Finding Leads for Equipment Financing | The Customer Loyalty Solution : What Works (and What Doesnt) in Customer Loyalty Programs

Equipment financing is not really like any other type of business. The amounts involved can be huge. The terms, the length of the lease, and the items financed are seldom standard (as they are in automobile or home mortgage financing). It is hard to predict companies’ need for financing, as decisions on equipment purchases are seldom made on a predictable schedule. As a result, finding leads is tough. Which companies are going to need financing, and when?

The situation is complicated by the fact that the industry is highly competitive. In addition to banks, there are finance companies that specialize in equipment financing. There is very little customer loyalty, as decisions are made primarily on rates rather than on provider affinity, service, or brand. To further complicate the picture, the equipment financing sales force, like all sales forces, is highly skeptical of central assistance. The salespeople tend to be independent and are more comfortable developing their own sales processes than participating in a group effort. To grow its equipment financing business, KeyBank’s direct marketing group had to come up with a system that served up leads to its Key Equipment Financing sales force in a way that was both productive and acceptable to the staff.

Key’s direct marketing group developed a unique way of solving this problem with the help of a team from SIGMA Marketing Group. The solution involved a combination of direct mail, telemarketing, and leasing managers in a system driven by a model using Dun & Bradstreet data.

In analyzing the situation, both groups saw that Key’s 30 leasing managers were spending entirely too much time trying to find leads. The life of a leasing manager was very demanding, with constant travel and much time spent chasing possible leads that might not materialize. Once they had a solid lead, the leasing managers found that closing the sale could be a fairly straightforward process. SIGMA recommended setting up a lead-discovery process that would produce qualified leads for the leasing managers so that they could focus on closing sales and not waste time on lead development.

There were four parts to the system:

Create a relevant and highly targeted prospecting list that the leasing managers would find credible.
Develop a compelling direct-mail communication on behalf of each leasing manager that would permit effective telemarketing follow-up.
Have outbound telemarketing associates work closely with the leasing managers so that the leads and appointments generated would be relevant and worthwhile.
Create a lead-generation database to track and identify the business generated by the leasing managers using this program in terms of both pending and closed deals.

Creating a Universe of Prospects

Using Key’s data, SIGMA created a CHAID (chi-square Automatic Interaction Detector, a statistical technique) model to identify the characteristics of Key’s current leasing customers. This model identified the best predictors of a company’s likelihood to be a leasing customer. They were (in order)

Company sales volume
Year company started
Company number of employees
Dun’s Major Industry

Ten segments were created. The top two segments, with ownership indices of 269 or greater, were

Ownership rate of 30.5 percent, with Dun’s Major Industry classification of Mining, Communications/Utilities, Business Services, or missing and year company started being pre-1960 or missing.
Ownership rate of 20.2 percent, with Dun’s Major Industry classifications of Mining, Communications/Utilities, Business Services, or missing; year company started being 1960 to the present; and sales volume greater than $5 million.

A sign-up form was developed for each leasing manager that captured not only all their contact information, but also those attributes that they wanted a lead to have, such as geography, sales size, and industry. Each leasing manager furnished a sample of his or her signature for use in the outgoing communications.

The information from these two sources was combined into a list order for Dun & Bradstreet. The D&B list was divided geographically by leasing manager, and the leasing managers were asked to make any additions, edits, or deletions to the list that they wanted.

Armed with a good, edited list, Key and SIGMA worked to develop compelling and relevant direct-mail communications that could be mailed on behalf of each leasing manager. The leasing managers were able to schedule the mailings by geography and quantity over 2-week intervals, staggered so that they would not have more leads than they could handle at any one time.

To set up appointments, one outbound phone associate was dedicated to each group of three leasing managers. The associate held phone conversations with each leasing manager on a regular basis to understand the specific nuances of what each leasing manager valued in a lead (e.g., the prospect’s role, budget, or timing). Some of the leasing managers even wanted the associates to set up their appointments for them and provided the associate with their calendars. The leasing managers could use email or a toll-free number to talk to their associate while they were in the field on visits. When the associate generated a lead or set up an appointment, the associate would call and email the facts and details of the lead (e.g., who, what, when, and desired amount) to the leasing manager. Upon receiving the message, the leasing manager would often call the associate back to obtain further information about the prospect (e.g., personality, potential barriers to acceptance, and who the decision maker was).

Of course, many prospects were not ready to do business at the time the calls were made. The associate would then ask when they might need equipment leasing in the future and would note the answer in the calling database. Software in the calling database automatically brought the prospect’s name back to the associate’s attention when the time for a follow-up call had arrived. As the callers gained valuable information from the initial phone contacts, the information was added to the calling database. As a result, the lead rates steadily increased over time as the aggregated knowledge from the calling database grew.

Finally, a series of daily and weekly reports was created to measure mail, calling, and lead activity overall. Additional reports were created to track mail, calls, and leads at the leasing manager level so that best practices could be identified and shared with the rest of the group.

Measuring Success

How do you know if a program like this is really working? It may look good on paper and it may seem to be generating leads and appointments, but is it really better than the old system of letting leasing managers forage for themselves? How can you prove that the money spent is really worthwhile? There is a really simple way to determine whether a program like this is successful: Are the leasing managers using it? At first, only 7 of the 30 leasing managers signed on to use the system. As the success of the program became clear, more and more leasing managers signed on. At the end of 6 months, 20 of the leasing managers were actively using the system. It became the central focus of the Key Equipment Financing lead-generation program. Within 4 months, the lease accounts generated by the program as a percentage of total accounts grew from 1 percent to 1.5 percent—an increase of 50 percent. At the same time, the program also boosted the loan accounts generated by the program from 2 percent to 4 percent—a gain of 100 percent in 4 months.