Enjoy the flexibility of leasing and financing

Tags: Knowledge
Did you buy that apartment in Gurgaon with a suitcase of cash? How about when you picked up your new car? When you moved into your rented flat, did the owner ask you for the whole year’s rent up front? In each of these situations, you first figured out a reasonable monthly payment before determining the price you could afford. In essence, you developed a cost-benefit analysis based on your monthly operating expenses. In other words, you were figuring out affordability.

This value or affordability analysis is not dissimilar to the financial exercise many of your customers could, but often do not, do when contemplating the purchase of new computer technology. Instead, they often consult the year’s capital budget, see what is there, and determine the price tag they can afford. The customer becomes fixated on price.

Imagine you are buying a car. You touch and feel, test-drive the latest models, and decide on the car of your dreams. You approach the salesperson, apprehensive about the negotiations to come. The first question the salesperson asks is: “What are you looking at for a monthly payment?” By simply practising the art of affordability selling, the salesperson is getting you to think about value on a monthly basis instead of total cost.

Affordability selling of technology, however, is somewhat different. The primary concerns of technology purchasers today are obsolescence and return on investment (RoI). In many cases, technology becomes obsolete by the time it is implemented throughout an organisation, making the affordability selling of technology more challenging. In the computer industry, affordability selling lets you position the price of a solution — rather than a product — in terms of monthly operating expenses that your customers easily can relate to.

The key to successful affordability selling of technology is to shift the conversation away from the price of the product early in the sales process and focus instead on the price of a business solution, clarifying immediately whether or not it fits your customers’ needs. Many customers purchasing computers want the bottom line that includes service, tech support and training. By shifting focus away from the price of the box, the price of the software, and the price of education and training and concentrating instead on offering a monthly price for their computing needs, you can add a level of sophistication to your selling. You can expand and broaden your product offerings, elevate the discussion and talk about the concerns of their businesses.

By virtue of its terms and conditions, affordability selling and leasing creates a relationship between you and the customer that a simple sale cannot. With upfront sales, your customers purchase the product, walk out the door, and can end their relationships with you. The relationships were successful — you earned sales — but brief. With financial selling, you create ongoing relationships with your customers.

Unlike a traditional product sale, you know exactly when they will need new computer equipment: at the end of their lease. By establishing relationships with your customers, communicating regularly and doing everything you can to satisfy them, you have decreased significantly the chances that they will turn to your competition the next time they are ready to purchase computer equipment. The benefits to your customers of financing computer solutions? They can upgrade their technology without having to sell their current technology; they have a single source to turn to for service, support and supplies; and most important, they have a solution to their computing needs based on a monthly operating expense, without having to tap into capital budgets.

One of the biggest benefits of leasing or financing is flexibility that a cash-upfront sale cannot offer. Let us say your customer is opening a business and needs computer equipment. Cash is tight and will be for a while, but according to the business plan, growth will be steady. Your customer cannot afford the purchase cost, but can afford a monthly payment. But even the monthly payment will be difficult for the first few months. A step or balloon lease lets your customer gradually increase payment amounts over the term of the lease in step with the company’s expected growth. Leasing provides the flexibility to tailor a plan that meets the needs of your customer. zz

(The writer is CEO and MD

of CustomerLab)

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Amidst Sino-Indian bonhomie, the Tibet issue cannot be wished away

    Tibet did not figure in the three-day high-level meetings between India and the People’s Republic of China (PRC).

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

<b>Riskfactor</b>: Intertemporal choices

Intertemporal choice is the study of the relative value people ...

Parvez Imam

Why we all have blood on our hands

What does the Jammu and Kashmir flood make us think? ...

Dharmendra Khandal

The peculiar possibilities of animal poop

You can tell a lot about an animal by its ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture