EquipmentEngine’s Richard Henderson believes technology can do amazing things. But striking a balance between automation and customer relationships still matters. Equipment Finance Advisor spent time with Henderson to ascertain the thinking that goes into developing a technology-based model that also brings the high-touch elements of a bricks and mortar equipment sales operation.
Equipment Finance Advisor: Describe what experiences from your career prior to launching EquipmentEngine most directly influenced your mission to deliver a technology based model to the commercial finance industry?
Richard Henderson: I’ll start with the general answer and then get more specific. For years, I had been struck by the fact that business-to-business organizations, particularly within the lending community, tended to lag far behind their business-to-consumer counterparts when it came to adopting modern technologies to bring efficiency, predictability, and data intelligence to the client experience. The possibilities for our industry resulting from technology available today are literally endless. I couldn’t understand why our industry hadn’t enjoyed the explosion of innovation that the consumer-facing world had.
This general concept gnawed at me for years. Prior to launching EquipmentEngine, I had the opportunity to watch and help shape how technological innovation was being applied to drive dramatic improvements to efficiency during some strategic process improvement projects. Additionally, my earlier product development projects exposed me to the concepts of Web 2.0 and other Web innovations that a few very small and specialized business partners with whom I associated regularly were beginning to adapt to make financial products and services available in creative new ways.
Additionally, while working on a distressed portfolio for another institution, I recognized an opportunity for asset management service providers to change things up a bit in our industry. From there, the idea was hatched: bring together top producers and experts from the portfolio servicing side and pair them with some very creative and innovative technology applications. We then had a chance to shake up the industry. That sort of thing is very appealing to me.
Equipment Finance Advisor: To what degree does gathering the “voice of the customer” influence the on-going development of this technology-based model?
Henderson: The concept of the voice of the customer (VOC) is so simple, but so powerful. The approach is a subtle paradigm shift that is far too often overlooked. Properly executed, it creates dialogue that elucidates how your clients view the world. It invites clients to become intimately involved in the development of the products and services that they actually care about. Just as important is what is learned by just listening. Clients don’t always ascribe importance to features and benefits to the same degree one may have expected.
I believe the process for development should be iterative and always start with the VOC in mind. I’ve heard this called the “minimum viable product” approach to product development. The last thing you want to do is over-engineer your suite of services only to find out you’ve been focusing on things that clients don’t even really care about. As much as you may want to, you simply cannot and should not attempt to do everything all at once. That’s a recipe for disaster. You must prioritize in a way that will deliver the greatest bang-for-the-buck for your clients, deliver what is most important to your clients first, next make sure they are satisfied with it once delivered, and only then move on to the next iteration.
Equipment Finance Advisor: Why are commercial lessors and lenders seeking new and innovative methods in the asset management approach from third-party providers?
Henderson: What we’ve found time and time again when listening to our clients is that they are primarily interested in simplicity. Today, competition among commercial lessors is as fierce as it has ever been. The time-old result is margin compression and today it is forcing lessors to do more with less and to deliver a return on assets unachievable without an integrated technological approach.
Additionally, asset managers are being called upon with a new fervor to step up to the plate and to contribute their expertise and opinions at a much more strategic level. That is so much easier said than done; managing a high-performance national repossession and remarketing effort is a logistical nightmare and highly labor intensive.
The third-party recovery industry is generally cottagey, unpredictable and severely lacking in technological advancement. The lack of outsourcing options that can actually make a difference for asset managers makes them slaves to the many varied tasks involved in keeping their heads above water. This creates a setting in which it is incredibly difficult for them to advance their careers and focus on contributing to their organizations at a more strategic level. There’s only so much time in the day!
A third-party service provider leverages technology to solve this problem in innovative ways including offering previously unavailable tools like streamlined key performance indicator (KPI) reports, data synthesis, and new levels of access to intelligence available. Without this, most asset managers are highly unlikely to “get a seat at the table” and contribute to their respective organizations at a strategic level.
