Three Things We’re Doing Wrong in Equipment Financing Sales and How to Fix Them

by Vernon Tirey

Vernon Tirey, a 30-year veteran in enterprise automation solutions, is the co-founder and CEO of LeaseQ, a marketplace bringing automation and efficiency to small business borrowers looking to finance equipment to start and grow their businesses. LeaseQ’s proprietary cloud-based platform streamlines the equipment finance process for business borrowers, equipment sellers and equipment financial services companies.

LeaseQ’s Vernon Tirey explains how the managed services model can enable a strong sales strategy, deliver competitive advantages, streamlines business processes and improve the customer experience.

How do you know when a company has a successful sales strategy? Short answer: when success is all about sales execution. Long answer: when the company’s products and services are easy to sell, easy to buy and easy to justify.

Managed services is another way to say “don’t worry ’bout it, we gotcha covered.” We are all familiar with the managed services model. Most of us have cell phones, and according to the Pew Research Center, 90% of American adults who own a cell phone have become accustomed to paying one flat fee for the phone, data plan, warranty and tech support.

As consumers adopt and become accustomed to more of these managed services, their behaviors start to spill over into the business world. The model’s pricing structure—regular monthly billing around service levels and volumes—is attractive and has proven effective in industries like telecommunications, office imaging, healthcare and IT systems; however, we’ve so far failed to look beyond the obvious industries, and our traditional cash cows are running dry.

There’s a $1 trillion industry ripe for implementation of this model—equipment financing. The managed services model would right a lot of what we’re doing wrong and give sales teams a terrific offering to take to the marketplace. Here are three things we’re doing wrong in equipment sales and how the managed services model can fix them:

1. Equipment financing is not a separate offering—make it part of the equipment sales pitch.

Customers do not want to make two buying decisions, yet the current and widely accepted industry approach for selling equipment is to sell equipment and then offer financing, if necessary. Not every customer needs financing, but making financing fast, easy and an intimate part of the sales process has a big payoff because it differentiates the equipment seller’s offering and increases customer satisfaction.
There are three ways to make equipment financing part of the sales process.

First, map the sales process from offer, to delivery and funding. Work with sales management to weave financing into the process by clearly identifying roles and responsibilities, information flow and hand-offs.

Secondly, add technology and tools to streamline the process. Developing a tool kit of email alerts, widgets, “get quote” buttons, landing pages and a dashboard to manage it all is ideal. This is called “finance everywhere,” and, as the name suggests, the intent is to provide an easy way to determine financing wherever a vendor is selling equipment. Building a tool kit may seem daunting at first, but by creating simple finance tools for vendors, lenders will have a toolkit of their own in 12 short months.

Lastly, Invest in sales training. Sales training is the lynchpin for truly integrating financing into the sales process.

2. One financing solution and process is not right for every vendor

Those equipment dealers who have thought about adding a financing solution to their offering oftentimes look to emulate the big guns of equipment sales like IBM, John Deere and Caterpillar. These large equipment sellers have captive financing arms. Financing is both a strategic and tactical strategy, and most often financing is woven into the managed services offering in a very effective way, but this may not work for everyone. The majority of small and mid-sized equipment sellers don’t have the capital or in-house financing expertise to build the infrastructure necessary for captive financing.

So what options does an equipment seller have to compete?

The answer is many. In fact, captive financing might be the worst option, considering the resources required. A key partnership with a lender that provides great rates and managed services to deliver “white-labeled” captive financing might be best. If A-to-D credit coverage is key, creating a credit desk that syndicates to multiple lenders or partnering with a marketplace might be the right strategy. If specific programs like 0% financing or 30/60/90 day no-pay programs will give the vendor the biggest lift, then shopping the programs to find the best lender makes sense. The ultimate goal is to implement the financing strategy that delivers a leg up on the competition. It’s to win more customers, not finance more with customers who are already buying.

How many customers are being lost because financing is never offered to them or they can’t get approved? As an industry, we are competing for customers already leasing. Continuing to think this way will lead to limited growth and compressed margins.

3. Customers want faster, better and cheaper options

Enough with some day, we need to automate now! Borrowers are looking for instant gratification, and the days of waiting 1 to 48 hours for a financing quote are coming to an end. Automation of instant quotes is critical for lenders and vendors who want to close an equipment sale when the customer is ready to buy. For vendors in particular, automation is not new. They’ve already automated significant parts of their business: marketing is online, sales and customer service have CRM and CPQ, manufacturing and distribution have ERP and they all have email. Automating equipment financing and plugging it into the vendor enterprise is just the beginning.

Because the equipment finance industry is so late to the automation game, the tipping point will come quickly. Those who embrace automation now will become early adopters, securing their survival and shots at success.

Powerful Solution: A Managed Service Model for Equipment Financing

Rather than searching for separate solutions to these problems, I suggest we look to one—the managed services model. Under a managed services model, equipment dealers place greater emphasis on “add-ons” to offer an unprecedented amount of options and level of convenience for borrowers.
It’s a relationship, not a purchase. Under a managed services model, equipment dealers advise their borrowers on how to effectively manage their cash flow to afford the equipment they need with easy monthly payments, instead of waiting until a borrower has the money to buy. This allows equipment dealers to add value by integrating into the borrowers’ businesses in a meaningful way, increasing their own relevance and moving from an auxiliary asset to a critical part of business operations.

So the question equipment dealers need to be asking is, “Would you like fries with that?” As I mentioned above, there is no one-size fits all solution, but generally equipment dealers can become managed services providers in one of three ways: build, buy or partner. Partnering with organizations who do managed services well is the best solution.

GreatAmerica Financial Services, a national equipment finance company and partner of LeaseQ, helps equipment dealers make a smooth transition to the managed services model. In 2010, GreatAmerica launched Collabrance LLC to focus on this very thing.

“Equipment dealers are asking, ‘how do I become relevant to my customers and see a trajectory of growth?’” said David Pohlman, executive vice president and CEO of GreatAmerica. “If we can help equipment dealers navigate down a path of managed services, it helps them grow their business, keeps them relevant to their customers and provides new types of devices and services to be financed.”

Pohlman suggests equipment dealers also expose themselves to others who’ve done it well: “Dealers hear a success story and think, ‘they were just like us at one point and have taken the necessary steps to success.’”

The time is now for equipment dealers to add financing to their toolkit and managed services is the ideal model for the job as the equipment finance industry marches forward.

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