Cash flow tailored lease to make the sale

A few years ago, I developed a relationship with a specialty point-of-sale equipment provider that had not effectively embraced the use of leasing as a tool to help their customers overcome budget constraints.

One day I was talking to a sales rep, Paul, over a cup of coffee, and I asked him my usual question, “How’s business?” After crying his eyes out and blaming everyone but himself for his poor sales results, he told me that he wanted to quit sales and that he felt he was better suited for a job that would provide him with a regular paycheck.

Sensing his frustration, I asked Paul what attracted him to sales and if he really, deep down, wanted to leave the profession. He responded by telling me that he enjoyed the freedom, the potential for big money and, most importantly, the tremendous sense of satisfaction he received from making a sale. And then he proceeded to say that he really didn’t want to pack it.

Having been involved with sales people for several years, I offered to take him under my wing and work closely with him for the next month.

My intention was to condition him to start using leasing proactively and show him how it can be used to close sales. The first thing I asked him to do was generate a list of “staying cool” prospects, you know, the ones who were thinking about or putting the purchase on hold for a future date. The second thing I asked him to do was to start making appointments with these companies where he would walk with him on the sales call. I gave him a week to do this and get back to me.

Three days later, Paul called saying that he had made an appointment for Tuesday at 10:00 am with the owner of a company that he had previously provided a quote for 10 systems totaling $280,000. He proceeded to tell me that we are probably wasting your time as you won’t be purchasing any POS equipment until next year.

The company was a retailer selling women’s beauty products, including specialty soaps, body washes, and other skin care products. The company had 10 locations across Western Canada and wanted to replace its current outdated system. It was September, the Christmas season was approaching, and the client made the decision to put the acquisition on hold until next year.

So, we met with the client and his opening statement was, “I don’t know why we’re meeting again. I think I’ve made it clear that I’m not going to continue until next year.” I looked at my protégé and saw an I told you so smile on his face, however, the prospect’s comment was music to my ears. I knew we had a lot of research to do though, and with the right strategy and questions, we could probably turn this into a sale this year, not next.

I took control and started asking questions.

That was the conversation…

Me: “So how long have you been thinking about replacing your current POS system?”

Client: “About six months.”

Me: “It seems that you have invested a lot of time in the process.”

Client: “Of course. I have met with several suppliers and it is not easy to do a complete analysis of the various products available.”

Me: “Have you chosen a supplier or are you still looking at the specifications of more than one product?”

Client: “No, I’m definitely going with the Paul product, but like I told you, I’m not doing anything until next year.”

Me: “I see. What is your reason for upgrading your current system?”

Client: “We have a lot of product and our current system can’t handle the amount of small ticket inventory. Paul’s system will allow me to better manage ordering procedures and tell me which items aren’t moving.”

Me: “Are you telling me there would be a substantial cost savings by installing the new system?”

Client: “Absolutely. It’s September now, and I just don’t think it’s feasible to have it up and running, with the staff fully trained in time for the holiday season, which starts in early November by the way. I wish it had started earlier in the year.”

Me: “Paul, is it feasible to have your system fully operational with staff trained by November 1st?”

Pablo: “Absolutely! We have a dedicated team of service technicians and customer support trainers at all locations in Western Canada. In addition, we will assign a project-specific IT specialist who will be available 24/7 of the week”.

Me: “It seems clear to me that Paul can meet his deadline and will, in fact, go the extra mile to ensure the transition is seamless. Do you have any reason to doubt him?”

Client: “No. I’ve checked their references and they seem to deliver what they promised. $280,000 is a lot of money, you know?”

Me: “I acknowledge that you did, however, state that there would be substantial savings by replacing your current system.”

Client: “Yes, there are, however, we opened three new stores this year, and I am not very interested in approaching my bank again for a loan or an extension of my line of credit. To be prepared for the holiday season, I have to use my line for a large amount of inventory.

Me: “If we were to set up a 4-year lease at around $7,300 per month, would you be prepared to go ahead and have the new system up and running by November 1?

Customer: I really prefer owning my team.”

Me: “With all due respect, if a purchase is secured by a bank loan or line of credit, you don’t actually own the equipment. With a lease, in effect, you’re creating a separate line of credit outside of your relationship.” In addition, the lease payments are fully tax deductible.”

Client: “In this business, 70% of my income is generated in November and December, and with a lease, I would keep that $7,300 payment for the entire year. In the months when my income is low.”

Me: “I appreciate that and in fact you are not the only one. We have many clients in similar situations and we have addressed the situations by providing what we call custom cash flow leases. We could provide you with a lease where 70% of your payments were made in November and December, with the remaining 30% distributed throughout the rest of the year, would you be willing to move forward with the new team today, instead of waiting until next year?”

Client: “Can you do that?”

Me: “Absolutely.”

Client: “Sure. I think that would work.”

Me: “In that case, I’ll put together some exact numbers for you and come back this afternoon to get credit information as well as your current financials. In the meantime, Paul will prepare your paperwork and we’ll get the order.” .”

Client: “Sounds great. Can you be back here around 2:00? I’ll have my information ready for you.”

Me: “Perfect. See you then.”

There you go!

A win-win-win situation. Paul got the sale, the client got the much-needed POS system sooner rather than later, and not to mention he got the lease.

Why was this sale made?

First of all, Paul, the sales rep, was willing to back out of the sale today and wait until next year. He didn’t realize the opportunity was still there, yet he wasn’t aware of the tools and resources available to close the sale today. As with many prospects, the client hid the real objection. In this case, the real objection was financial in nature, and due to expansion during the year, he was reluctant to approach his bank again.

By hiring a leasing specialist, Paul was able to add a new dynamic to the sales process and ultimately solve his client’s financial problem. This particular situation involved a lot of creativity to first identify the customer’s needs and second come up with a solution that would close the sale.

Naturally, a sales representative like Paul is not expected to have the same level of knowledge as a leasing specialist; however, to be properly equipped, he must know what type of lease flexibility is available.

This provides an excellent example of how leasing can be used to control and close a sale. Be sure to involve Keltex Financial early in the sales process and let us help you.