Facing Common Customer Objections

Transcription

1 Facing Common Customer Objections How to sell Technology Finance for Non-Financial Sales Professionals Corporate sales have become increasingly complex. Every proposal you write must be designed to attract the attention of both technical and financial decision makers. The trouble is that they have very different requirements and concerns. Before a decision can be made on funds, budget or expenditure, there are many issues that need addressing such as: What is the project s projected Return on Investment (ROI)? How will the investment affect Return on Capital Employed (ROCE)? Could the purchase negatively affect Return on Assets (ROA)? How is the investment going to be funded? Is there enough budget? Can the cashflow cope? Will there be any negative impact on business if the investment is not made? With so many questions, it is important that you are aware of the specific concerns each decision maker will have and how to address them. An illustration of the drivers and relationships within technology finance Reason for financing Roles and their drivers Cashflow Management CFO Is funding available? Are there funding lines open to make the purchase? CIO Treasury Is budget available? Has the investment been planned? What is the cost of funding? How do external funding rates compare with internal rates? Balance Sheet CFO How will the investment in these assets affect financial Management ratios and the stability of the balance sheet? For large and publicly quoted companies, how will the investment be viewed by financial analysts? Technology Management CFO Can the business afford to make the technology changes it needs, when it needs them? CIO Can the business avoid technology obsolescence and get access to the latest technology whenever it needs it? Print Exit

2 When you are making an investment proposal that will be influenced by different departments within a business, there are some very important questions that must be asked of the technology decision makers as well as specific questions for those in finance. The answers to the questions below will illustrate the influence finance has on technology decisions and allow you introduce Cisco Capital SM in a way that will add value to your proposal. It will help make an immediate sale easier and more importantly, increase sales and speed up the decision process in the future. Questions for technology decision makers: How much of the project has already had budget approval? Can you afford to complete the required upgrade/refresh with your existing budget? What are the implications of the project not being delivered on time? Will the existing budget cover your medium and longer term needs? What are the implications of going over budget? What restrictions does your budget have on your upgrade plans? Will you require additional Capital Expenditure (CapEx) approval to ensure your network maintains its efficiency? How will your technology infrastructure evolve over the next 3 to 5 years? What additional investments would you make today if you didn t have budget restrictions? Questions for finance decision makers: How do potential net book losses affect the upgrade paths for your network technology? What financial ratios does your organisation judge its performance by? How will all investments required within this fiscal year be affected by budget approvals in place? If your business does not recover 100% of VAT (or equivalent), how do you manage your non-recoverable VAT through your funding lines? What criteria do you consider when judging the validity of a proposal from vendor/external finance options?

3 Responses to common objections of financing Q: We are cash rich and have no need to finance A: Many of our customers businesses operate profitably and generate a healthy working capital. But by using finance from Cisco Capital they have been able to grow even further by reinvesting working capital back into their organisations. The outright purchase of equipment that depreciates and ultimately becomes obsolete does not make financial sense. Financing is not merely an alternative to a cash purchase; it has become a key business policy that is being widely adopted across organisations of all sizes. Q: We have a purchase only policy A: Many of our customers have a policy in place when we first speak to them - or think that they do. For example, it has often been the case that many customers do not realise that their organisation leases standard business equipment, such as laptops, or fleet vehicles. Even for those organisations which have never leased in the past, once we have demonstrated the benefits of financing through Cisco Capital and how simple it can be, they have been known to change their policy. For example, your technology investment decisions will no longer be based on whether you have the budget; but on what the business needs. Q: Financing is too expensive A: It is a common misconception that financing is too expensive. Cisco Capital s financing customers include international banking organisations because it enables them to borrow money competitively and reinvest capital back into their business. This gives them better ROCE than they would get by externally funding their technology investments. We have many customers that are now experiencing the benefits of financing, who once believed financing was too expensive. A: Cisco Capital will accommodate any equipment mix as long as the Cisco hardware/software split is at least 70:30. This allows you to gain access to competitive financing for all of your equipment.

4 Q: We don t have the budget for the project / I am waiting to receive the budget A: Have you thought about using financing to eliminate your budgetary restrictions? Financing is very flexible. You can choose to defer rentals to better reflect your ROI or you can even take a payment holiday so that repayments begin when the technology is up and running. Cisco Capital assists in driving forward your investment in technology to help your business and provide a finance solution that is tailored to meet your specific needs. Q: We don t finance because we keep our assets for a long time A: Cisco Capital offers finance terms up to 60 months. But rapid technology advances mean that within that period, it is likely that you will make a business decision to upgrade or replace equipment. European legislation, such as WEEE, means you have additional expenses as well as associated risks when disposing of obsolete equipment. However, Cisco Capital is able to dispose of the equipment for you using the correct procedures, without expense to you. This means you pay only for the use of the equipment and not the ownership, providing you with a more cost effective solution. Q: I don t want to be tied into a finance arrangement for too long A: Cisco Capital will tailor a finance facility to your needs. It offers terms from 24 to 60 months. Q: I am considering using my own financier A: Does your financier have the technology expertise to help you to maximise your investment? Its unlikely that they employ Cisco networking equipment financing experts, they are more likely to be just financing generalists. Independent financing companies and banks typically make money just on the financing. But Cisco Capital actively supports Cisco to help drive product sales, assisting the reseller channel and providing you with the very best expert advice with flexible and highly competitive financial solutions. Being part of Cisco means that Cisco Capital truly understands the technology lifecycle and the value of the assets.

