GSG Journal

Putting the RIGHT Proposal in Front of your Prospect

Posted by James Brown on Oct 5, 2016 10:30:00 AM

All good equipment salespeople become experts on the products that they sell. They take the time to understand how their product works and what it can do.  They know the specifications, applications, capabilities, speed, integration and every other facet of the solution. They can rattle off the key points of the solution from memory, and take pride in understanding how it can benefit their customers. When a potential sale is identified, sales professionals invest significant time in moving to the next step. From initial call, to needs analysis, and on to a demonstration and possibly a trial in the customer’s environment, a very precious commodity, sales time, is used.

             However, when it comes to one of the most important parts of closing the deal, a detailed financial proposal, many simply list every lease option they have available and hope for the best. After the weeks or months spent leading up to proposal, the financial structure is often an afterthought. Countless proposals simply list 36, 48 and 60 month FMV and $1 lease options on a cluttered pricing page. A detailed, customized financial proposal will increase your chances of the customer proceeding with the transaction. This also shortens the sales cycle since your customer will have fewer questions during the approval process. Here are some thoughts about how to create a customized lease proposal:

  • Historical Customer Behavior at End of Term- Ask your prospect what they have done with similar equipment in the past. If they typically upgrade to newer technology midway through the lease, the salesperson should take that into account when proposing an acquisition package. Conversely, if they keep the equipment for as long as possible and run it until it is no longer viable, that is valuable information as well. 
  • How quickly does the technology being sold change? – While a printing press may last for 7-10 years, a production color printer may be at the forefront of technology today, but behind the technology curve in 3 or 4 years. Use this information to determine the length of the lease contract being proposed.
  • Customer budgeting- Ask your prospect how they budget for this type of acquisition. Do they use operating or capital funds? Many customers can easily access operating funds and may be able to use them for an FMV Others may be using capital funds and want a $1 lease. Understanding where the funds come from and the approval process for each will help you propose the right type of lease. Another consideration is timing. Does the prospect have a specific budget available for the current fiscal or calendar year? If so, a payment deferral until the next budget period may allow the customer to proceed immediately rather than wait. A step lease that matches the funds available for the current period can often speed up the sales cycle as well.
  • Lease types and when to propose them:
    • FMV lease- A fair market value lease customer can purchase the asset for its market value at lease end. FMV is often the best lease type for technology that changes quickly. If a prospect doesn’t want to own the equipment and will most likely upgrade, an FMV lease offers the lowest possible payment. FMV offers the option to own the equipment at the end of the term but is best when ownership is not very likely. 
    • $1 Out lease- If the useful life of the asset is long or the customer wants to own the asset, a$1 lease (also known as a capital lease) is the way to go. If the prospect wants to own the equipment, a $1 lease is likely more cost effective than an FMV lease where the customer exercises the purchase option at the end of the term. A $1 lease may also qualify as a write off under section 179, which reduces tax liability in the year it is put into service.
    • Step Lease- If the customer has a specific budget for the current period or has cyclical revenue throughout the year, a customized step lease can help. Matching the payments to their specific needs not only helps with the financial justification but shows how well you know their business. 
    • “Put” option- If your customer wants the lowest possible payment but wants to own the asset, a “PUT” (Purchase Upon Termination) lease, or a lease with an obligated final payment is a great option. The final payment is typically 5-10% of the original amount financed. In effect you offer the low payment of an FMV lease, with ownership after the final payment. 
    • 10% purchase option- This offers the customer the option to purchase the asset at lease end without the unknown FMV. It allows your customer the option to purchase the unit with the ability to know exactly what the outlay at lease end will be.


Don’t just include a laundry list of lease options. Help your customer say YES to your deal by crafting a proposal that matches their acquisition goals. It shows that you understand their business, and in many cases your proposal will go on throughout the customer’s organization to people that you don’t get a chance to meet with. A customized proposal will sell your solution even if you aren’t there! Engage a leasing professional to walk you through the options, or contact your customer’s financial decision maker to ensure the right proposal gets submitted for approval. You’ll find that this results in more closed deals and shorter sales cycles.

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Topics: leasing, strategy, service, solutions, leasing benefits, tips, sales tool, sales, end of lease, proposal

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