33 - Joseph Lucanie (Fathom)

I agree completely.

@20:35 - Clay Neumeyer (serviceloopelectrical.com)

Now, if that's true though, one last thing, sorry, then the ninth wonder of the world must be expense creep, because everyone who's earning it is also buying a bunch of additional shit and increasing the quality of that life that they're striving for.

Sorry, thank you for letting me finish.

@20:52 - Joseph Lucanie (Fathom)

Go ahead. Oh, by all means. I was gonna say, I thought of something that I've learned when it comes to studies of ethics.

And I wanted to bring it back to you because. Because I have learned that only a rich man can do a job wrong because they have to be able to afford to do it twice.

If you were looking at your client and you know that they don't really have the money, you're actually dooming them by doing the job cheaper.

Because what will happen when you do it cheaper? Let's say you go to the panel and you find out, you know what, there is corrosion, but they don't have money to do more than just a breaker change.

But you recognize that there's humidity in this basement. You recognize that over time it's going to be exposed. You recognize there is aluminum wiring.

You know that every dollar you put into this, it's not being applied to the balance. You're gonna eventually have to rip it out and do it all over again.

But if you can look at this client and say, you know what, I'm gonna give you a permanent solution so that not only will we do it now, but this is the last year, the next 40 years.

Now they've paid money and it's done. They don't have to continue worrying about it. Eventually the loan's paid off, but the problem will have been gone.

So that's why it's more ethical to offer these options, no matter what they look like, no matter what they drive, no matter what kind of house they're living in, you have an ethical obligation to do the job the right way, otherwise you are necessarily dooming your clients.

And do any of us wanna do that?

@22:24 - Clay Neumeyer (serviceloopelectrical.com)

No, no, no, no. And well said. So what are the action items? I mean, these ones are pretty cut and dry, but as always, we're presenting you guys with an action, an all-star action, where you can start winning more today.

@22:36 - Joseph Lucanie (Fathom)

All right.

@22:37 - Clay Neumeyer (serviceloopelectrical.com)

Can I crack off on the first one? Let's do it.

@22:39 - Joseph Lucanie (Fathom)

All right. The action item, I'm gonna challenge every single person to simply just take the phone they have that's sitting in their pocket next to them.

I want you, by Monday, or whenever you read this, or whenever you listen to this, I want you to call a financing company if you don't have one already.

Simply go to any financing company online. whether it's synchrony, whether it's turns, whether it's hearth, whether it's green, it doesn't matter who you call.

Almost every single one of them has a contact me. Even if you just type and say, I'm interested, someone will be calling you within 48 hours because it's a business too.

They want to set you up with financing. And if you're set up with financing, you can serve your clients at a higher level.

So the bare minimum action is just pick up the phone and make a call. They'll do the rest of the work.

They'll sell you on it. Just call them and say, you're interested. Is that enough of a bare minimum action?

@23:34 - Clay Neumeyer (serviceloopelectrical.com)

Absolutely. Yeah, that'll get you started.

@23:35 - Joseph Lucanie (Fathom)

Momentum, right? That's what matters here. The all-star action is a little bit further. The all-star action is I'm just going to double it.

And I'm going to say, not only do I want you to call one company, I want you to call four companies.

The reason why is I want you to think of every financing company you can. Simply just type in how to offer financing in my small business.

Type it in Google and I guarantee you'll have a whole plethora of ads to go through. But if you can call multiple companies, now you have the ability of comparing their rates and the ways that they can serve your clients better.

Wouldn't it be better to be simply able to say, I've shot the market. Like imagine you're talking to your client and being able to say, we have shot the market and I can guarantee this is the absolute best option available.

And I made sure, even though we have to pay more for it, I want to provide that level of service to you because we believe you deserve it.

We believe you and your family deserve this level of comfort. Was I wrong to offer that to you? No.

So that's the all star action. First one, call one company. After that, call four companies.

@24:41 - Clay Neumeyer (serviceloopelectrical.com)

You got to have it. You got to have that backup financing, guys. So thanks for watching. Thanks for listening.

If you're just catching this on the podcast, as always, it's been an absolute pleasure to help you guys in your journey to master sales, simplify pricing, and deliver premium level service.

Thanks, Joe.