One of the greatest challenges of rent-to-own sales (RTO) in the shed industry is a lack of shed dealer training and knowledge of policies and how RTO differs from financing. They are very different and the laws that govern them are very different.
The Importance of Dealer Training
Without proper training, a dealer may risk unintentionally misrepresenting the requirements and stipulations of an RTO contract, creating potential dealer/ customer conflict later. “The dealer needs to be as educated as possible on what the rules are,” said Shannon Latham, owner of Shed Geek Rentals, and host of the Shed Geek podcast.
It’s much more effective to invest time in training before trying to sell RTO contracts than to wait until talking with a customer and being confronted with questions the dealer can’t answer. If the dealer has to stop his sales process to call a customer service rep to get clarification, it can make the dealer look unprofessional, which can undermine the customers trust in the dealer and potentially lose sales. Being knowledgeable leads to confidence and a polished sales presentation. As one sales pro put it, “Confidence sells!”
It’s also better to do the training upfront because it’s more time efficient and saves trouble in the long run. Mike Groves, a territory manager for Heartland Capital investments, said, “I have some dealers who will call me who have never trained. Just yesterday, a guy called me four or five times in a row who I had offered to train but never had the time. And now he’s wanting the training, but I couldn’t sit down and do it at that moment.”
Groves explained that this hit-or-miss spot training by phone ends up taking a lot longer than if the dealer had just taken the 45 minutes to do a one-on-one training session to begin with. Heartland does offer training videos, but Groves recommends the one-on-one training, as that allows for dealers to ask follow-up questions and get clarification.
Heartland doesn’t require dealers to have the training, but some dealers find out the hard way that they should have had it. For those dealers, Groves said, “Once we give them a login to our system to get in and start doing the contracts, they just go for it. But they find out pretty quickly that they would have been better off with the training. If some information is missing, they get stuck and wonder, how am I supposed to do this or that?”
The training involves more than just filling out the applications and contracts completely and accurately, however. It also helps them track the status of accounts throughout the contract term.
The Need for Clear Communication and Terminology
Providing the customer with a clear, accurate explanation of the contract is crucial. “Presentation is important, Groves said. “You don’t want to look like you’re trying to deceive anybody. It’s good to tell them up front that this is not financing, and they’re going to pay a lot more for it in the end unless they pay it off early.”
Using the correct terminology is also important. It’s not only the legal and ethical thing to but can also help prevent misunderstandings that can hurt business later. For RTO, dealers need to use rental terms, not financing terms. Terms for rental contracts include “rent,” “return, “retrieve,” and “rent credit” (the rent-to-own equivalent of a financing down payment).
Financing terminology includes words like “financing,” “interest rate,” “down payment,” and “repossession.” Repossession is the right term here because, with financing, the customers have partial ownership of the shed as they are paying off their debt. With a rent-to-own contract, however, the customer doesn’t have any ownership of the building at all until the building is completely paid for.
Sam Byler, CEO and president of the Shed Hauler’s Brotherhood, is particular about the wording he tells his drivers to use when they pick up a shed. For RTO pickups, he tells them to say, “I’m here to pick up our shed,” not “I’m here to pick up your shed.” The RTO company had retained ownership the entire time. It never belonged to the customer. Using the precise verbiage “our” makes that point clear.
Good dealer training is crucial. If sales reps don’t fully understand the rent-to-own program, they won’t be able to sell it clearly and with confidence. Customers can spot the lack of knowledge, which can reduce confidence in the seller and risk losing a sale.
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Byler also differentiates the meaning of three words: “return,” “retrieval,” and “repossession.” A “return” takes place when a customer calls and asks for the RTO company to come pick up the shed. A “retrieval” happens when an RTO company initiates the process of getting the shed back. The term “repossession” shouldn’t be used in connection with RTO. That’s a term that applies to financing only because the RTO company isn’t getting ownership back. The RTO company fully owns the shed until it’s completely paid for.
It’s a good, long-term business practice to be open and transparent about both the pros and cons of RTO. Customers who sign an RTO contract fully understanding all the expectations and limitations will be happier and more likely to have a successful transaction and provide positive feedback and good word-of-mouth recommendations. It’s shortsighted to try to rush or pressure clients into an RTO contract just to get a quick sale. That will almost certainly negatively affect the seller’s reputation and eventually cost sales, and will likely lead to higher retrieval rates, which will also reduce profits in the long run.
