Lessee-Lessor Relationships are More Important Than Ever
by By Mike Hamilton and Rob Hoysgaard March 2020
In an environment with constant senior management turnover, there is more pressure to perform and meet expectations than ever. Many CFOs and other senior-level management personnel have not been in their positions very long.
The days of relying on established relationships with the right people to win and keep business are not gone but things are vastly different. Nowhere is this truer than in the relationship between lessee and lessor.
a booming economy is a real blessing and presents many opportunities, there are more new people in decision-making roles. Suddenly you find yourself having to explain why you are the lessor of choice to an existing client that you have done business with for years. Additionally, more layers have been added such as procurement and supply chain beyond the traditional finance and fleet.
Even though you have been awarded the business for a while, the relationship is now being questioned and maybe in jeopardy. The new decision-maker feels obligated to change something which puts you as a lessor in an awkward position. You may now be asked to complete an RFP and this makes it more important to show how you add value in a way that separates you as a lessor from your competition.
Communication between the lessee and lessor takes on even more importance when establishing a new relationship. Value can mean developing a creative lease structure, offering more flexibility for the client, presenting a data-driven solution or partnering with a company that offers more to your client than you could bring alone without that partner.
However, remember the lessee does not care how you help them drive cost out of the business, they just need to find ways to drive cost out of the business that work in the short and long term.
If you can offer a solution that your competitors can’t — one the client actually needs and can quantify the value of that solution — you normally can win or keep that client happy longer. When you offer a different solution with proven quantifiable results, that’s when the lessee’s senior management becomes interested and you are on your way to developing a new “relationship.”
In order to be seen as different and offering value, invest in learning more about the business, rather than focusing on what your competitor will focus on, normally the lowest cost of funds or the lowest lease rate.
Find out as much as you can about the fleet. In what types of applications are vehicles used? In which regions of the country do the trucks operate? What are the duty cycles? What is the average miles driven? Also make sure you understand their challenges and plans for the future.
The more you know about the fleet’s operation, the better you are able to tailor your recommendations to their needs. All the information will help you determine whether it makes sense for the fleet to buy or lease. If leasing is the best option, then you can determine which type of lease — fair market value, TRAC, etc. — is most appropriate. The information you have gathered will help you determine the length of the lease.
When you as a lessor establish how you want to bring value, the lessee-lessor relationship becomes enhanced. Having the right data allows you to bring more value to customers and set up a leasing option that is ideal for their needs. Once that option is agreed upon, make sure you run a cost analysis for the fleet periodically. This will ensure your recommendation is correct and lines up with what is best for them, especially as market conditions change.
About the Authors: Mike Hamilton is Senior Vice President of Sales, Capital Equipment Solutions, for Corcentric. He is responsible for large business development opportunities and major accounts for the Capital Equipment Solutions department at Corcentric. He has over 40 years of experience as a financial services professional in the transportation industry and has been with Corcentric since 2008. Rob Hoysgaard is Vice President of Sales for the Northeast Region, Capital Equipment Solutions, for Corcentric. He is responsible for analyzing customer fleets in order to optimize their total cost of ownership. Hoysgaard has extensive knowledge of asset acquisition, equipment finance, asset services, and remarketing.
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Whether you are a third-party originator or a funding source/bank, the responsibility lies with all parties to build partnerships based on mutual trust, mutual commitment, shared ideas and common goals.