7 Precautions for a Profitable Layaway Program



Despite the continuous changes in technology, retailers are reverting to a sales and customer-loyalty practice that was prevalent in the 1950s. That would be a layaway program to sell more products to cash-strapped customers.

Big box stores, such as Walmart and Toys R Us, have benefited from PR when they’ve announced their layaway programs.

If you’re a small retailer, you can get the most from your PR with five basic elements.

woman shopperA well-planned layaway program combined with your sales campaigns will prove to be a winner.

But operating a layaway program can be unprofitable if precautions aren’t taken. You’ll have to determine if a layaway program is the right fit for your business.

If it is a right fit, continue to be on your toes. It’s not a slam dunk that you’ll be profitable with a layaway service.

You’ll need to develop the right value propositions, determine which products should be included for your revenue stream, and the best ways to control costs.

Here are seven tips:

1. Anticipate what questions customers will ask. This means you’ll have know-in-advance how to answer their questions.

The Better Business Bureau (BBB) is advising consumers to get written answers to these questions:

— How much time do I have to pay off the item?

— When are the payments due?

— How much do I have to put down?

— Are there any storage or service plan fees?

— What happens if I miss a payment? Are there penalties? Does the item return to inventory?

— Can I get a refund or store credit if I no longer want the item after making a few payments?

— What happens if the item goes on sale after I’ve put it on layaway?

2. Develop a written agreement for your customers. In view of the BBB advice and in my experience, your agreement should minimally include several elements in your written terms-and-agreement.

They include:

— Your pricing

— Items that are only available in your layaway program

— Options for payments

— Required deposit amounts to hold the items in layaway

— Service fee (Note, however, big retailers are waiving the fee)

— Cancellation and refund policies

— Yes or no – whether to include a lowest-price guarantee once items are placed in layaway

— Final payment date

3. Get started early. To capitalize on your marketing, and for the maximum in Christmas holiday sales, you’ll want to implement the layaway program in time to do you some good.

4. Market your program. Make sure you promote it in all channels – from your in-store advertising to social media.

5. Manage your inventory. You’ll have to be at the top of your forecasting game to make sure you have efficiency in managing your inventory. For a layaway program to work, the products must be on hand.

You’ll have to gauge your regular inventory turnover vs. the customer demand for laying away items.

Of course, you’ll need to have room for a layaway program. To alleviate risk, depending on your situation, consider asking your vendors to drop-ship products.

7. Online is, of course, a factor. Include your Web site and e-commerce in your layaway program.

Others are getting into the act that make layaway programs feasible for small retailers.

Third-party companies now offer layaway plans – between the retailers and their customers. The customers make installment payments to the third party. After the customer pays in-full, the third party sells the items to the retailer.

From the Coach’s Corner, here are more articles on customer trust and loyalty:

Why Your Customers Stay or Leave – Insights from Study — Despite all the emphasis on speed in customer service, it’s not the salient factor in keeping customers happy.

Want More Business? Build Trust with Consumers…Here’s How With consumers trying to cope with information overload – you will increase sales with long-term customer loyalty – if you build trust by using best practices.

Your Supply Chain Can Meet the Expected Standards of Customers, If…  — A company that fails to meet customer expectations on store inventory and delivery has problems in supply chain management. Such a company minimizes its profits. Worse, it’s a red flag about competitiveness and long-term sustainability.

How Retailers Can Improve Operations for Profits — Many retailers could turn their operations into higher profits, if they do a better job of utilizing their customers’ data according to a study.

Why Companies Are High Maintenance to Customers (but Don’t Know It) — Businesses are losing more than they know because they inconvenience customers. Such negative customer perceptions result in lost opportunities in revenue growth, tarnished branding and smaller profit margins, according to a study.

“Customer satisfaction is worthless. Customer loyalty is priceless.”
-Jeffrey Gitomer


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.




Seattle business consultant Terry Corbell provides high-performance management services and strategies.