According to Chase Coble, solution partner for NewFoundRentals, when things go bad in the shed dealer/customer relationship, that doesn’t come back on the RTO company. “What that customer remembers and tells his friends is where he bought the shed. He’s going to say, ‘I went to X shed company, and they put me on a rent-to-own, and they didn’t explain it to me, and I’m mad, and I’m leaving a one-star review.’ Those situations are created by lack of proper training,” Coble said.
It’s also important to talk about the helpful features that RTO offers, Coble added. “That means the dealer explaining things like the early payoff options and if you offer 90-days same as cash because there’s a lot of customers who will use those things of you tell them about it. But it’s very easy just to make the sale and never mention that there are opportunities to pay off early, never mention that if they don’t need the shed anymore, they can voluntarily just give it back and stop their payments. Those things need to be explained to the customers so that they get the best overall experience because your reputation, that customer coming back and saying, ‘Yeah, I went with these guys, and I did a rent-to-own, and I totally understood it, I had no problems, and about 36 months into my 48-month contract, I was in a stronger financial position, and I was able to call the rent-to-own company, and I did an early payoff. My payments are done, and now I own the shed.’ Those are the reviews you want. Properly explaining the program is what leads to these opportunities.”
Coble added that he wants shed dealers to feel comfortable in explaining rent-to-own and that he welcomes his dealers to ask questions when they’re unsure about something. “They’re sometimes reluctant to bother us with questions,” Coble said. “But I would encourage those dealers that, when in doubt, your rent-to-own company would so much rather you “bother them” than not ask. Ask those questions and tell us where you’re feeling like you need more help because we are more than happy to help with those explanations, but we need to know if you’re having a problem. So if you think there’s something that you’re not understanding, call that company up and ask right away. It’s going to make your life easier.”
It’s a wise practice to show the potential customer the total cost of an RTO shed at the full-length of the contract. Dealers can explain that the cost can be lower if paid off early. If the total cost scares off a customer, it likely means that the RTO agreement wasn’t a good fit for them to begin with. That doesn’t necessarily mean the sale is lost completely. They might feel more comfortable with a financing option because of its lower cost — if they’re eligible. If they’re not comfortable with either option, it’s important to recognize that some customers may be better off without a shed at all than signing a contract that they’re not financially able to handle.
Help Customers Learn About RTO Without Embarrassment
Some customers might be embarrassed about their financial situation. Coble suggested helping those customers learn about RTO without shaming them. “In our industry, physical advertising is more important than people think, so if you have your shed lot and you don’t have rent-to-own information out for people who drive by or drive in to see, you might be losing business. There’s a certain part of our customer base who would do rent-to-own but who are maybe a little bit ashamed to ask about it because it’s like admitting that they don’t have all the cash to buy a shed up front. So having that advertising out there where they don’t have to ask anybody really helps. That way they know they can buy a shed with less money up front, they don’t have to buy the thing outright, and they don’t have to crawl into the office and feel like they’re begging.
The Legal Aspects of Contracts
Financing regulations fall under federal laws and are therefore uniform throughout the U.S., whereas rent-to-own programs are covered by state and local laws that vary widely, so dealers need to be well-informed about what the RTO laws are in their area. Also, it’s possible that RTO laws could vary locally between the dealer’s location and the customer’s home, so dealers need to be aware of that as well.
“One of the most common mistakes salespeople make is rushing through the lease agreement or skipping over complex terms,” said Chris Winter, owner of A Place for Your Stuff and CarportME Carports. “This approach often leaves customers confused or frustrated. Instead, take the time to guide customers through the document, focusing on clarity and transparency.”
Winter added, “If customers have legal or technical questions, encourage them to review those sections carefully and reach out with any concerns. A transparent and patient approach builds confidence and reduces the likelihood of disputes.”
Conclusion
Rent-to-own programs can account for a large portion of overall shed sales, so it’s essential to give them the time and attention they deserve. That means being fully trained and confident in explaining all aspects of RTO. Providing clear, concise information will help the customer and dealer develop a better long-term business relationship, which can in turn boost the dealer’s reputation and profits.
