What Kind of Shoppers are your Customers?

When evaluating the number of equipment financing & leasing companies in the market, a case can be made for two opposing models for evaluation purposes. Each model having its own unique value proposition: the ‘Wal-Mart’ Equipment Financing company model and the ‘Costco’ Equipment Financing company model. Understanding these models can provide valuable insights for equipment financing professionals, helping them better serve their dealers and customers while differentiating their services in the market and where their firm fits on the spectrum.

 

The ‘Wal-Mart’ Equipment Finance Company

Characteristics:

• Low Prices: The primary focus is on offering the lowest possible rates and fees to attract cost-conscious customers and dealers.
• Low Service: Minimal customer service is provided to keep operating costs low.
• Limited Assistance: It’s challenging to find staff who can help with specific issues or questions.
• Policy-Driven Responses: Employees often quote policies rather than offering solutions to problems.
• Departmental Disconnect: Staff frequently defer responsibilities by claiming “it’s not my department.”
• Self-Service Emphasis: Customers and Dealers are encouraged to do most of the work themselves, from application processes, documentation signing and data/material collection to payments, similar to self-checkout lanes in retail (online portals).

 

Impact on Dealers and Customers:

• Cost Savings: Dealers and customers benefit from lower financing costs, which can be crucial for those operating on tight budgets.
• Efficiency vs. Service: While cost-effective, the lack of personalized service may lead to frustration and inefficiencies, especially when issues arise that require human intervention.
• Customer Experience: The self-service approach can be time-consuming and may detract from the overall customer or dealer experience.

 

Executing the ‘Wal-Mart’ Strategy:

1. Cost Optimization: Continuously analyze and reduce operational costs to maintain competitive pricing.
2. Automated Systems: Implement advanced automated systems for application processing, payment handling, and customer inquiries to reduce the need for human intervention.
3. Clear Policies: Develop and communicate clear policies and procedures to streamline operations and reduce ambiguity for customers.
4. Training Programs: Provide training to staff to handle common queries efficiently, while encouraging customers to use self-service options.
5. Feedback Mechanism: Establish a feedback mechanism to identify areas of improvement in the self-service processes and make necessary adjustments.

 

The ‘Costco’ Equipment Financing Company

Characteristics:

• Great Value Over Lowest Price: Emphasizes value through competitive pricing combined with high-quality service.
• Higher Touch Service: Features multiple touchpoints for customer interaction, including greeters, cashiers, and exiters, ensuring a seamless and supportive experience.
• Unparalleled Customer Service: Known for exceptional customer service and flexible return policies, fostering strong customer loyalty.
• Membership Model: Customers feel privileged to be part of an exclusive club, often paying a membership fee for access to Costco.
• Proactive Assistance: Staff are trained to assist customers proactively, with a “let me show you” attitude rather than deflecting responsibilities are redirecting (i.e. I think it is in Aisle 6).
• Free Samples: Offers incentives like free consultations or trial periods to showcase the quality of their services. Try before you buy.

 

Impact on Dealers and Customers:

• Enhanced Value: The focus on value rather than just price means customers and dealers get more for their money, leading to higher satisfaction and repeat business.
• Superior Service: High-touch service ensures that customers feel supported and valued, improving overall experience and loyalty.
• Long-Term Relationships: By providing exceptional service, these companies build long-lasting relationships with dealers and customers, creating a stable client base.
• Reputation: The high level of service and value can enhance the company’s reputation in the market, attracting more business.

 

Executing the ‘Costco’ Strategy:

1. Value Proposition: Clearly define and communicate the value proposition beyond just pricing, highlighting service quality and customer support.
2. Customer Touchpoints: Create multiple touchpoints for customer interaction, ensuring that each interaction adds value and enhances the customer experience.
3. Training and Development: Invest in comprehensive training programs for staff to ensure they can provide high-quality service and proactive assistance.
4. Membership Programs: Develop membership or loyalty programs that offer exclusive benefits, fostering a sense of belonging and loyalty among customers.
5. Customer Feedback: Implement robust feedback mechanisms to continuously gather insights from customers and improve service offerings.
6. Marketing Strategies: Use marketing campaigns to showcase success stories and testimonials, emphasizing the exceptional value and service provided.

 

Framing the Sales Discussion: ‘Wal-Mart’ vs. ‘Costco’

When discussing these models with dealers and customers, it’s essential to frame the conversation around the related values and goals:

1. Understanding Customer Preferences:
   1. “Are you a Wal-Mart or Costco shopper?”
   2. “What do you value more: the lowest price or the best overall value?”
2. Highlighting the Importance of Value:
   1. “Just like anything in life, you get what you pay for.”
   2. “It often takes buying the cheap product once to realize you should have looked for something
   3. with more value and aligned with your goals and future needs.”
3. Demonstrating Alignment with Goals:
   1. “Our approach is about aligning with your goals and providing the best possible value, not just the lowest price.”
   2. “We focus on creating long-term relationships and ensuring you receive the support and service you need to succeed.”
4. Emphasizing Service and Support:
   1. “With our high-touch service model, you’ll have dedicated support at every step of the financing process.”
   2. “Our proactive assistance means you spend less time dealing with issues and more time focusing on your business.”

 

Internal Organizational Execution

1. Aligning Organizational Culture:
   1. Cultivate a culture that supports the chosen business model. For the ‘Wal-Mart’ model, emphasize efficiency and cost-saving. For the ‘Costco’ model, focus on customer-centric values and exceptional service.
2. Technology Investment:
   1. For the ‘Wal-Mart’ model, invest in automation and self-service technologies to streamline processes.
   2. For the ‘Costco’ model, invest in CRM systems and customer support technologies to enhance service quality.
3. Performance Metrics:
   1. Develop metrics that align with the business model. Track cost savings and efficiency for the ‘Wal-Mart’ model. For the ‘Costco’ model, track customer satisfaction, loyalty, and service quality.
4. Continuous Improvement:
   1. Implement a continuous improvement process to refine operations, enhance customer service, and adapt to changing market conditions.
5. Talent Management:
   1. Hire and train staff that align with the organizational values and business model. For ‘Wal-Mart’, focus on operational efficiency. For ‘Costco’, prioritize customer service skills and a proactive mindset.
6. Strategic Partnerships:
   1. Develop partnerships that enhance the business model. For ‘Wal-Mart’, seek partners that offer cost efficiencies. For ‘Costco’, partner with companies known for high-quality service and value.

 

By clearly understanding and communicating the distinctions between the ‘Wal-Mart’ and ‘Costco’ models, equipment financing professionals can more effectively tailor their services to meet the specific needs of their dealers and customers. Emphasizing value, exceptional service, and long-term relationships will not only boost customer satisfaction but also foster business growth and market differentiation. By strategically implementing these models both within their organizations and in the marketplace, equipment financing companies can adeptly address the diverse needs of their stakeholders, paving the way for sustained success and a strong competitive edge in the industry.