Synchrony: Personalized Financing Strategy Boosts Big-Ticket Commerce

Macroeconomic uncertainty over inflation and interest rates is affecting big-ticket items and leading to shifts among consumers.

More homeowners — who have opted not to buy a new residence due to high mortgage rates and home prices — are sprucing up their properties and remodeling. More car owners, faced similarly with inflation, are keeping their vehicles on the road longer, with an eye toward keeping them well-maintained and properly appointed.

“Higher borrowing costs have made consumers more cautious about taking on debt for discretionary purchases,” said Curtis Howse, CEO of Home and Auto at Synchrony.

Many consumers are sticking to necessities. According to the February/March edition of the PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report,” which surveyed over 4,200 U.S. consumers, 60% of respondents have scaled back on nonessential retail purchases due to price increases. Howse said he believes that offering financing options — and installment payments — enables customers to buy higher-ticket items.

“These are items that they may not have been able to purchase otherwise,” Howse told PYMNTS.

And by using customer-specific data, merchants can foster stronger customer relationships and incentivize repeat purchases, as Synchrony in effect positions itself as an extension of the retailer’s brand, he said.

Omnichannel Efforts

Synchrony’s digital tools remain key differentiators, serving up an integrated shopping experience by allowing customers to easily access financing wherever they choose to make those purchases, he said.

“For example, many customers can determine if they’re eligible for financing within a few minutes on their mobile device — through our direct-to-device capabilities,” he said.

As financing offers and promotions essentially follow consumers wherever they may be, financing plays a crucial role in “bridging the online and offline shopping gap,” Howse said. Consumers, after all, can and do look for auto parts and home furnishings in the store, shop online, and may come back to make their final decision.

By enabling an integrated experience across channels, retailers can use financing options like installment loans to provide customers with a consistent, flexible way to pay, whether they’re shopping in-store, online or through mobile apps. This omnichannel financing approach removes friction and allows customers to take advantage of promotional offers and complete purchases on their preferred platform, said Howse.

“Ultimately it’s about choice,” he told PYMNTS.

There’s a positive knock-on effect, too, said Howse. Financing programs, in collaboration with firms like Synchrony, with loyalty and rewards in the mix, “create a path for advocacy, perhaps to friends and families and others that the consumer may know relative to that brand.”

Examples From the Auto Industry

Howse noted that partner firms have been seeing strong results. He offered the example where, in the auto industry, Continental partners with Synchrony to offer flexible financing for its dealers. Nearly 2,000 Continental dealers are enrolled in the Synchrony program, and year-to-date sales are up 30%.

Likewise, Synchrony began to offer flexible payment options to Big Brand Tire a bit more than a year ago. Since then, over 13,000 card holders have used Synchrony to help make their car repairs more convenient.

The program, said Howse, “is continuing to grow quickly,” with year-to-date sales already up 70%.

“These added values make consumers and customers more likely to remain loyal to the brand and continue to make purchases,” he said.

By finding out that a $2,000 purchase is affordable, via installment payments, said Howse, a consumer may add ancillary purchases to that same visit — thus driving up the merchant’s revenues.

In looking ahead at the evolution of financing, Howse said financing will become more seamlessly embedded into the overall shopping experience, with capabilities like scanning QR codes or in-store activities such as applying for financing directly on mobile devices.

Synchrony partnered with software platform ServiceTitan in April to integrate Synchrony financing within the platform. The collaboration allows contractors in the field to give customers the option to apply for financing within the platform or use Synchrony’s direct-to-device application processing and prefilled technology to streamline the process.

“It’s all about being at that ‘point of need’ once the decision has been made and as the consumer continues to utilize all the tools that are at their disposal to make the purchase decision,” Howse told PYMNTS.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.