Friday, July 25, 2008

New Lease or Re-Lease Tis the Question


I've spoken to many p4p members in the last two weeks and have also placed a few calls to leasing reps that I know. Pretty much the general agreement is "business is stagnate".


What's alarming is lease upgrades, where most clients could be upgraded 12-18 months prior to the end of the lease we are now seeing these clients going deeper into the end of the lease, waiting until the last few payments and even customers that are in renewal are waiting too long to notify the leasing company of their intent. Can't say I blame em, seems everyone is just trying to wait it out for a recovery.


Which brings me to the question of re-leasing the equipment that the customer already has. There are some opportunities out here. Consider this, a client leased a system for 36 months for $10,000. The system is in good shape, the leasing company wants $2,500 to buy the equipment. At this time the customer can't cut a check to own the system or just wants lower payments and they would like to keep their present system.


Here's where you can step in and re-lease them the same equipment for a shorter term and save them money on the existing lease payments. First and foremost get the buyout figure from the leasing company, add your sales cost to the base of the machine and then present (in the case above) a 24 month lease with a $1.00 purchase option. Where the client had lease payments of $289.00 per month you can now re-lease the equipment for $243.00 per month ($1.00 purchase option). No machines to order, no out of stock situations, the existing system works fine and has all of the features you need. You could even extend the term to 36 months and save them more on the monthly payments. Also, keep in mind that the recent economic stimulus package allows the customer to write off the entire lease amount ($1.00 purchase option) that year!


Since almost every leasing company has a "roll over" clause, the key is to get in as early as you can. If anything this is just another avenue to venture down when considering a customers options if they do not want to explore a new piece of equipment or need to lower payments.


Would appreciate any comments on this.


-=Good Selling=-

2 comments:

Jeremy said...

My thoughts on finding ways to save customer's money is completely different from the re-leasing method of lowering payments. I know this may sound more difficult or time consuming, but what about offering a solution (software + hardware) that is designed to improve a process or reduce another expense? We have incredibly powerful solutions that never get discussed because we stay in the "this box for that box" mentality. What about a variable data printing solution? How much money can that save a prospect? How about a workflow solution built in a few hours around a customers existing processes, yet removing the "pain" points?

I think we can demonstrate to our clients and prospects some amazing opportunities. Let's decide to not participate in the recession. If all we ever think about is the short-term sale, then at least we know the extent of the results we can expect.

Art Post said...

Points well taken, I am a solution seller also. However, we need to recognize that not all customers are "Solution Buyers", nor can we sell everyone a software/hardware solution.

In the re-lease the equipment, it is a solutions sale if the customer needs to solve a financial need. Such as saving money or lower payments.

Thanx for the great post and looking forward to more.

Art