"Marketing to Lessees: Perception is Reality?"
Last week, the Equipment Leasing Association hosted a teleseminar on Understanding Lessee Perceptions For Marketing Success. Joe Lane of Bay4Capital moderated the panel, which included Christopher Swann, Ph.D. of Global Insight, Lori Dixon, Ph.D., of Great Lakes Marketing, and Ted Brownrigg of Financial Pacific Leasing and William Verhelle, Esq. of First American Equipment Finance.
The discussion blended objective and subjective research results, showing a variety of perspectives on how lessees view leasing and lessors' marketing efforts. Brownrigg and Verhelle also offered impressions of their own marketing effort successes.
Christopher Swann began by sharing results of the recent Global Insight study titled The Benefits Of Leasing -- Value And Market Perceptions. Swann focused on how leasing is perceived in the marketplace, how perceptions turn into choices and how those choices become marketshare.
“We found out what lessees want,” Swann said on the call. “We found that lessors could increase market share if they were willing to do some particular things, including simplifying documents, simplifying contracts, specifically reducing surprises, sustaining their speed of equipment delivery, and maintaining a continuous relationship between lessor and lessee. They clearly want a long term relationship.”
Swann noted that the market for equipment was $833 billion in 2003 (sourced from the Bureau of Economic Analysis. The figure includes business spending only, not consumer spending.
“What is interesting is we found that 39 percent is indifferent to acquisition method,” said Swann. “This means those equipment acquirers are not wedded to leasing or purchasing. We found most businesses are amenable to leasing, even the hard core purchasers. Lessors have an opportunity there,” he said, but to remember what they appreciate—consistent, fast service— and don't appreciate—lease documentation.
William Verhelle of First American Equipment Finance, who shared his company's approach to understanding customers, agreed that anything that will reduce the customer's staff time is highly valued. “Any time you can simplify paperwork and use straightforward terms is highly valued.”
Swann also said, “The tendency for small to medium size firms is to acquire a narrow range of equipment, mostly computer and office equipment. This also may be an opportunity for leasing to penetrate their additional equipment needs.” A teleseminar “quick poll,” which allowed listeners to vote on whether they agreed or disagreed with a statement made, showed that most of the 67 listeners agreed that this opportunity does exist.
Lori Dixon of Great Lakes Marketing the provided results of a recent study she concluded earlier in the year, which conducted in-depth interviews of 12 CFOs from a variety of industries. She noted the significant difficulty in reaching this important audience.
“We purchased a list of 211 companies with sales of $500 million or more. More than 480 calls made in order to complete the 12 interviews,” she said. “They are hard to reach.”
Dixon shared that the purpose of the study was to evaluate ELA's marketing messages and understand CFO attitudes and experiences. Key findings show that all the CFOs were familiar with leasing and cited leasing as the best option in only certain, specific financial situations. The CFO audience said they would first assess the asset obsolescence timeframe and then work to understand the company's cash flow and financing options.
“Interestingly, their impressions of leasing was based on personal and company experience, and not based on what they read in the press,” said Dixon.
Additionally, Dixon's research showed that the CFO group was evenly divided as to whether or not leasing was a good strategy or not. Those in favor cited conservation of cash and avoiding obsolescence as key benefits. Opponents to leasing cited higher cost as reasons not to lease. “They all expressed words of caution when evaluating leasing, ensuring the person understands all the costs, tax consequences and their option under the terms of the lease,” she said.
Several messages were tested with the 12 CFOs. The words that garnered the most positive perception included “cash flow,” “cash effective” and “liquidity.” The words that didn't incite their interest as much included “rate” and “deal.”
The phrases that most interested the CFOs included, “Leasing is flexible with its customized structures, such as custom payments, cyclical payments, master leases, and other” and “leasing allows for cash conservation,” and “corporate planning for economic recovery shows include flexible financing options.” When polled, 49 percent of the teleseminar's listeners agreed that those were good statements to use with lessees. Just 27 percent agreed the statements were “somewhat” good.
“But, because most impressions of the CFOs come from their own experience with leasing, it is clear generic messages about leasing will not work,” said Dixon. “They want specific information on leasing to help them decide the leasing option. When marketing, it is important to know the kinds of leases the customer has dealt with in the past.
“Additionally, leasing should be marketed as an option. They are not receptive to messages that depict leasing as the best or the only option,” noted Dixon. “The ultimate goal would be to match messages with their real world experiences.”
Ted Brownrigg of Financial Pacific Leasing, which focuses on higher risk, high yield transactions, also shared his experiences with marketing leasing.
“We find customers willing to put a lot of faith into the sales person,” said Brownrigg. “Unfortunately, it is not capitalized on enough. They don't get straight enough information and follow-up is poor. But we see a huge opportunity among small businesses if we can improve this.