Executing Customer Service

by Rick Bueti March/April 2014
IT leasing veteran Rick Bueti offers frank advice to equipment lessors that claim to provide “custom, innovative, tailored solutions” — forgo marketing clichés and execute simple, honest customer service.

I have been in the equipment leasing business for 21 years, and I’ve seen a lot of lessors come and go, including some household names like Comdisco and Merrill Lynch Capital and not-so familiar names like a company I once worked for named United Computer Capital. It is not easy being successful in this business.
When I started my career at IBM Global Financing, I attended a new employee orientation where our president (the late Harry Kavetas) spoke, and his words have always stayed with me: “We are not in the leasing business,” Harry said. “We are in the risk management business. We manage credit risk and residual value risk, and that’s it. Those are our primary objectives.”

Nine years later I left IGF to take a sales job with Compaq Financial Services. A sales director (who will remain nameless) lectured our sales force during my first meeting there: “We really only have two obligations to our lessees: to pay their vendor for the equipment we are financing, and to allow them ‘quiet enjoyment’ of the equipment as our contract allows, and that is all we really owe them.”

Of course, both were technically correct in their opinions. The leasing business is very much about risk management and it is important to maintain an arms-length relationship with lessees to emphasize that you are mainly the financing arm in an equipment acquisition, not the manufacturer or the vendor. However, they ignored the one critical factor that makes a leasing company, or any company for that matter, truly great: Take care of your customers and they will take care of you.
But how does a leasing company do that? Most leasing companies make claims of excellence, but how do they back it up?

To answer these questions, I did some very interesting research. I looked carefully at the individual websites of the 2011 Monitor list of the top 10 Most Active Lessors in the Vendor Channel to try to understand what’s made them successful. To my surprise, nearly all of these companies market themselves in essentially the same way with little differentiation. That is, they basically have a consistent, overall vision of themselves that I’ll paraphrase collectively as, “We employ long-term leasing experts who provide unique, innovative and custom-tailored financing solutions to help our vendor partners increase sales.” Sometimes imitation is the sincerest form of flattery, but sometimes it’s easiest to just follow the crowd. Can somebody please pass me the NoDoz?

Perhaps these companies should pay heed to what Mark Hurd said in a Fortune Magazine interview shortly after taking the helm at Hewlett Packard in 2005: “Remember Edison’s quote: ‘Vision without execution is a hallucination.’ I have a hard time separating strategy from operations because they all have to flow together.”
Allow me to elaborate. If a leasing company wants to convey uniqueness, it must start by rejecting these repetitive, standard talking points. Instead, it should explain very clearly what it truly is at its core by starting with the basics, like speed to market and as Hurd said, execution. I know, I know, these are clichés and a bit boring, that’s very true. But in the leasing world, speed and execution are absolutely critical. Why? Because most equipment leasing/financing deals are cookie-cutter types of transactions using standard leasing terms, conditions and structures. Most lessors can write “custom tailored financing solutions,” and, yes, they can tweak terms and conditions within reasonable limits.

However, think about it exclusively from the lessee’s perspective for a moment. What do lessees mostly want — sophistication or simplicity? My experience reveals the following: Lessees want fair terms and conditions. They want a fair price, an easy and automated way to track their on-lease assets and a lessor that is willing to bundle multiple assets, including soft costs, on the same transaction. And, they want a painless end-of-lease process. Most importantly, when they ask you for these things, they want them fast, particularly because whether lessors like to admit it or not, financing is often the last item required to finalize a deal that is already baked. Lessees don’t want to sit around for three days waiting for a leasing company to make a credit decision, quote a rate or contract a transaction that they wish to sign now. So, lack of speed, simplicity and flawless execution will often kill a lease transaction, and ultimately a leasing company, faster than anything else.

CCA Financial, Monitor’s 18th ranked top private independent lessor for 2013, is a great example of a lessor with excellent website tools that offer its customers simplicity and speed. Take a look at the wealth of information a lessee can access at www.ccafinancial.com if you have some time. If I’m an existing lessee of CCA, I’m going to be very happy that I can get all of the information I need easily and intuitively right on their website, and as a result, I’ll keep coming back.

Another basic, but very important, differentiator for leasing companies is the concept of having all of your employees completely in lockstep with what you are trying to collectively deliver to the market you serve (merging strategy with operations as Mark Hurd alluded to). Here are some suggested questions CEOs should be asking of their management team, if they want to be considered a premier lessor:

• Do our inside sales people know what our outside sales people do, and vice versa?
• Is our sales plan simple, or is it complex? Does it incent the behavior we want from our sales people?
• Are our people who interact with customers at a C-level experienced and with diverse skills, and are they compensated appropriately for that expertise and the trust we place in them?
• Do we truly have state-of-the art, web-based tools that our lessees can easily tap into, or do they have to wait a week when they ask us for information?
• Do our contracts, settlement and accounts receivable people understand our business well, or do they have ridiculous mantras, such as “collect, not correct”? (Sidebar: This actually existed in the A/R department at one firm I previously worked for!)
• Do we stick rigidly to the terms and conditions of our contracts in order to maximize our profits on the current transaction, or do we truly show flexibility to our customers in an effort to retain their business?
• Do we listen to the concerns and opinions of our people in the “trenches,” who are closest to our customers, or do we make our decisions in a vacuum?
• Are we exposed to too much risk in our lending practices? What is our default rate?
• Are the people who design our programs and promotions in tune with what our sales teams require?
• Do our remarketing sales team and our new originations sales team communicate with each other? Are they on the same page in terms of profit objectives and more importantly, customer satisfaction?
• Do we regularly survey our customers? If so, do we put plans in place to address their concerns and criticisms?
• Do we know how to remarket our off-lease equipment, and can we do it quickly, or do we let our lettuce get too brown?
• Finally, do we understand that we are nothing without our customers? (Or, as Bob Talbot, a truly outstanding sales VP and personal mentor at IGF, used to say to us repeatedly and with conviction, “Our customers ultimately pay our salaries, pay our bills and keep the lights on. When they call us, they are doing us a favor; we’re not doing them a favor. Let’s remember that every single day.”

At its foundation, the leasing business is simple, but the nuances can be very complex. The successful lessors of tomorrow will listen carefully to their employees and customers, provide speed to the market(s) they serve, have state-of-the-art, automated tools for their customers, and execute, execute, execute. They should also rethink the conventional marketing claims of being “creative experts” in favor of a more pure, simplistic theme.

I’d suggest something like this: “We are an equipment leasing company. We’re fair, we’re fast, we know what we’re doing, and we’re easy to do business with. We know you’ve got other things to do. We’ll worry about leasing your equipment, so you can focus on running your business.”

Rick Bueti has worked in sales and sales management in the IT leasing business for the past 21 years with companies including IBM Global Financing, HP Financial Services and United Computer Capital. He currently is a leasing sales representative for Avnet Technology Solutions.

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