“We simply cannot fit copier and MFP needs into a separate silo from our traditional IT, cloud, working environment services, and even our medical technology capex needs. These industries are no longer converging. From our perspective, they’ve converged,” said a VP/treasurer from a national hospital network.
After two years of business upheaval, the need for digital transformation in the face of radically shifting work environments is clear to office technology customers. And in a time when cash and budgets are under extreme pressure, most of these same customers understand more clearly than ever that getting equipped for what’s next will require financing—and in many cases, a highly creative approach to it.
According to an ongoing survey of more than 1,600 recent technology buyers, businesses are 2.4 times more likely to finance a technology need than they were in 2019. And because the pandemic economy forced many industries to delay—and in many cases completely rethink—their technology acquisition strategies, there’s a lot of need out there.
Whether it was the radical change in working environments, massive shifts in customer behavior or near-term focus on cash preservation, many companies find themselves needing to invest heavily in technology to fuel 2022 growth plans. But despite strong corporate earnings, breakthrough levels of investment such as that will require more focus on payments and financing than ever before.
As dealers push to achieve strong organic sales growth this year, coming up with new strategies that leverage financing as an instrument to enhance the affordability of new products and solutions; enable hardware, software and service bundling; and support the shift to everything-as-a-service will be a game changer.
New Products and Services
Like the financial executive quoted above, the time of IT service convergence is no longer ahead of us—it’s now. As such, continuing to offer a siloed approach to copier financing, supplies and service is a surefire way to fall out of step with the needs of the marketplace.
Our surveys indicate that technology buyers are 71% more likely to consider an alternative to their technology needs when compared to their previous office equipment lease. The door to add value and offer new solutions has never been more open.
For many dealers, making the most of this opportunity involves the expansion of products and services. Whether it’s IT hardware, software, networking, cloud or security, new capabilities are key to standing out in a post-pandemic landscape.
But these new capabilities need to be affordable, especially in our current economic climate. However, more than 60% of dealers rarely lead with a payment, giving a marked competitive edge to dealers that do. As an innovation instrument for 2022, expand your financing platform and lead with financing, especially for new products and services.
Bundling
Office technology professionals have long been successful in selling the bundle. Copier, supplies and maintenance, all for a simple monthly payment, powered the business for years. And even after all this convergence and innovation, this approach is still highly effective and profitable.
But oddly enough, dealers rarely bundle alternative technologies and solutions. Only two in 10 dealers lead with a bundled offering for IT needs, while eight in 10 led with a bundled offering on their last MFP quote.
“While the traditional office technology industry built bundled economic offerings for the dealer for decades, these new solutions might require dealers to build their own. This requires a very solid understanding of the economics of the bundled elements, and truthfully, many of us don’t have the experience with these new solutions to point to those economics,” said a CFO of a $190 million southwestern dealer.
In this new world, assembling the product offering and the financing to make it economically viable falls to the dealer, becoming an important part of the value you add to the solution. While this may require more work and a proactive engagement with the equipment supplier, service team and your financing company, the rewards can be tremendous.
“After spending six months building our unique remote office transformation product, we blew out our sales goals for Q4 and offered something truly different in the market. While time will tell how profitable it will be, I’m confident we’ve underestimated profitability, if anything,” said a CEO of a $300 million midwestern dealer.
Bundling products, services and payment is still a great opportunity to innovate and win business in today’s environment. Use your finance solutions as an instrument of innovation and change.
As-a-Service
Roughly 83% of dealer principals surveyed express a strong desire to offer more solutions that drive recurring revenue. But just under 10% of those same respondents had a 2022 plan to achieve that goal.
There’s no doubt the recurring revenue, as-a-service, or subscription-based model of products and services is gaining favor fast. There’s also little doubt that dealers want to capitalize on the trend.
Who could blame them? As-a-service customers are four times more likely to be returning customers. As-a-service deals are 2.3 times more likely to have higher margins than standalone transactions. And as-a-service revenue streams are one of the best ways of building enterprise value.
But how can a dealer get there? Simple—engage your finance partner in an upfront, strategic conversation about customer needs and your new portfolio of products and services. Be sure to discuss how those solutions could be bundled with affordable payments. An experienced financing provider can be a key ally in helping you confidently take on new asset classes, perhaps even helping you determine how to build the right offering.
Financing may be ingrained in a dealer’s psyche, but growth in this post-pandemic era requires new ideas and bigger thinking. The right financing partner can be integral to your success in evolving to meet the needs of today’s market. Financing is an instrument of innovation. It’s a familiar one, but it too has evolved in recent years and stands ready to enable and elevate your success.
