Rentals vs. Sales: Who Decides?
Over the last few years, I have met some sales people who say they never rent equipment. "Renting is for sissies. I hold out for the full commission by holding out for a sale." On the other hand, I have met owners of companies who pride themselves on the size of their rental fleet and actually discourage sales. They say, "we like to build up our equity by renting." As with many things in sales, the correct approach is somewhere in between. If you want to get all the sales you can get, there is only one person who can decide if it should be a sales or a rental, and that person is the customer.
As far as we can tell from working with companies around the country, the national average is 72 percent of people buy equipment and 28 percent rent. That means that anyone who does not rent is probably missing about 28 percent of the closes they could be getting. Maybe that customer who "has to think it over" could be convinced if rental were offered. Conversely, companies that only rent could be missing as much as 72 percent of the income they could be generating if they offered the equipment for sale. But how do you know which customers are right for renting and which are right for purchasing? Ask them! However, here are a few tips that might help you decide.
The most obvious category of people who may want to rent is made up of people who rent their current home or furnishings. Make it part of your qualification to find out if they own or rent their current residence. Also ask about furnishings and appliances. Some sales people use this question as the final closing choice. When they come back to the table after the demonstration they say something like "The way I see it, you folks only have one choice to make tonight … would you prefer to own or rent the equipment?" Try it and you will agree that the way to close the most people is to let them make the choice without pushing one way or the other.
There is a very large group of people who I call "creditorially challenged." These are the people who used to be called deadbeats and stiffs before politically correct terms were invented. I know you are not going to rent to complete stiffs, but there are many people who are on their way back from bankruptcy or credit problems that are good enough to pass rental criteria but still cannot be financed. If you try to sell them and they get turned down for financing, they often are so embarrassed they won’t negotiate with you and end up renting equipment from a competitor. To prevent this from happening, as part of your qualification, find out about credit history and present rentals to people who you feel may have trouble financing their purchase.
There are many kinds of customers who are in a temporary situation that they may use as an excuse to put off the purchase. Some procrastinating phrases you might hear include the following.
- We are putting it off because we think county water is coming through.
- We can’t get it because my husband is being transferred in about six months.
- We can’t get it because I may be laid off this winter.
- We can’t get it because we are remodeling the kitchen next year.
- We won’t have the money for another nine months.
These are just a few. There are a million reasons why people do not want to commit to ownership at this time. What could be easier than to offer a rental? These are the people the strong closers, who refuse to rent, miss when they are so easy to put into a rental. Try answering a delay or temporary objection with "I doubt I could do this, but I’m going to try to get that equipment in here now on a rental basis. That gives you all the savings and benefits we discussed right away. If things change and you want to own it later, we have a plan for that too. If you do need to get rid of it in a few months, that is no problem."
Not Quite Convinced
I don’t want to shock anyone’s ego, but the truth is that a great many people who nod along with us as we present just are not convinced when we are done. They might think soft and pure water is a good thing, but they aren’t willing to step up and buy the equipment. Do they tell us? No way! They come up with excuses like "we have to think it over" instead of saying they just aren’t convinced. After all, saying you aren’t convinced to a salesperson is just asking for another 20-minute dose of point-by-point presentation. Once you recognize this, you will find it is very profitable to offer a rental to people who seem interested just are unwilling to commit. When you do, emphasize the temporary nature of it. You might say something like, "I sense some hesitation here and I don’t blame you. I am telling you it’s going to save you money and improve your life, but how do you know it will? I can’t usually do this, but I am going to try to get our company to put it in as a rental. If it isn’t everything I have said and more, just call me in 30 days and we will take it out at no additional charge.
Give it some thought and I think you will agree that money is left on the table if the salesperson or company decides who should buy and who should rent. I guarantee you will make more money if you leave that decision up to the customer and focus on leaving every home with either a sale or a rental agreement.
About the Author
Carl Davidson is president of Sales & Management Solutions, which provides sales and management training designed exclusively for the water equipment industry. For more than 13 years, he has helped more than 1,400 companies in seven countries. For a free demonstration tape and catalog, contact the company at 800-941-0068; www.salesco.net.