As a family-run company dedicated to helping its customers pursue excellence in metals fabrication, Minnesota-based Hytek Tools keeps a close eye on the needs of its client base. In the company’s first few years in business, Hytek co-founders Jason and Melissa Jones heard repeatedly from customers that access to equipment financing would help many of them purchase the precision, high-speed fiber laser cutters that are state-of-the-art for metal fabrication and related industries today.
“Customers would say, ‘You should figure out some kind of financing system,’” said Jason Jones.
The fiber laser cutters Hytek sells range in price from $65,000 to $500,000, and its customers range in size from smaller fabrication shops and sign makers to large organizations such as Lockheed Martin and NASA.
One challenge in finding a successful financing solution was finding a way to cater to so many different ticket sizes and Hytek purchaser profiles.
As Hytek experimented with different lender partnerships, Jason Jones said the company learned a few other lessons about successfully helping customers access financing:
The finance application process needs to feel seamless. Hytek sells primarily through e-commerce, and has invested in creating a high-quality online purchasing experience that is efficient and intuitive for customers. When it tried partnering with a few individual lenders to offer financing, Jason Jones said the application process felt clunky and dated.
Customers should stay on Hytek’s website. Even worse than a clunky user experience, Jason Jones said some lender partners would take customers to a third-party site, where Hytek would lose control of the sale.
“It would take you off our site, and I am pretty sure we had a couple people get approved (for financing) who ended up buying somewhere else from our competitors,” Jones said.
Pricing options should be clear and up-front. While many of its competitors in the fiber laser cutter industry require customers to request a quote, Hytek distinguishes itself by displaying pricing on its website.
Therefore, a truly successful financing solution would need to be able to break that cost down into a monthly financing cost, allowing customers to better understand their buying power.
After seeing lackluster results with previous lender partnerships, Hytek’s leaders found APPROVE Payments. APPROVE’s SaaS solution allows equipment sellers to give their customers access to a curated network of lenders, with tech-based tools that make it easy to display monthly financing costs, and allow for a fast and easy application process.
“We were struggling when we discovered APPROVE. We weren’t getting many applications, and that was hurting our sales,” said Jason Jones. “The digital quote with the finance payment was a selling point for APPROVE. Compared to what we were doing before, it’s just night and day.”
Jones said APPROVE integrates seamlessly into Hytek’s website, and its graphic interface with buttons to make it clear to customers how to apply for financing help move people through the process—with measurable results.
“We got applications right away, after three to four months without a single application through [a previous lender],” Jones said.
He likes the way APPROVE makes the application process easy for customers, while keeping them on Hytek’s own website.
“I have been telling customers, ‘You could be 60 seconds away from the biggest piece of machinery your company will ever buy,’” Jones said.
This is particularly helpful to some of the metal fabricators Hytek serves, as the industry is transitioning from older plasma cutters to fiber laser cutters, which are more expensive, but achieve much higher-precision cuts.
Fabricators who can’t afford to buy a cutter may spend as much as $200,000 a year outsourcing cutting work, Jones said. By seeing a monthly financing cost instead of a single equipment price, he said many of them may realize that they can afford this investment that has the potential to grow their business’s revenue.
“You do the numbers, and they could be putting that money in their pocket,” he said.
As Hytek’s competition in the fiber laser cutter market grows, Jason Jones said he is hopeful that the company’s ability to offer transparent pricing with clear, user-friendly financing options will continue to set it apart from others in the industry.
“There is definitely competition out there, and it’s coming fast. We have to stay ahead of them, and we try to do things differently,” he said. “We have gone full-steam-ahead with integrating APPROVE on our site, and I am really excited about it.”