- February 23, 2022
We hear the expression, “flow business” and wonder, just what exactly does that mean? I asked our sales leaders this question and in short, they say it is a repeatable, consistent volume of business from a business customer (buying supplies regularly from the same source, e.g.). In the case of a finance company, it means a steady diet of credit applications from an equipment vendor that reliably and predictably uses your services. In both cases, this is business that is earned by providing a great product and a great customer experience. We’ll examine this more later.
In the equipment finance business, the difference between flow business and transactional business is often a function of transaction size. Larger, mid-ticket business might be considered flow if it meets the test of repeatable and consistent volume. For the most part however, the term flow business is used in conjunction with small ticket financing.
Organizationally, LCA is always asking the question of just how much personal touch matters versus technology when considering the influence each has on an equipment vendor’s decision to provide us with flow business. We think there is a place for both but the key to success begins with communicating vendor expectations throughout departments that touch the transaction. This starts with an application that is submitted to Credit and continues through Document Processing, Booking and finally Customer Service. If there is alignment among these departments regarding vendor expectations, there is a high probability that flow business can become a reality. Once this is complete, technology can be applied to eliminate touches, automate repetitive manual functions and otherwise speed up the process. But you can’t rest on your laurels, even after vendor expectations are understood across the teams. Continuous monitoring, measurement and improvement are critical to maintain and grow the relationship and keep that flow of business going.
Getting back to the notion that it takes the combination of a great product and a great customer experience to secure flow business. The question is – are both required? Companies like Apple can lay claim to both but can you put out an OK product with superior execution and still win the day? How about the inverse? The sales of a great product will surely be limited if the customer experience and post-sale servicing are poorly executed. Conversely, average or even useless products can be successful if they are effectively marketed. Think of the Pet Rock, the Snuggie or the Shake Weight. P.S. I’m happy to report that I’ve never owned any of these!
The answer to securing and sustaining flow business is that you need both. Settling for good enough might work in the short term, but continuous work on both product and customer experience is needed to stay relevant and in the top tier of your competitors.
The benefits of flow business are obvious, especially when you need to forecast upcoming sales volume for management. It’s a great benefit to know that a portion of your business is locked and loaded month after month. At LCA, we are fortunate to have equipment vendors like this and we are grateful for their trust in us to handle their financing business. This is a testament not only to our front-line originators but also to the credit, documentation and customer service teams that make them look good.
The keys to flow business are simple to understand but not always easy to pull off. Even if your financing “product” is not where you want it to be, you can still execute like a champion while refining your product to be best in class. Look at your processes and how the business flows internally and use your people and your technology to remove any points of friction and duplication. Lastly, make sure your teams are aligned with your vendor’s expectations to create a truly exceptional customer experience.
Go with the flow!