One of the biggest mistakes that
anyone working in Europe can make is to assume that all the
different markets share the same characteristics and can be
approached in the same way.

Leasing is testimony to that fact,
with a surprisingly large variation in the contracts, laws,
practice and uptake of finance by the business community across
Europe. One thing does, however, hold true wherever you look,
namely the importance of the local connection for a successful
sales effort.

The route by which this is achieved
that offers the best chance of success does, however, vary
considerably from country to country.

A direct sales approach with leasing
sales teams contacting end-user customers through introductions,
cold calling and visits can be very effective for banks and finance
companies with extensive branch networks or large field and
telesales teams – especially in the larger countries in Europe
where local banks have built out a very extensive network of
offices.

The obvious challenge is one of cost
which has seen many smaller banks, branch offices and the local
presence disappear over the course of the past 20 years as a drive
for greater efficiency and cost reduction has swept all before
it.

The emergence of indirect and vendor
sales over that same time period has, in part, been driven by the
need to replicate the local presence and feel of an extensive
branch network without the requirement to maintain that
network.

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Indirect and vendor programmes
continue the tradition of doing business locally by using the
third-party or vendor sales force as a proxy for the branch.

The current credit turmoil has caused
some to reflect on the wisdom of closing down the direct contact
finance companies and banks had with their customer base however,
as delinquencies have risen significantly and bad debt begins to
climb.

The closure of many third-party
relationships and the renewed focus on the customer base that many
have announced demonstrate the need to re-connect with the users of
finance. The ongoing re-evaluation of business plans currently
taking place should include a consideration of how best to maintain
that all-important local connection.

Without this, no business can be truly
successful distributing finance in Europe wherever they choose to
operate.

Whoever figures out how to deliver
this without incurring the major costs of a significant physical
local presence will emerge as a winner following the huge
disruption we are undergoing at present.

Alun
Richards
 is a principal at The Alta Group and former
managing director of Key Equipment
Finance