Trust the Numbers & Strategize
Kevin F Clune, CLP
With the first two quarters of the year in the bag, how is your business doing? A recent blog article from an associate of mine in the Equipment Leasing Industry encouraged business owners to measure their “Key Performance Indicators” on a regular basis. These figures should fit onto one page called a “dashboard”, he said, and “track performance, measure efficiency, and gauge effectiveness of managers”.
He explained that by developing this tool, you would “gain a deeper insight into how your company works, or should
work. A good dashboard can contribute to the improvement in the performance of any business.” The underlying assumption is that you are measuring relevant metrics and that actions would be taken to effect change if the
indicators alert you to a problem.
The decision as to what you track within your business would vary according to your industry. However, in conversations with both equipment vendors and leasing customers with whom I have the privilege of working, they will probably assess similar measurements to gauge their lease finance services.
1. Total Cost of an Equipment Lease
2. Unexpected Costs
3. Customer Retention Rate
4. Administrative Cost
It is always easy to sell a low monthly lease payment to a prospective customer and the savings might look good at first glance. However, the total cost of a lease is the more critical figure to monitor. Are there additional fees
such as insurance premiums, property tax fees, and interim rent?
Have leasing customers incurred end of lease surprises such as onerous return conditions and automatic renewals that have increased their total cost? Are equipment dealers seeing a decrease in sales of upgraded equipment due to automatically renewed lease contracts?
Finally, if your customer retention rate is on the decline, it is critical to determine the reason(s). Is your lease finance partner contributing to your success by providing fast approvals and an easy process so that you can quickly acquire the equipment you need to serve your customers? For vendors, will your customer be less likely to return if the leasing company you have recommended has business practices that will reflect poorly on you?
We hope that your key performance indicators paint a robust snapshot as you head into the last half of 2014, and we wish you continued success. As a business that is checking our numbers regularly and implementing changes accordingly, the Clune & Company team would welcome the opportunity to assist you in attaining your goals.
Numbers don't lie,
Kevin F. Clune, CLP
Clune & Company LC
