I was on site with a catering equipment vendor recently. It was our quarterly meeting, and we were taking stock of the business’ position after 6 months working with Shire.
The verdict: the company had earned £100,000 in additional revenue by offering customers leasing options.
The focus shifted from one-off sales to future revenue
A key advantage of offering finance is that you can easily sell a total care package.
Put it in the context of a personal car purchase, and you’ll see what I mean. 30 years ago, everyone paid cash for cars. Affordability was a key driver, and manufacturers met this demand with basic models (like the Ford Escort). Since car finance has become mainstream, people can afford more expensive cars (like BMWs and Audis) than they could before, and they’re demanding features and innovation. As part of the finance package, dealerships include MOT and service – and make a higher margin on these services.
The sales team at the catering equipment vendor was very focused on closing the upfront sale. They were selling models within customers’ cash budget – the Ford Escort equivalent – and loyalty was low.
By promoting leasing, they were able to up-sell to products better suited to the buyer’s needs, complete with a maintenance package. This opened up a stream of future revenue while building long-term relationships with customers.
Future revenue was more profitable
The vendor made a far higher margin on the maintenance package than the upfront machine sale. Plus, they knew that in 3 years, at the end of the lease, there was a high probability the customer would want to upgrade (complete with a new lease).
As a result of the finance offering, customer lifetime value increased dramatically – and the vendor was able to deliver a better service.
Financing made the supplier more competitive
In the catering industry, bricks-and-mortar vendors struggle to compete with online retailers with low overheads, no expertise and rock-bottom prices. Customers benefit from low prices but miss out on the knowledge and expertise that helps them choose equipment based on maximising productivity and minimising total life costs.
Offering finance with a full-service maintenance package became a valuable differentiator. The team was able to build a stronger rapport with the customer and offer a consultative service, becoming a trusted adviser helping restaurants and caterers get the most from their equipment investment. And that boosted the vendor’s conversion rate.
Want to learn more about how you, too, could boost revenue in months?
Offering leasing is easy.
It’s a straightforward on-boarding process, and you never have to become a finance expert (someone like me is an extension of your team, always a phone call or email away). You get access to an online quotation system so you can track deals and auto-score customers quickly. You also get regular, free sales training tailored to your business, so you maximise the revenue stream.
For more information, fill in the form on our contact us page.