Marketing only product and payment will keep your customer count stable only until a competitor matches your rate - and everyone loses in a race to the bottom.

Photo RTO Online

Value becomes a higher priority for consumers during an economic downturn. Consumers will rent from the company they perceive as having the highest benefit-to-cost ratio.

By Roy Griffaw, Publisher, RTO Online and RTO Magazine. bio

A decade ago when the nearest competing rent-to-own store was 20 miles away, all that was required for a 1,000 BOR store was inventory and a sign that said "open". Simply offering credit-starved sub-prime consumers an effective way to buy was value enough.

Today, nearly every active RTO customer in the country is touched by multiple competitors every month through TV ads, newspaper inserts, door-hangers and marketing calls, reinforcing the fact that neither the products you carry nor the transaction itself is unique.

Successful rental dealers sell value, not products. This is especially true for those dealers appealing to traditional retail shoppers looking for credit alternatives during the recession. Value becomes a higher priority for consumers during an economic downturn. Consumers will rent from the company they perceive as having the highest benefit-to-cost ratio.

Traditionally, Value = Benefit / Price. In rental-purchase terms, Value = Benefit / (payment * term). The total price of merchandise acquired through a rental purchase agreement will be higher than if acquired by cash. Therefore, the benefit must be greater for the transaction to be considered valuable. The more perceived benefits, the higher the perceived value.

The primary benefit of rental-purchase is the ability to satisfy an immediate want or need regardless of prior credit history. Since this benefit is available at every RTO store on the planet, it should not be used when evaluating value versus your competitors.

Another way to evaluate value is performance versus expectations: Value = Quality/expectations. Does the quality of your merchandise exceed expectations? Does the quality of your service exceed expectations?

In addition to increased consumer expectations of value, brand loyalty means less during tough economic times. According to a recent Ipsos study on global consumer attitudes and behavior, 80% of consumers say they are very or somewhat likely to switch from their usual brands to lower-priced brands during an economic downturn.

Unlike price, value is a perception. Perceptions are driven by marketing. Marketing only product and payment will keep your customer count stable only until a competitor matches your rate - and everyone loses in a race to the bottom. Reminding customers of your 'sameness' in every ad is more likely to produce yawns and channel-flipping than real growth. Improving and marketing your value will create new customers and result in real long term growth.

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Roy Griffaw is the former owner of Express Rent to Own of Missouri and the founder and CEO of RTO Online Inc. Griffaw founded RTO Online in 1996 to improve inter-industry communications. The company has grown to become the world's leading publisher of RTO industry trade news. Contact admin@rtoonline.com for more information.