Over Holding On MFP Lease Costs Unnecessary Dollars

My goodness this is so simple. People in this industry are so ignorant sometimes it hurts.

Ouch I'm in pain.

You are aware that most dealers have an agreement with lease companies that after the first three months of renewals the over pay is split 75% (for the dealer) and (25% for the lease company)? Shame on you Leppert you absolutely know this or should or get out of the advice business.

Secondly shame on any rep that allows a lease to get anywhere near less than 18 months left on a lease. See my other posts regarding selling to someone not in the market. Has dumb become the new normal?

Peace out.

Yoda

One of my previous comp plans was so bad that I had no chance of upgrading an existing lease until the lease was a minimum of six months to the end of lease expiration. Even at six months, the money I would have made would have been pitiful. Thank goodness the comp plan changed, but I'm sure that there are others who had a similar comp plan and they have to wait unless they figured out a new workflow, a solution or a feature that would allow them to upsell the customer.

Art

Yoda, I deal with CIT, RCAP, DLL and National leasing on a regular basis. In Canada, not one of those major vendors offer a split on revenue after the original lease term expires. They just keep billing the customer at the agreed amount and take 100% of the proceeds.

quote:

Originally posted by Yoda:
My goodness this is so simple. People in this industry are so ignorant sometimes it hurts.

Ouch I'm in pain.

You are aware that most dealers have an agreement with lease companies that after the first three months of renewals the over pay is split 75% (for the dealer) and (25% for the lease company)? Shame on you Leppert you absolutely know this or should or get out of the advice business.

Secondly shame on any rep that allows a lease to get anywhere near less than 18 months left on a lease. See my other posts regarding selling to someone not in the market. Has dumb become the new normal?

Peace out.

I agree with your first point, but on the second regarding the time at which to upgrade a customer, you're leaving a LOT of money on the table by rolling in that much buyout with each upgrade. If the customer is paying $1,000 per month, rolling in 18 payments could cost you up to $18,000 in revenue and profit. I don't know how you're paid, but that would make a big difference to my paycheck. I know there's a greater risk of competition getting in the longer I let the lease ride, but if I keep the client happy, they rarely shop & even more rarely leave for the competition. That's a risk I'm willing to take in most cases for significantly more commission.

Yoda, you need to not be so quick to throw around the "ignorant" and "dumb" labels. Just because something is true in your tiny little world does not mean it is universally true. For instance, we share revenue from the first month, not the third but what difference does that make. It is still not in the best interest of the customer (in most cases), which should be our primary concern.
That brings me to your next, supposedly obvious, observation. "shame on any rep that allows a lease to get anywhere near less than 18 months left on a lease." I assume you are talking about a 60 month lease or you are even more unscrupulous than I orignally thought. So you feel that it is in the customer's best interest? to roll 18 months of payments into a new lease, where they are now paying interest upon interest, extra property tax and a higher end of lease residual? You also say it should never go beyond 18 months so I assume you will compound the issue by doing it again on the third lease. Does it ever end? Can I ask how long you have been in this business? I can say with all certainty that this is not the formula for long-term success and after 30 years in this business I feel I have earned the right to say so.

Better to remain silent and be thought a fool than to speak and remove all doubt.

Gents,

perhaps i'm stating the obvious but how about just cutting service or jacking up by 25% or so and telling them its aged equipment and therefore much less cost effective to run?

We are always keeping an eye on the EOL list over here and making sure customers know exactly when the machine will stop being serviced.

Unfortunately for us in most cases devices are support for up to 10 years.

Yes, AC68 that is exactly what we do for leases that go past expiry. We increase the cpc to what we call "market rate".

Unfortunately, this makes the account easier for a competitive vendor to swoop in and "slam" the account with a new lease.

I would like to see service departments that will work with sales when it comes to old devices that are being supported after 8 years or so. Our service is not cheap and that's not a bad thing, however at some point in time we need to tell the customer that either we won't offer a ma agreement, and or even a break and fix.

