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Positioning the AMR Sell: Utilizing the Valuable Leasing Tool

Positioning the AMR Sell: Utilizing the Valuable Leasing Tool. Randy Meinke, Vice President Kerry Linda Martin, Vendor Relationship Manager. Overview. When Does Leasing Fit? Recognizing Leasing Situations--”Customer Says” Leasing Benefits to the AMR Process and Vendors

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Positioning the AMR Sell: Utilizing the Valuable Leasing Tool

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  1. Positioning the AMR Sell:Utilizing the Valuable Leasing Tool Randy Meinke, Vice President Kerry Linda Martin, Vendor Relationship Manager

  2. Overview • When Does Leasing Fit? • Recognizing Leasing Situations--”Customer Says” • Leasing Benefits to the AMR Process and Vendors • When and How to Utilize the Lease Tool

  3. Budget and Price Obstacles Can’t Invest In Trial Program Political Obstacles Timing Cycles for Budgets and Bonds Prevent Closure Simplification When Does Leasing Fit?

  4. Customer Says... • Next Year’s Budget • Next Years Revenue Bond • Can’t Get Approval for a Project That Big • We Have Other Capital Projects Using Up…

  5. Customer Says... • Can’t Fit in Capital Budget • Project Makes Sense, But… • We Know What We Need, And We’re Going to RFP

  6. Sell More… Sell it Sooner

  7. Why Provide Financing? USC

  8. Three Case Studies • 4 Year ROI/Payback… Immediate Cash Benefits With Lease • Several Year Install Is Accelerated to 18 Months • RFP - Differentiate--Introduce Something New

  9. Leasing Benefits to the Sales Process and Vendors • Shorten Sales Cycle, Clinch the Deal Financing Fits Project Into Client’s Budgets • Sell Monthly Payment Rather Than Gigantic Lump-sum • Better Economics for Client • Bundle All Costs of Project Into Financing

  10. Shorten Sales Cycle Working ThroughOperating Budget • Operating Budgets Expenditures Authoriized through • Operating Management • Engineering • Mid-Level Managers • Day-to-day Operating Expenses Are Interchangeable With Leases • Labor, Maintenance, and Supplies

  11. Sell Monthly PaymentRather Than Gigantic Lump-sum Which Is Easier to Sell $7,000,000 or $120,000? Who Can Say Yes to $120,000?

  12. Leasing Provides Better Economics for Client • Improve Project ROI and Shorten Payback • Projects Are Profitable During the Early Stages When Financed • Monthly Income > Monthly Expense • Client Obtains More “Solution” for the Same Dollar Amount

  13. Bundle All Costs of Project Into Financing • Avoid Multiple Authorizations for Different Project Costs and Vendors • Avoid Client Having to Expense Consulting and Implementation • Stretch Lease Term to Match Benefits and Cost of AMR

  14. Benefit to Sales/Income • Increase Sales Volume and Revenues • Turn-key Solution - Easy for Client to Say YES! • Control & Shorten Sales Cycle • Maintain Profit Margins • May Eliminate Performance Bond, Lower Cost

  15. Case Study and Example I • Client Selected Upgrade Technology From Current AMR Provider Challenge: 4 Year Payback Period • Lease: Payment Less Than Annual Savings • Immediate Positive Cash Flow • Payback Less Than 1 Year • Client Signed Deal

  16. Lease Benefits - Current and Future Sales • Client Can Buy Now • Client Can Buy More Going Forward • Your Focus Is on Customer Satisfaction • More Wish List Projects Done • Expand Client List… Grow Your Business

  17. Case Study and Example II • Client Has Mandate to Meter by 2008 • Challenge 1: Customer Budgeted for 4-year Install/Rollout Plan • Challenge 2: Customer Needed Full System Immediately • Challenge 3: Partial Install Produces Less Than Partial Benefits As a Result of Lack of Labor Savings Until Full Install

  18. Case Study and Example II Lease With 18 Month Rollout Provided • Full Implementation and Savings Early • Less Budget Dollars, More Benefit • Matched Costs to Benefits • Avoided Political Complications • Increased Vendor Revenue • Avoided Multi-source and Multi Vendor Issues

  19. Lease Benefits - to Vendor Finance Dept. • Improve Cash Flow With Faster Payments • Avoid Credit Risk to the Vendor • Offer Extended/Deferred Payment Terms • Cut Collections Expenses • Positive Impact on Bank Relations by Improving Vendor Financial Statement • Reduce Implementation Risk Through Complete Solution

  20. When Is It Time to Introduce Financing? Often… • Early • Middle • Late • And Again…

  21. When Is It Time to Introduce Financing? Often… • Early - head-off budget & price objections • Middle - competitive advantage, and project ROI/payback benefits • Late - remove political and project size obstacles • And Again… to sell more, and to differentiate your solution

  22. Ways to Introduce Financing • Discussion • Proposal and RFP • Service Agreement

  23. Discussion: How will you Finance… ? • 3 Answers: • Not Sure • Cash/In the Budget • Need Financing…Exploring Options

  24. How will you Finance...? • Simple Questions Answer… • In the Budget? • How Do We Get It Through the Board? • Realistic Time to Close This Prospect? • How Can I Help This Manager Get This Project Done Internally?

  25. Get Ready for Finance Discussion • Who Will Handle the Financing? • Client’s Financial Condition • Project Scope & How Lease Helps • Finance Options Available

  26. Financing as a Topic • Can Differentiate Between Truthful Objections and False Obstacles

  27. PROPOSAL and RFP • Operating Expense May Avoid Formal RFP • Incorporating Finance Option in Proposal Recognizes Client Needs and Obstacles and Differentiates Vendor • Benefits of Financing Often Help Obtain Final Approval From CFO or Executive Committee

  28. Case Study and Example III • Client RFP Requests Vendor to Provide Financing For Trial Program With Annual Payments in Arrears • Challenge: Avoid Credit Risk For Vendor and Increase Sale Size While Meeting Customer Need

  29. Case Study and Example III Lease: Annual Payments in Advance Provided for Complete Project Rather Than Phases • Customer selected full solution based on early cost savings through financing • Vendor Preserved Sales Price and Margin • Client Saved 10% With Alternative Payment Plan • Contract Awarded to Vendor Who Used Financing and Outside the Box Thinking.

  30. Service Agreement • Private-label Lease Program Presents One-source Provider • Financing Matches Term of Service Agreement • Unique Option, Becoming More Common With Growth of Outsourcing Kerry Martin, Utility Finance Group 800-496-4640 x677

  31. Finance Options Available • Cash from Operations • Retained Earnings/Equity • Bank • Bonds and Sr. Notes • Lease • Vendor Financing Terms

  32. What Do Utilities Lease? • Meters and AMR Systems • Software--Billing, CRM/CIS and other • Consulting and Implementation Costs • Office Equipment and IT Hardware • Field/Operations Equipment • Land, Buildings, Facilities • More…

  33. $1MM OR $100K?? Year 1 TOTAL

  34. Bottomline • Financing improves the business case for your project with better ROI and cash flow. • Expedite the sales process by using the budget objection to your advantage. • Finance Options Help You Save Your Client Time and Money.

  35. Contact Utility Finance Group Contact: Mr. Randy Meinke, Vice President CalFirst Leasing Corporation Telephone: 800-496-4640 x 659 E-mail:rmeinke@CalFirstLease.com Contact: Ms. Kerry Linda Martin, Vendor Relations Manager Utility Finance Group Telephone: 800-496-4640 x 677 E-mail:kmartin@CalFirstUtility.com Call or Visit Us at Booth #402 For More Information

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