In June this year newly rebranded lessor DLL launched its expanded retail financing programme in five European countries: the UK, Germany, Spain, Italy and the Netherlands.
The plan, according to a spokesperson from the company, was two-fold.
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DLL wanted to work more directly with the dealer segment than the firm had in the past – a route to market that it had built suc¬cessfully in the Nordics and the US.
Secondly, DLL wanted to leverage the relationships it had built with major cop¬ier manufacturers through business in North America, working alongside them as the manufacturers expanded into IT and software markets.
Underlying the business expansion was a strategic analysis of the market. The copier market is based on a physical product, but will have to adapt as the demands of offices change across the world with the growth of remote working, green policies on printing in offices, and growth in demand for full product servicing.
So DLL targeted copier manufacturers which were becoming acquisitive in the IT and software markets, including Canon, Konica-Minolta, Ricoh, and Sharp.
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By GlobalDataUS business model
The company, recognising the growth potential in Europe, decided to diversify its channels in Europe by using the business model it had originated in North America, building a dedicated European salesforce and transplanting the president of its global business unit, Steve Riggs, from the US to oversee the expansion closely.
Since the programme’s inception, DLL has recruited seven new dealers and a range of international copier manufacturers, which has given the firm confidence to set ambitious targets for its new market.
Riggs says: "We’d like to get up to 300m of market share in Europe, because we have a very successful business model in the Nor¬dics, in the US, and in Canada. We own 2.1bn of copiers originated by independ¬ent dealers, so to the best of our assessment, we’re the number one in the worlds in origi¬nations of copiers from copier dealers."
Bullish predictions aside, Riggs says prox¬imity to the point of sale was a successful place to be for leasing companies, and that considerations came down to a focus on the service, not just the product.
"Globally, we own 3.4bn worth of copiers," says Riggs. "When you’re work¬ing with a dealer, the dealers can fire you every day by not sending you [asset finance] applications, but you also have the ability to sell them value – you can pay manufac-turers quickly; you can support manufac¬turers quickly; you know how their busi¬ness makes money."
DLL had a host of comparable relation¬ships that would help making its finance product integral to the process of getting a copier from the factory into the office.
"With our business in office technology, we support Cisco, EMC, Microsoft, NetApp; we have all of those processes at our dis¬posal," Riggs says. "All of those firms are converging into IT.
"Every copier manufacturer, like Canon, Ricoh, Konica-Minolta are out buying IT companies because they want to expand revenue, and they know the only way to expand revenue is to get the IT services and networking business."
Crucially manufacturers with long com¬mercial arrangements have that essential quality that money can’t buy – trust.
Riggs says: "Manufacturers that we are dealing with also have the existing customer base and customer relationships, some of which run over 30 years. As a result they are plugged into the numerous IT networks through the copier product, and now they see new revenue source if they provide IT and networking services, so they are out acquiring IT companies."
As a result, DLL has 1.5bn in IT with major partners, on top of its 3.4bn in copiers.
Leveraging successful examples
DLL has used a little of its own experience with regards to process and staff for the expansion.
"The blueprints for the US, the Nordics and Canada are identical; that’s why we have had the same people for this kick-off working from our Nordic teams," says Riggs.
"We have had independent relationships with international dealers for over 30 years; we have continued to support these dealers and we have a generation of vendors coming into the dealerships.
Point of sale vendors find us to be an integral part of their busi¬ness, because we provide them with capital. We also provide them with the ability to manage their service as a collective.
They think that we are a very close component to what makes them successful."
With a way-in provided by successful relationships, revenue is maximised by opportunity.
"We have multiple products that we sell into this; our asset management products, our usage-based billing products, our insur¬ance products, and of course they are all good income products for us and they add value to the dealer," says Riggs.
"The only way to capture all that business is to have sales people that go out into the market, develop relationships, understand what it’s going to take to add value to that dealership, and that’s not a complicated business; it’s just getting good people that know how to sell, and know the value prop¬osition of our company."
It’s a familiar tale in the asset finance market, with its steady stock of experienced and long-serving professionals, that a new business line or expansion from a lessor needs an attractive package to pull staff over from competitors.
Riggs says: "It’s a significant commit¬ment; we’re investing several million euros in recruiting people. Now is good, because we didn’t do it a year ago! When all the ele¬ments come together, and everybody agrees on it, you have to plan, you have to hire, and recruit. Recruiting the right people is the number one priority.
"If you don’t get good people that can move the business quickly, and get you into the local dealerships that we would cat¬egorise as Tier 1 [high-quality] dealerships, that’s a bad start. So we have very aggressive remuneration and recruitment programmes: we really want top talent."
Riggs recruited copier stalwart Olle Holmgren to his team, expanding his role as vice-president of sales with his appointment as the European retail leader, and with that joined DLL’s office technology management team. Holmgren manages all aspects of the EU retail launch currently under way in five countries, while also continuing to lead the Nordic commercial team.
French connection
A noticeable name missing from the list of countries set for the retail asset finance copier expansion is France, although there are reasons apparent to any poten¬tial investor in French leasing about the state of the market.
According to Leaseurope’s Annual Sur¬vey 2013, the Association Francaise des Sociétés Financieres recorded a 5.45% drop in new production between 2013 and 2012, to 28,766m.
As Leasing Life’s Jonathan Minter dis¬covered in September’s issue: "Exactly why the French are struggling is a matter of debate, with some blaming the effects of restrictive government policies on busi¬ness, others on the fiscal drain of numer¬ous bailouts, and others on the poor per¬formance of the eurozone, France’s primary trading area."
Riggs is of a similar opinion.
"France in general, is a very difficult place to make money, if you’re a non-French organisation. We are going to do a study in Q1 to assess how viable our product would be there, but we have had experience in all these countries over the years, and so we do understand the French market and it is a bit of a challenge.
"We thought that instead of jumping in right out of the gate we would concentrate on the countries where we know our value proposition is strong. Let’s get the project’s revenue higher, let’s get people working, and then let’s assess France separately."