I think front line service techs would like nothing more than to get the "old junk" out of the field. It is probably the number crunchers that aren't willing to shut these people off because of the lost revenue.

Last summer all the sales reps were given a list of old equipment still on contract and told to inform the customer that their agreements would soon be cancelled which we did. Then the company decided to look at the bottom line and recanted. Now us salereps all look like smucks just trying to force a sale when the cancellations didn't happen.

quote:

Originally posted by Yoda:

quote:

Originally posted by Old Glory:
Yoda, you need to not be so quick to throw around the "ignorant" and "dumb" labels. Just because something is true in your tiny little world does not mean it is universally true. For instance, we share revenue from the first month, not the third but what difference does that make. It is still not in the best interest of the customer (in most cases), which should be our primary concern.
That brings me to your next, supposedly obvious, observation. "shame on any rep that allows a lease to get anywhere near less than 18 months left on a lease." I assume you are talking about a 60 month lease or you are even more unscrupulous than I orignally thought. So you feel that it is in the customer's best interest? to roll 18 months of payments into a new lease, where they are now paying interest upon interest, extra property tax and a higher end of lease residual? You also say it should never go beyond 18 months so I assume you will compound the issue by doing it again on the third lease. Does it ever end? Can I ask how long you have been in this business? I can say with all certainty that this is not the formula for long-term success and after 30 years in this business I feel I have earned the right to say so.

Better to remain silent and be thought a fool than to speak and remove all doubt.

Thanks Old Glory,
You too on the "all doubt thingy"
30 years FYI,
No it never ends,
you probably don't really believe in leasing either, come on admit it (I have 1 guy like you now won't bundle, doesn't like leasing, and writes non escalation clauses on every deal)

I guess its just a current customer love fest down there. You must not be in an area where a long laundry list of discount "cheap F...N copiers" dealers exists, or there are 5 other dealers selling the same brand you do, so you can luxuriously go see your client with 1-2 months left after you have increased there service prices year after year for the past 5.

Good for you! And very scrupulous I may add!

Hope some young bucks with a need to make a name for themselves don't get hired by the competition, or some vets from your place don't leave (with a customer list/lease expiration list in hand) in your area (where are you again?) Note to self: new business plan in new market....

Are you a service manager? Never mind went to your web site

quote:

To provide a Christian work environment

Your Evangelizing, pleaseeee.
Peace out!

quote:

Originally posted by Art Post:
I would like to see service departments that will work with sales when it comes to old devices that are being supported after 8 years or so. Our service is not cheap and that's not a bad thing, however at some point in time we need to tell the customer that either we won't offer a ma agreement, and or even a break and fix.

Art,
After 8 years I would think they are already paying for a new copier and service. Wouldnt a TCO saying the new is the same price as the old work?

Yoda:

We have many systems that were purchased from the leasing companies in 09, 10, and 11. Many of these systems are wide format system and we're still servicing them after 7,8 & 9 years. When your payments are zero and you maintenance costs are $800 or so a year, there is no TCO to put forward to the customer.

Every now and then we'll get the customer that needs a full PM, it's then easier show the TCO for the last year.

If the customer is still under lease that's a horse of a different color, I will always provide a TCO & ROI to every customer I can.

Some of us out bound by company policies that dictate what we can and can't do for upgrades (nothing I can discuss here), what the return charges are per device, what the delivery and install charges are per device. Sometimes you add it all up and it does not compute.

Art

quote:

Originally posted by txeagle24:

I agree with your first point, but on the second regarding the time at which to upgrade a customer, you're leaving a LOT of money on the table by rolling in that much buyout with each upgrade. If the customer is paying $1,000 per month, rolling in 18 payments could cost you up to $18,000 in revenue and profit. I don't know how you're paid, but that would make a big difference to my paycheck. I know there's a greater risk of competition getting in the longer I let the lease ride, but if I keep the client happy, they rarely shop & even more rarely leave for the competition. That's a risk I'm willing to take in most cases for significantly more commission.

