In the overall scheme of things, service contracts and the revenues they bring into your enterprise probably aren’t the most exciting part of selling office technology. Still, in uncertain times like these, it’s hard not to appreciate this revenue stream. When built into your leasing and financing contracts, these agreements generate monthly recurring revenues that have the potential to enhance the value of your business significantly. That’s because bundling the financing with the service allows you to show the value of the contract as future revenue.
With standard service contracts, your business can only show the value of the time remaining on the contract until it renews. When you bundle the lease and service, the difference can increase future revenues two to three times higher. When the need arises, this recurring revenue makes your company more attractive to banks and potential buyers.
Beyond that, these service contracts provide your company with a predictable revenue stream, which, as in any business, helps you manage your day-to-day cash flow needs. These revenues can also help guide your financial decisions when you’re considering hiring additional staff, expanding, or making new investments in your business.
Relationships with SMBs: The ties that bind
If you think about a small- and medium-sized business customer, they may be wearing many hats, with other important business matters that extend well beyond acquiring office technology. When these prospects are approached by a sales professional who is well-versed in the benefits of bundled servicing options, they are very likely to appreciate the ability to “one-stop-shop.” What’s more, it’s about choice. By offering your prospects an array of financing options, you’ve equipped your sales team to be regarded as a trusted financing source who takes the time to understand their prospects’ needs in an efficient and consultative manner.
But it goes deeper than that. When you offer financing solutions that include delivery, installation, ongoing maintenance, service, and training for one monthly figure, you’re offering them peace of mind. And when you deliver as promised over the life of the agreement, you’ve sealed the deal for future business and possible referrals.
Lease renewals – How to keep them coming back
When looked at as a whole, monthly recurring revenues add value to your enterprise, provide a predictable cash stream, and serve to deepen and solidify customer relationships. Doesn’t it make sense to find ways to make sure your leasing customers renew?
If you haven’t considered renewals, it’s probably a good idea to develop some internal procedures to create customer touchpoints throughout the life of the financing. As with anything else, capturing the lion’s share of renewals requires commitment and consistency on your sales professionals’ part. Given the value that monthly recurring revenues add to your business in any economic environment, isn’t it worth the effort?
LEAF Managing Director Nick Capparelli has been with the company since its beginning in 2011. He has also held leadership positions at LFC, Fidelity Leasing, Tokai Financial Services, and Master Lease. An industry veteran and thought leader with more than 25 years of experience, Capparelli is a graduate of Northeastern University.