5 The disadvantages of purchase? It can be expensive The Present Value (PV) of expenditure using cash can be greater than the present value of the rents payable under a Fair Market Value (FMV) lease (sometimes known as an Operating Lease). Cisco Capital s FMV lease reduces the true cost of ownership because Cisco Capital places a residual value into the acquisition. This means the Customer does not fund 100% of the purchase price. Net Book Losses When an asset is purchased it sits on the balance sheet. Technology depreciates quickly and in years 1 and 2, the net book value (NBV) of the equipment is often far higher than its actual Fair Market Value. When old equipment needs to be replaced to keep the company competitive, this causes huge financial difficulties. Potential Net Book Losses are a significant barrier to customers upgrading technology, even if the business need for an upgrade is clear. Disposal With ownership comes responsibility. In accordance with EU regulations such as WEEE and the Data Protection Act, it is illegal to dispose of IT hardware simply by throwing it into a skip. Equipment has to be dismantled, all data erased and memory devices certified as clean before it is safely disposed of or reused. This takes a great deal of time in terms of administration, as well as cash for carrying it out.

6 What are the advantages of financing? Get the Cisco Capital Advantage Cisco Capital gives your customer more benefits: Value for money With highly competitive interest rates and market-leading residual values, our financing initiatives enable us to provide your customers with the lowest possible cost of ownership. Payment over time Our finance options remove the need for large initial capital investment and allow your customer to pay for assets when the benefits are actually delivered. Fixed payments Our set payments for the term of the contract simplify your customer s budget management and allows them to plan ahead. Operating lease payments As these payments are often treated as revenue rather than capital items, this can have a beneficial effect in terms of external borrowing regulations and capital charges. Added flexibility We will also finance non-cisco products along with intangible assets such as software and services, in addition to providing flexible payment periods for the complete solution that suit your customer s needs. IT asset disposal We remove the burden of IT asset disposal and you can rest assured that equipment returned to Cisco is dealt with in accordance with all EU environmental regulations such as WEEE and ROHS.

7 Allow your customer the freedom to focus on their business not on equipment ownership and disposal At Cisco we are fully committed to reducing the environmental impact of all of our products throughout their entire lifecycle. This includes meeting the requirements of the new European Union s Waste Electrical and Electronic Equipment (WEEE) Directive. The Directive states that the manufacturer is responsible for the cost of return, re-use and recycling for all electrical and electronic equipment sold within the EU since 13 August But ensuring compliance with WEEE is just part of our wide-ranging Product Stewardship Program developed to address increasing environmental concerns. This means looking at the impact of Cisco products from initial development and manufacture through operation and service to eventual end of life. In fact, we have built Product Stewardship activities into all of our business and engineering systems and processes. Cisco takes the responsibility as a global citizen seriously. It s the right thing to do and our success depends on it - John Chambers, President and CEO Reduce the impact of your customers end of life technology cycles Cisco Capital actively supports Cisco Product Stewardship through a range of flexible finance programs and the new Cisco Certified Refurbished Equipment program. With Cisco Capital finance we give your customer easy ways to return their end-of-lease equipment. For example, our innovative Evolve i.t, with Cisco program* allows them to trade up to new Cisco products during the term of their finance agreement as well as receive generous payment rebates. But while they feel the benefits, they can also be confident that equipment returned to Cisco Capital will always be dealt with in strict accordance with the WEEE Directive. Cisco Capital finance programs remove the compliance and process burdens associated with IT asset disposal so that your customer can focus on their key objectives to manage, grow and develop their business. Through our Cisco Certified Refurbished Equipment program, Cisco Capital will also refurbish the returned Cisco products and remarket them to other customers both within the EU and around the world. This innovative program extends the useful life of Cisco equipment through valuable re-use, whist also reducing the need for disposal and its associated environmental impact.

8 For More Information For more information about Cisco Capital financing programs or to contact your local Cisco Capital representative, visit About Cisco Capital Refurbished Equipment Cisco Capital Refurbished Equipment (Remarketing) is a part of Cisco Capital. Cisco Capital Refurbished Equipment refurbishes, markets and resells Cisco Certified Refurbished Equipment through channel partners in the United States, Canada, Europe, Middle East, Africa and Asia Pacific markets. * Not available in all countries. Terms & conditions apply Cisco Systems, Inc. All rights reserved. Cisco, the Cisco logo, Cisco Capital and Cisco Certified are trademarks or registered trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company.