Equipment Finance Advisor: How does a technology-centric model such as the one you have created translate into what you describe as the "unlocking of hidden value in equipment?" How does technology actually "unlock hidden value"?
Henderson: There’s a little “secret sauce” here, so I’m going to give you a very general answer that speaks to our overarching philosophy and approach. In a highly scalable way, our integrated systems provide the four most important assets for us to leverage in our pursuit of the recovery trifecta (highest sale price, lowest cost, fastest result): (i) Reach – attracting new buyers, (ii) Intelligence – we know a lot about these buyers, (iii) Speed – the goal is to get the right piece of equipment into the right hands at the right time, and fast, and (iv) Relationships – time and time again, we’ve found that the trust that is built up between a sales representative and his or her buyers results in a buying experience that significantly reduces the perceived risks of buying used, repossessed, commercial equipment on-line. This reduced risk results in higher purchase offers and repeat customers.
Finding a way to cause these four factors to interact in a scalable, efficient, and cost-effective way -- and outside of the auction environment is critical. The technology we employ puts us in a position to field lots of offers while dramatically reducing the amount of time it takes to begin fielding bona-fide offers. And it’s rapid fire.
So how does the technology unlock the “hidden value” of equipment? You just can’t pull this off on a national basis manually. The combination of our platform’s reach, intelligence, speed and human touch allows us to deliver our clients equipment sales prices which exceed the status quo in less time and for less money. At the end of the day, quantifying the “hidden value” is rather simple: it is the difference between the status quo net recoveries our clients report to us and those that result from the above approach.
Equipment Finance Advisor: How important is the personal touch (the team behind the website) when a company delivers its services via an advanced technological platform?
It all comes back to the customer experience. In my opinion, too many businesses define themselves as either an e-commerce platform or not. That is too restrictive. It is true; the straight up low-touch e-commerce approach can work very well in certain settings, but not all. By utilizing the VOC principle properly, you can cut to the chase, find what is really important, and fix your business’s sights squarely on delivering on that, in whatever shape it takes.
Take Zappos.com for example. Their idea was to simply employ an e-commerce sales approach specialized around shoes. They did okay, but by focusing on the customer they got the message fast that their business lacked a key ingredient that almost seems obvious in retrospect.
Zappos.com was competing with brick and mortar shoe stores which offered something they didn’t: the ability try on shoes before buying them. As it turns out, this is a step that is very important to most people who buy shoes. The solution: Zappos.com decided to tackle this obstacle head-on. They began allowing customers to ship purchased shoes back, at no charge if they are not 100% satisfied after trying them on. In fact, they have gone so far as to take the highly unorthodox approach of actually encouraging their customers to send shoes back. Their customer care team was trained to accept phone requests for returns with an encouraging, “no problem,” thank-you-for-your-patronage approach. Although initially counterintuitive, this approach built game-changing trust by showcasing the Zappos.com commitment to delighting its customers.
An eye for the particular nuances of a “delightful” sale in the business of remarketing commercial off-lease and repossessed equipment, makes it clear that trust is built up in a different way for in our space. The equipment we sell often represents very large purchases requiring large outlays of cash, expensive shipping, and a tremendous amount of logistical coordination. There is a lot of well-founded cause for concern for buyers considering purchasing used equipment online in general, repossessed equipment in particular. We took inventory of those concerns and created a roadmap to what we thought represented a “delightful” experience for our buyers.
What we have found is that for us, the magic comes from striking a balance between the efficiency of an e-commerce approach and the trust and relationship building that follows from a well-managed, high-touch, traditional brick and mortar equipment sales operation. To us, the technology is a tool, not the service itself. We use this tool to grow and stimulate conversations with the buyers in our database. By leveraging a platform that stimulates these conversations – and lots of them – fast, we are able to make better use of our human resources to get to work creating the kind of value only human beings can create: strong, personal relationships.
Technology can do amazing things and our industry needs to embrace it wholeheartedly, but as your question suggests, the technology is a means to an end, not the end in itself.