The shared economy and the trend towards the variabilization of fixed costs are becoming increasingly important as a factor in customer service. This element is already anchored in the basic concept of leasing. - a guest article by Christian Glaser
Aristotle (384-322 BC) already stated: "Wealth consists more in use than in possession". Leasing is more than just a financing alternative and can set itself apart from traditional bank loans in many respects. This is because leasing companies are often property specialists in certain product groups and make very active use of this when drawing up individual contracts, which they can adapt perfectly to the customer's needs. Reputable leasing companies therefore consult closely with their business partners and customers in advance in order to be able to respond to their needs. The following three examples illustrate this:
- Full-service leasing
- Leasing for sales financing
- Variable leasing rates with the pay-per-use model
1. full-service leasing
With this type of contract, the leasing company typically assumes all costs incurred for maintenance and wear and tear during the term of the contract. For the customer, in turn, this results in clearly calculable costs in advance and lower administrative expenses. At the same time, the customer typically benefits from high-quality customer service from the dealer, manufacturer or other service partners.
From the manufacturer's point of view, this ensures that the property is looked after by its own or at least quality-assured customer service during the term of the contract, which in turn results in the possibility of sustainable customer loyalty and the creation of a positive customer experience.
In many cases, this is also the starting point for taking over the customer service not only for the object financed in full-service leasing. With good customer service, the complete administration of the vehicle fleet, machinery etc. is often requested. The better the service is perceived by the customer and the more closely the individual areas are interlinked, the higher the customer's switching costs will be and the less important the price will be as the sole decision criterion. Just think of the high switching costs in certain areas, e.g. in the IT environment for SAP users or the IT hardware or fleet management of large companies.
2. sales financing with leasing
From the manufacturer's point of view, leasing is also ideal for sales financing and, depending on the strategy, also for the targeted displacement of competitors. Particularly attractive leasing rates can be used to allay customers' fears of switching and make the use of vehicles, machines or other leased objects more attractive. The manufacturer does not have to offer excessive discounts on the list price, but can instead offer particularly favorable leasing rates. As a result, the prices for their own products - especially on the secondary market - remain stable, which can often be observed in the automotive sector in particular.
Depending on the contract term and product life cycle, the aim of sales financing can be to maximize customer loyalty to the company and - similar to a cell phone contract - to give the customer the guarantee that they are always entitled to the latest product generation of the leased object. This makes it almost impossible for competitors to change the customer's mind, which means that the manufacturer or dealer often avoids a difficult price discussion.
3. pay-per-use models
In times of Industry 4.0, agile production and simply increased capital requirements as a result of digital transformation, it is often important from the customer's point of view to variabilize cash flows, so that from a Capex-streams in Opex-electricity. It is precisely the increasingly blurred boundaries between tangible and intangible objects that make traditional financing difficult or almost impossible.
Leasing companies, on the other hand, have often been familiar with financing software projects for a long time and will be able to contribute their expertise to digitalization projects with a focus on processes, networking, software or staff training. Leasing models such as pay-per-use are based on the idea that the leasing installments are serviced from the cash flow generated by the leased asset, i.e. pay-as-you-earn.
Although this basic principle is not new, it has been further refined in recent years. Especially in times of Industry 4.0 and the greatly increased possibilities of real-time availability of data, this results in completely new sales approaches. For the customer as well as for the leasing company and the dealer or manufacturer. On the one hand, the leasing company uses the collected data to carry out precise billing with the customer and, on the other hand, to accurately determine its own residual value forecasts.
In addition, leasing companies are discussing the possibility of subletting free resources that are not used as part of pay-per-use, similar to free freight space in the freight forwarding industry. This is good both for the environment and for the wallets of those involved.
The manufacturer, on the other hand, can use the data collected to continuously improve its product and identify potential teething troubles at an early stage. Likewise, with good data mining, customer service can be made aware of certain issues or expected wear and tear and thus a customer service call-out can be requested and planned at an early stage, even before longer breakdowns occur. The same applies, for example, to the ordering of spare parts, which in the past were often only ordered after the service technician had visited the site. Thanks to intelligent sensors, these can now be requested at an early stage.
In turn, customers can receive tailor-made financing that is fully aligned with their cash flows, as well as the opportunity to benefit from additional services from the manufacturer and customer service and simply obtain financing for digitization projects.
Leasing is more than just a financing alternative
Leasing can make a significant contribution to increasing sales in customer service and improving customer loyalty within the company. The manufacturer or dealer can work closely with the leasing company to calibrate exactly which "ingredients" and "input parameters" should be used to achieve the respective goals.
Christian Glaser
General Representative of a well-known leasing company and convinced that leasing is the optimal medium to accompany the digital transformation and achieve a sustainable improvement in the customer experience.
