Collecting money from customers can strike fear into the hearts of landscape contractors. Dangers resulting from bounced checks and late cash payments affect contractors’ bottom lines, and outstanding balances tend to sour client relationships.
In response to these money matters, John Deere Credit has introduced a consumer financing program, allowing contractors to wave goodbye to the days of inhibited cash flow and lagging deposits. Contractors that sign up for the program through John Deere Landscapes’ branch locations have the ability to offer their consumers two different financing options. As a result, clients’ landscaping plans become more flexible, and contractors become more profitable.
John Deere Credit initially brainstormed ideas for this program after John Deere’s acquisitions of McGinnis Farms in January 2001 and Century Rain-Aid in October 2001, said Steve Davis, manager of market development, John Deere Credit, Madison, Wis. “With the acquisitions, what we were looking for were ways to leverage those businesses into our other businesses,” he related.
Knowing that most retail landscape transactions take place with cash or check and after further analyzing the market, John Deere Credit began focusing on offering credit options to customers, Davis continued. “It seemed like a natural extension for the product in the marketplace,” he said. Shortly thereafter, John Deere Credit created a pilot program for a limited number of contractors in the Georgia area. Since feedback was so positive from contractors and consumers alike, the program is now marketed on a national level – the unique aspect of the program, Davis pointed out.
Currently, the program serves customers that purchase landscape options costing between $1,500 and $15,000. Customers that wish to finance these purchases through John Deere Credit then have two options: a 6-month same-as-cash plan, or a 6.9-percent APR for 48 months plan. Consumers with greater cash flow and the desire to avoid interest payments might choose the first option, while the second option attracts clients that would prefer to space out costs over four years, Davis said. Under the second financing option, clients’ payments work out to be about $24 a month per $1,000 of landscape purchases.
With this finance program, landscaping and irrigation are more affordable, as opposed to the normal out-of-pocket expenses associated with these types of services, Davis remarked. And, contractors end up reaping the benefits with customers who are willing to spend more on their properties with a credit program. “What we’re finding out based on contractor feedback is that in most cases, a customer is getting three to four bids,” Davis figured. “With the financing program option, contractors end up locking in jobs they wouldn’t have otherwise.”
In addition, the program alleviates the risk factor related to late cash payments or overdrawn accounts, Davis added. “We all live in a payment-driven society, but this program makes the $15,000 landscape job much more affordable,” he said.
Initial test runs of the program in its piloting phase revealed one particular opportunity for improvement, Davis said. Contractors had been funded through their branch locations in the pilot phase, which delayed cash flow for business owners. As a result, contractors are now paid directly through the program, receiving their funding within two business days of the transaction, he explained.
Thus far, John Deere Credit has received encouraging feedback from homeowners who are now able to install the landscape of their dreams without suffering immediate out-of-pocket costs, in addition to contractors who see their customer base expanding. “This is a program that in all honesty has really created some excitement at the contractor level,” Davis noted. “It definitely helps strengthen relationships.”
For more information on this program, call John Deere Landscapes at 800/347-4272. To apply, homeowners can speak with their local service professional or visit http://www.applynow.JohnDeereLandscapes.com.
The author is Assistant Editor – Internet of Lawn & Landscape magazine.