Do equipment vendors really need to offer financing options to their customers?
Featured in the January 2017 issue of Dealer Communicator.
Dealer Communicator is a Manufacturer Sponsored News Journal whose purpose is to help channel manufacturers solidify their dealer relationships and to find worthy dealer/distributor partners.
It’s not uncommon when I approach new or prospective vendor accounts that they reply that they do not offer financing as part of their sales process. “My customers never ask about it” they reply, and that causes me to evaluate the merit of that response. If the vendor is exhibiting at a trade show, they are there for a purpose. They typically have a sales force and some degree of marketing as well. Why do they do all of this? It seems pretty simple to me – to let the world know what they have to offer.
By the same token, if a company comes along and develops a new product that revolutionizes their industry, would anybody ask for it if they did not know about it? If a company sells dishwashers and takes on a new line of garbage disposals, would anybody ask about the disposals unless they somehow knew that the company offered them? The answer is a resounding “NO”. So, it stands to reason that the same is true for financing. Why would anybody ask a vendor about financing if they have no reason to believe that they offer it?
In today’s world many customers are looking to their equipment suppliers for a turnkey sale including the equipment, delivery, installation, training, warranty, service, and financing. The vendor that offers the complete package has a better chance of closing the sale than the one that offers a less complete package, including financing. Think of the world of car sales. Almost every ad you see on TV leads with financing, anything from “no money down” to “0% financing” and everything in between. The reason for this is that many people make large purchases such as cars based on monthly payment and affordability (financing). The world of equipment sales is no different. In many cases, the company owner or CFO looks at the acquisition of new equipment in one of two ways; will it increase sales or will it decrease costs? They compare the projected increase in sales or decrease in costs to the monthly cost of the acquisition, and if the monthly cost of the equipment is less than the anticipated increase in sales or decrease in costs, then the acquisition makes sense from a cash flow standpoint. Let’s say that the company determines that the new equipment will save them $2,000 per month and the monthly payment for that new equipment is $1,500, they see an immediate cash flow benefit of $500 per month. So, the financing of the equipment becomes as important as the acquisition and cost of the equipment.
With the financing of your equipment being such an important component of your sale, why would you wait for a customer to ask for it? Why not make it a part of your equipment sale presentation and offer your customer a turnkey equipment acquisition experience.