Whether you’re at the grocery store, the clothing store, the car dealership or anywhere else you go to buy things, very rarely is price the most important thing on your mind. If you’re buying food, you want products that taste good, and that are both healthy and nutritious. If you’re buying clothes, you want things that are well made, that fit right and that make you look good. And if you’re buying a car, you want something that’s safe, fun to drive and that suits your personality and your lifestyle.
In other words, you are buying value, or at least perceived value, from your own personal perspective. If price was the most important element in the grocery store, the clothing store, the car dealership or anywhere else, we would all shop at the same places and buy the same things. Certainly, getting the most bang for the buck is not only human nature, but good business as well. We’re always looking for the best deal or discount to help our buying process.
But at the end of the day, if you want that prime steak, custom suit or high powered sports sedan, you’re going to wind up paying more for it than you would have paid for something of lesser quality. Said another way, you are paying for the value received. If you spend less money, you get less value. That’s how business works.
When it comes to leasing or financing equipment for a business, the exact same thing applies, although many people don’t realize it. When leasing equipment was first introduced as an alternative to paying cash or using a traditional loan to buy equipment, most business buyers would perform a lease/purchase analysis to determine which approach made the most sense financially. While this kind of analysis can still be useful, today it is clearly not the sole driver behind the decision to buy or lease equipment.
If leasing was shown to be the best option for new equipment, business buyers would typically then make a practice of “shopping around” for the best price. They would contact a number of leasing companies with sheet of equipment specifications and then make a decision to lease with the company that provided the lowest rate factor. It was a pretty simple process and over the years millions of transactions were conducted in that manner.
In the early days of equipment leasing, this approach might have made sense. Leasing companies were more concerned about generating new applications and closing transactions than they were about building relationships. Customers didn’t show much loyalty to the leasing company unless it consistently offered the lowest rates, and the leasing companies didn’t show much loyalty in return. It was a completely transactional relationship.
Over the past several years however leasing and finance companies have discovered that they can no longer do business that way. Today, as these companies realize that customers are precious and that the key to success is to build long-term, lasting relationships with them. They do this by providing value added services to their leasing and financing offerings, and by focusing on customer relationships.
Customer service has improved dramatically. Lease origination has been simplified and expedited. Lease administration and support has been streamlined and in some cases automated. Transactions are flexible and can be customized to the unique needs of the customer. In-house expertise is available to assist customers in obtaining maximum value from their leasing programs.
In short, today’s progressive leasing and finance companies are value-based instead of transaction-based. They are creating brands that have become associated with a consistent expectation of value and exemplary service. Yes, competitive rates are still important, but they are not—or at least should not be—the primary driver when choosing a leasing or financing partner.
Just as you are loyal to brands in the supermarket, clothing store and automobile dealership, it’s important to think about your leasing and financing partner in the same light. Building a strong and lasting relationship with your primary funding source is an essential step in ensuring business growth and a prosperous future.