Capital-Equipment Financiers: Boost The Value Of Your Best Clients With Dynamic Leasing
As a capital-equipment provider, you know that most marketing seeks to attract new customers. But the serious business of appealing to customers shouldn’t stop once they’re through the door for the first time, whether the boundary in question is real or virtual.
The point of encouraging return business is embedded in something called “customer lifetime value,” or CLTV. It’s an important concept, and a benchmark business metric, because there’s a measurable cost linked to customer engagement. That’s true whether the aim is to attract new customers in the first place, or keep them interested enough to come back for more. But it costs five times more to engage a new customer than it does to keep an existing patron.
(To streamline this post, here’s how to calculate a CLTV score. Focus on the five-step section called “Customer Lifetime Value Model” near the top.)
Giving your customers strategic options around the gear they need
This economic benefit elevates the need to keep customers engaged to the point they’re motivated to return whenever they need the goods or services you provide — and inspired to boost your organic marketing by saying nice things about your business in the meantime. But this must be an ongoing effort that calls on outstanding service as much, or more, than compelling messaging.
That’s one reason an automated in-house lending facility powered by SaaS technology is vital to companies that sell or lease capital equipment. Simply put, it spells out the message, “We are here for you, now and in the future.”
The value of this pledge comes from the fact that for many businesses purchasing equipment outright makes less sense than leasing as commercial gains derived from using the equipment can be used to offset the payments.
Lending to companies that need your capital gear — anything from rubber bands for broccoli stalks to communications satellites destined for orbit — makes your business a vital and potentially permanent part of the customer’s operations. More arresting than ads, inserts, or emails, an ongoing and satisfying relationship with your existing business clientele is the shortest road to repeat business that exists.
Help customers manage value risk and enhance your own analytics
Having an embedded lending or lease-payment facility also speaks to a real need among capital-equipment consumers. A company that seeks to buy the machines it needs to operate is assuming risks associated with “residual value,” or the value of an item after a set period such as the term of a lease. To realize this value and control expenses, a company that buys its gear outright has to sell it eventually, and at an optimal price.
That’s maybe simple enough as a one-off transaction. But a company with a fleet of 18-wheelers would need an entire business unit dedicated to extracting residual value from its trucks on a continuous basis.
“As a result, companies frequently opt to lease assets to transfer residual-value risk to you, the lessor, even when they can well afford to buy the equipment,” says Dmitry Voronenko, CEO and co-founder of third-party financing pioneer TurnKey Lender. “In this view, leasing is a way for your customers to protect their return on investment.”
Companies that use embedded lending or lease-installment services can expand existing customer relationships through on-going return business, cross-selling, and revenue from financing fees.
These sales opportunities can be further enhanced through data analysis by means of machine learning and artificial intelligence (standard with TurnKey Lender’s lending-software suite) as a way to achieve a better understanding of your client base, including its behavior and preferences. The result is a “massive” reduction in risk to the point where you can offset residual-value depreciation, according to Matthew Harris of Bain Capital Ventures.
In this light, having embedded lending or lease-payment capabilities means companies like yours can provide lucrative new services at a customer acquisition cost of almost nothing.
Now this is the time to digitalize your financing operations
The coronavirus pandemic is another reason to join the ranks of capital-equipment financiers. Bouncing off the sharpest GDP plunge since Harry Truman was president, the Washington, D.C.-based Equipment Leasing & Finance Foundation expects big banks “to step back from smaller-ticket deals and focus on core markets” in 2021, leaving “an opportunity for independents to increase market share” by focusing on small- and mid-size businesses.
“Measures taken to stem the pandemic have also accelerated the pace of new-tech adoption by as much as 10 years in as many months,” says Voronenko. “Sophisticated financing is becoming less of a nice-to-have and more of a must-have.”
Equipment lessors targeting such businesses need a financing solution that digitizes all loan-approval processes, meets any and all of their industry-specific needs, and gets them up and running fast. Beyond these three imperatives, capital-equipment financiers favor lending- and lease-management infrastructure that does the following seven things.
- Results in more sales
- Actively and accurately assesses risk
- Provides ongoing support, training and troubleshooting
- Automates legacy processes across each loan’s life cycle
- Achieves early instant approvals
- Doesn’t require specialist employees
- Eliminates manual processes
This checklist underlines the value of flexibility in a lending or leasing platform. For example, companies that experience seasonality to any degree — things like ski resorts, temperate-zone marinas — will appreciate your ability to offer incentives such as zero down, and in-season-only payments that can lighten their loads considerably, and help you stand out from your competitors.
From horizontal drilling rigs to computerized embroidering machines
This flexibility, pervasive digitization, and all-points integration are features of TurnKey Lender’s Unified Lending Solution, or ULS. The platform includes:
- Application processing
- Risk assessment
- Loan origination
The system also pre-qualifies applicants in minutes, improving the user’s experience with the system. Browse TurnKey Lender Featured Customers and Case Studies to learn how businesses like yours make digital lending easy today.
“With our ULS, everyone in the value chain is free to do what they do best,” says TurnKey Lender’s Voronenko. “Our lending technology empowers equipment financiers to provide their customers superior service as a boost to their CLTV rates and an enhancement to their organic marketing efforts.”