Leasing Program Helps VAR To Sell Products NOW

The one word salespeople hate most is "no." Their second most-hated word is "wait." After coming "oh-so-close" to making a purchase, a customer will say, "I can't fit it into my budget right now." Color printer manufacturer Tektronix (Wilsonville, OR) says its new leasing program, in association with Copelco Capital, is helping VARs avoid the waiting game. Tektronix and Copelco have recently implemented the Color It Now Lease Program to encourage VARs to use leasing. The end result, the two companies say, is that manufacturer's leasing programs help VARs sell products now.

Leasing Program Gives VARs Power
"Small to medium VARs don't always have the resources to implement a financing or leasing program," said Chris Iburg, director of channel marketing for Tektronix. "If a customer wants to buy a product but doesn't have the capital budget to support it, the VAR is lost. The customer will put a purchase of $4,000 or $5,000 into next year's budget. However, payments of $79 per month are totally different."

Leasing has always helped bypass these budget constraints, said Iburg, but smaller VARs don't have the time or staff to implement a lease force. Also, agreeing to a lease program with a local bank can be cumbersome and costly. The Color It Now program seeks to form a seamless partnership between the manufacturer and VAR through Copelco.

"The more tools and more sales support we provide to make VARs successful, the better business partner we are," said Iburg, whose company works with nearly 5,000 VARs. "We worked with Copelco – our partner – to give VARs good rates, good support and the ability to sell in a way they haven't been able to sell before."

Sue Sumrell, Tektronix's director of leasing, said her company's 1998 overall fiscal year revenue figure of $2 billion is a big help to the VARs who sell Tektronix products. "With our sales power, we can negotiate leasing rates not available to resellers on a one- or two-unit basis," Sumrell said. "When providing leases to our VARs, we're always looking for something that is better than what they could get on their own. We're on the phone with Copelco once a week asking, ‘What can we do to help the VAR channel?'" Sumrell noted that Tektronix provides professional promotional literature that explains the Color It Now program's different leasing options.

Rusty Roberts, Copelco's director of major accounts, and Tektronix's Iburg explained how VARs are using leasing to speed up the sales cycle. "In the past, a VAR would avoid leasing unless the customer asked for it," Roberts said. "With this program, we've seen VARs using leasing in a proactive manner. You can sell customers on the value of having a color printer now, and then explain to them how they can have it cost-effectively." Said Iburg, "VARs are always looking for a new angle that will help them move product. They knew about leasing, but using a local bank that may not have had a competitive rate was awkward. Copelco's approval process can take less than an hour."

Additional Benefits: Life Cycle Manager, Margin Enhancer
In addition to speeding up printer sales, Color It Now helps VARs manage the life cycle of their products while enhancing their profit margins. "Everyone is concerned with having the latest and greatest in technology – fastest speed, best color," said Tektronix's Sumrell. "They want to replace that product when new technology becomes available. The best way for VARs to stay on top of these needs is with leasing." Copelco's Roberts agrees. "Through leasing, you're basically establishing an upgradable customer base. For example, a reseller signs a customer in for a three-year term. If that customer wants supplies or another product, they're going to look to the reseller as a solutions provider."

Iburg noted that VARs could increase their profit margins through leasing. "In a cash transaction, the salesperson has a tendency to sell minimalist configurations for the lowest price – like giving a 10% discount if the customer buys today," he said. "Leasing can be a profit enhancer because you don't throw away that 10%. And you can add on better features for just a few dollars more per month."

California VAR Sold On Leasing
Pacific Data Group, a printer supplier headquartered in Fremont, CA, has participated in the Color It Now program since it was launched in January. Pacific Data boasts a dozen employees and $4 million in revenue in 1998. Chuck O'Daniel, vice president of sales and marketing, said Pacific Data has increased sales thanks to leasing. "Every proposal that comes from our company now includes leasing," O'Daniel said. "The intent is to lease everything because we get paid faster. There are no 'Net 30' terms. We get paid promptly – within a week."

O'Daniel said his company's initial reluctance to adopt leasing was the burden it could place on a new customer. "The last thing you want to have happen is have a customer go through a leasing process," he said. "Copelco and Tektronix provide quick turnaround, minimal paperwork, efficient contracts."

O'Daniel estimated that now close to 20% of Pacific Data Group's customers lease printers. "We've seen more interest in leasing among small to mid-sized businesses," he said. "We stress to them the control of cash flow and that leases can be upgraded as printing technology changes."

Copelco estimates that by the year 2000, up to 30% of all printers will be acquired through leasing. That's up considerably from the 5%-6% figure estimated in 1998. "You don't often hear anymore the belief that the only businesses who lease are the ones without the cash," Sumrell said. "Financing is managed just as technology is managed."

Adds Iburg, "For some dealers, leasing is a new concept. When they get it and the light goes on, they're sold on it for life. The better VARs are those who realize leasing is a benefit to them."