Siemens Financial Services, a leading provider of business finance, today publishes new research revealing that over a third of all sales in the Information and Communication Technologies (ICT) channel is now funded using asset finance. Moreover, take-up of finance at point-of-sale is gathering such momentum that usage is expected to rise by a fifth over the next three years – bringing the proportion of technology investment enabled by finance to 40%.
Traditionally, the ICT channel has been slow to embrace asset finance and tended to turn to a finance provider at the eleventh hour, when budget constraints threatened to jeopardise a sale. This is in stark comparison to sectors such as print and digital imaging where asset finance forms an integral part of the sales process and facilitates up to 90% of sales. But Siemens’ new research points to a significant shift in mindset: respondents also declared that out of all deals that are financed, half now “involve finance from the pre-sales stage”, a clear sign that the channel recognises the importance of planning how (and whether) sales prospects can afford to invest in their equipment and solutions.
Interestingly, respondents cited “flexibility to include soft costs such as maintenance and software” as one of the most important aspects of a finance provider’s proposition (see graph). This illustrates the growing demand for all-inclusive, bundled financing arrangements that fund a total solution, enabling channel players to meet demand for cost-effective managed solutions. When quizzed on other important criteria, price, product range and brand – the most tangible elements of a finance provider’s proposition – were virtually an afterthought. Speed of credit approval and straightforward documentation were consistently nominated as top priorities. This may well reflect today’s commoditised market, in which the channel differentiates the quality of financial service provision by service, not product.
With 70% of respondents believing that leasing offers “great advantage” to their business, there is a growing awareness that offering finance can improve the value of customer relationships. But there is still much progress to be made. Respondents recognised this themselves - 60% noted that the channel “does not currently harness finance to maximum benefit as a sales-aid tool”.
Rob Heath, Product and Marketing Manager, Stone Computers Ltd, “We’ve always traditionally offered finance at point of sale but sadly, as we have only recently realized, not sold it. Following recent analysis we have found that our sales teams, whilst technically strong from an IT perspective, were not able to communicate the precise benefits of finance. Nor were they fully aware of how point-of-sale finance could help them achieve their sales targets through the delivery of a tangible customer benefit.
“We have now rectified this, as all our sales teams have recently attended a comprehensive asset finance training session. With end users facing increasing financial pressures and managed services playing an ever larger role, having a comprehensive knowledge of finance and suite of appropriate products will be crucial if we are to achieve our ambitions over the coming year.”
Peter Austin, General Manager, Siemens Financial Services, comments: “We know that businesses in the UK of all sizes are under financial pressure and it is encouraging that those who buy through the channel are now being offered a financial package in one third of cases.
“But look at the flipside: two-thirds of ICT channel sales are not financed. This is such a wasted opportunity. In our research, the overwhelming majority of those who didn’t offer finance at all said that they presumed their customers arranged it themselves - so they know the demand is there. I believe an outmoded view of the leasing industry is to blame; it is perceived as complex, riddled with legal jargon and paperwork.
“Even for those who use leasing, our research draws attention to vast potential to scale up their offerings. It’s surprising that 11% still introduce finance ‘just prior to contact signature’ – which is just too late. They should be using advanced asset finance tools to close more sales and even pre-qualify leads from the outset.”
Summary of key findings:
- 74% of channel players declare that they “use finance”
- 34% of all sales in the ICT channel are currently financed
- Over the next three years, this is expected to grow by a fifth - reaching 41%
- In half of all deals that are financed, finance has become an integral element “from the pre-sales stage” – but in 11% of financed deals, it is left until “just prior to contact signature”
- 70% of respondents believe leasing offers “great advantage” to their business
- 60% do not believe that the channel harnesses finance to maximum benefit
- Service-related elements of a finance provider’s proposition - speed of approval, ease of process – are top priority for the channel