INNOVATION in OFFERING PDL PRODUCTS & SERVICES
It’s time to rethink our approach to serving the payday loan consumer.
In addition to building a payday loan operation from scratch, I’ve been consulting in this space since 1998. I attended my first FISCA convention in 1999. I’ve attended virtually every FISCA and CFSA convention since then with an OLA here and there as well. As a result, I’ve witnessed the tremendous growth in the payday loan space – from virtually zero revenue in the 90’s to an estimated $45 billion dollars today!
In late 1998, I built my first web site in HTML. I studied all the SEO stuff I could find and followed many of the early gurus. I read everything I could find regarding SEO and subscribed to every newsletter!
No one really knew what a payday loan was back then and I was selling over 3000 payday loan leads/month to a Lender in Costa Rica for a few dollars each. My costs for these leads was zero! By the way, these leads were simply customer Name, phone number, and email address.
In those early days, before Google, I played with Alta Vista, an early PPC (pay per click) GoTo that became Overture, Infoseek, Ask Jeeves, Lycos, Excite, Yahoo Directory, yada, yada, yada.
Man have things changed!
I’m consulting with clients today facing $135 leads and lucky to fund 20% of them! If they don’t successfully re-market to the payday loan consumers they do fund, they lose their butts! Add to these costs the transaction fees Lenders typically pay to their LMS provider, their ACH provider(s), their lead scrubbers/sub-prime consumer data bases, their outsourced call center provider and more than a few Lenders begin to whimper they’re simply working for their vendors!
So, what do you do?
1st, as I’ve been repeating for years, “Embrace the Internet.” Don’t rely 100% on your brick-n-mortar approach.
Focus on the quality of your revenue stream. The barriers to entry in the payday loan space are relatively low. Margins are eroding. Sophisticated money is pouring in. Demand by consumers for payday loan type products is skyrocketing.
Don’t give up on developing organic traffic in spite of what the lead generators and call center folks tell you. Sure it takes time. However, if your model relies solely on lead purchasing, your margins will continue to erode. And, with heavy marketing costs, your enterprise value will suffer. Do know that organic traffic is not free. You do need to devote resources to long term development of organic resources.
Build a network of web sites. If your model requires the purchase an “off-the-shelf” LMS platform, you generally do not have the ability to tweak your content, META tags, TITLE tags, etc. at your whim. So, build a network with unique URL’s, hosted by multiple providers, link them together and put a member of your team to work on this. Do it in-house, out-source it, whatever! Learn to use all the various social media, Twitter, Facebook, Youtube AND the next new “thingy” that appears tomorrow.
Think social! Think community!! Google, LinkedIn, Facebook, Open Table, etc. never ran marketing ads or PPC campaigns. Everyone in the PDL space is taking the same approach. Avoid this!!
What about a “membership” site offering consumers discounted fees in return for access to their employment, bank info and an ACH authorization?
What if your payday loan customer had to sign in via their Facebook or Twitter account to qualify for a host of goodies? (See http://www.gri.pe/ )
What if you provided credit build, education, debt organization and management, access to ShareBuilder, a credit card and more?
What about a smart phone app for your previous, successfully paid off customers? They need a quick $400 deposited in their bank account to cover their car repair bill or face an NSF.
How about a whole different “loan?” Some kind of “line-of-credit,” “installment loan” product for your less-marginal customers? Look at http://www.kiva.org/
LET YOUR IMAGINATION PLAY!!!! Start down a new path! Look at what the developing countries are doing with financial services! Break out!!!
Now attack me, agree with me, or discuss with me BUT don’t ignore me!
Jer _Trihouse PDL Consulting