Published October 3, 2013 | Updated June 12, 2019
One of the best ways to sell more equipment is to make it as easy as possible for the buyer to pay for it. In fact, price becomes much less of an issue if payment terms are offered, particularly when the transaction doesn’t require a large upfront cash outlay. Creative financing is one of the most powerful closing tools a salesperson can deploy, while at the same time adding significant value for the customer who takes advantage of it.
So what is creative financing? Creative financing starts with a financing partner who understands your business and the challenges your sales force faces every day. The ability to develop a creative financing program that meets your needs and helps you to close more sales requires a broad and deep understanding of what you are selling and who you are selling it to.
A properly configured program of creative financing becomes much more than a simple form of payment. Successful equipment vendors use creative financing as a powerful revenue generation strategy that can be used to attract new buyers and then to actually close them. An experienced salesperson often uses creative financing as the ultimate sales closing tool.
This is not to say, however, that creative financing is a replacement for a thorough and meticulous evaluation and understanding of a buyer’s needs. Knowing what problems a buyer is trying to solve is the first step in any effective – and successful – sales process. And the more the salesperson knows about what the buyer is trying to accomplish, the larger the ultimate sale tends to be.
Once the equipment solution has been developed and proposed, introducing financing options does two things. First, it shifts the discussion away from the total price to a much lower monthly payment number. This number can then be modified to reach a monthly payment amount that fits the buyer’s budget.
But creative financing is not simply about creating an affordable monthly payment. For example, different customers have different requirements about what happens to their equipment at the end of the financing term. Some want to own it and keep using it. Some want to give it back and get new equipment. A creative financing solution can be tailored to meet virtually any end-of-term requirement.
The second major benefit of using creative financing as a closing tool is that it makes adding additional products and services a lot easier. After a buyer says “yes” the first time, they become increasingly likely to say it again and again, provided that the salesperson is solving problems and providing value. Also, because add-on products and services can easily be incorporated into a creative financing package, the overall impact on the transaction is minimal.
Working with the finance company, an equipment vendor can offer a wide range of programs that wrap all of the necessary supplies and services required over the lifetime of the equipment into one convenient monthly payment. So instead of inflating the total price tag to a point where it becomes unaffordable, the additional products and services will only cause small incremental increases to the proposed monthly payment over time.
Creative financing can also be used to encourage sales of a particular piece of equipment or an entire line, for that matter. Working closely with the finance company, the equipment vendor develops a promotion that creates excitement with customers and adds urgency in the form of a limited-time offer. As an example, a low interest rate could be offered for a slow-moving product, or a deferred payment promotion could be offered to customers in a seasonal industry.
Virtually the only thing required for these kinds of promotions is a close working relationship between the equipment vendor and its financing company partner. Some progressive and experienced finance companies have become quite good at helping their vendor partners market and promote their businesses effectively and profitably. This kind of working partnership can be exceptionally valuable to equipment vendors who are battling for market share in hyper-competitive marketplaces.
When used properly, creative financing is one of the most powerful business development and closing tools available to an equipment vendor. It makes it easier for your buyers to buy and sales will be easier, too.