There is no money left on the table. If someone else upgrades them you have nothing. Also every time you upgrade you go wider and deeper into the account with solutions, MPS, scan stations etc..

Always do a TCO bundle with service.

Original lease $1,000 per month
Service 20,000 at .01 originally = 200 per month
Bumps after 3 years 20000 x 0.013 =260
total current payment 1,260
new service 0.008 = 160-1260 =1,100/.02 = 55,000-18k =37k thats just breakeven. How about charging $100 more? now you at 42,000.

Yoda, I'm curious about your use of the "Peace Out" closing. Is the intent to show sarcasm? It just seems like a strange way to close a post after you have just ridiculed and demeaned a significant number of our members.
Inflamatory, inflamatory - Peace Out...Just seems odd to me.

quote:

Originally posted by Old Glory:
Yoda, I'm curious about your use of the "Peace Out" closing. Is the intent to show sarcasm? It just seems like a strange way to close a post after you have just ridiculed and demeaned a significant number of our members.
Inflamatory, inflamatory - Peace Out...Just seems odd to me.

Its a simple saying from the 70's means nothing. And you only see the attention getting parts of my posts do you ever read the content? Yes I am competitive, grumpy, mean and laser focused to provide:

1. My customers with the best possible imaging solution they can afford.
2. My sales people with the highest standard of living I can provide.
3. My company the most profit available.
4. My customers the best service second to none.

No ulterior motives, just trying to share what works and discount what doesn't. Where we disagree is what our solutions are worth. Do you really think a customer cares that much if they are paying a little more in interest (BTW right now the carrying cost is close to 0 so its a mute point)
EX: An outstanding imaging solution that works well regardless of price to a 20 employee company (payroll of approx $60,000 per month)is $200 more than if they wait. Losing the value of using the product for 18 months that may actually increase the bottom line of that company? BTW (0.00333% per month)

Its simple business math and I'm not sure why so many sales people fight it.
Customers want to upgrade if its even close. Your insinuation that upgrading a customer with 18 months left on a lease with a new business idea that makes their work flow better, with right sized equipment and makes sense cash flow wise is unscrupulous is dumb/ignorant and that was my point.

Have a nice day!

PS Next will be "Bless your heart" for those of you from the North that's not a compliment in the South LOL thought it was for awhile!.

Do you read your own posts? There was nothing constructive about your original and subsequent posts. If you would have started where just ended, we would have rolled on together in complete agreement. Your original post said nothing that could be construed as anything but selfish interest. I'm just trying to be sensitive to the many "young skulls full of mush" that read these posts. They don't need to think that they are "ignorant" and "dumb" just because a lease approaches expiration. By your own admission, there is a lot more to that story.

Does anyone actually say "bless your heart" anymore?

Yes I do (and edit them several times before and after posting) and I was commenting on the link Art posted about Leppert and what an idiot he is for his comments. (Yes dumb first then ignorant now idiot) Did you even read his article?

Less Sales people the better young skulls full of mush should go sell Pharma thats where they eventually want to be anyway more deals for me and mine.

This industry is to saturated anyway needs contraction are you retiring soon?

Have a nice day

PS Glory went back and read them again dang I'm good. Only used dumb post #2 you threw in ignorant bless your heart.

quote:

Originally posted by SalesServiceGuy:
Yoda, I deal with CIT, RCAP, DLL and National leasing on a regular basis. In Canada, not one of those major vendors offer a split on revenue after the original lease term expires. They just keep billing the customer at the agreed amount and take 100% of the proceeds.

Not here. The dealer/owner has to negotiate that with each individual lease company also negotiate payoff percentages and residuals. Talk to the owner. Maybe he is getting a split just not telling you?

Have a nice day

You want to run off sales people, do it somewhere else. That's not what this site is for.

quote:

Originally posted by Old Glory:
You want to run off sales people, do it somewhere else. That's not what this site is for.

Yes sir, I thought it was an open exchange of ideas, my bad. Its a recruiting/training tool for newbies. No problem flounder away.

It's clear that you only think your ideas are worthy which isn't anything close to an "open exchange."