Dear Funders: Don’t Dial ‘M’ for Marketing

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Photo credit, Bryce Johnson,

Photo credit, Bryce Johnson,

Imagine you own a small donut shop in Arizona and receive an email saying, “Hello, I have heard your chocolate donuts are amazing and the most popular item. I work for XX, and we provide small business loans, do reach out to us if you’re looking to take it a step further.”


Getting yet another envelope in a deluge of mails with a bank-check-like promotional ad for a preposterous amount that startles you for a hot second before it ends up in the paper shredder.

One of these methods is free, personalized and subtle. And no points for guessing which one.

Gone should be the days where funders indiscriminately send out email blasts or cold call merchants offering working capital. But are they?

A year ago, a Wall Street Journal article said,

“A big reason online lenders make heavy use of mail, they said, is that it is still more effective than other types of direct marketing. Across all industries, the overall response rate for direct-mail overtures is 3.7%, compared with 0.1% for both email and social-media marketing campaigns, according to a recent report from the Direct Marketing Association, an industry group.”

Mintel Comperemedia, a database which tracks advertising data highlighted the use of technology as being the paramount shift in marketing for the financial services industry. But is the transition from analog to digital underway? 

For some companies, it is. New York-based SOS Capital does not have a sales team and does all of its marketing on social media. The company sends no direct mailers, limits email blasts and instead scouts for small businesses on Facebook, LinkedIn and Yelp.

With more small businesses ramping up their social media presence, discovering leads has not only become easier but also cheaper. “Small business presence on Facebook is growing every day and finding them there can save you a lot of money,” said David Obstfeld, CEO and co-founder of SOS Capital. “Facebook is not explored by most funders but we have had great success.” The company spent $6,500 marketing to SMBs on Facebook and had 120 conversions over a period of two months.

How does that compare with the conventional methods of direct mail campaigns, email blasts and phone calls?

According to Justin Benton, sales director at leads generation firm, Lenders Marketing, it could cost about $100,000 to send out a million emails to active, verified accounts and as much as a dollar for a nice direct mail, including printing and postage.

“Even though it’s cost prohibitive for some folks and some others think that it’s past its prime, direct mail still wins,” said Benton who urges his clients to consider social media marketing which he says can be “virtually free.”

Discovering companies on sites like LinkedIn and Yelp can offer insights into the business and target customers better. “Calling a lead once and saying the words, ‘business loans’ or ‘working capital loans’ does not work, you need to understand the business,” Benton added.

Digital marketing can also help one keep better track of leads and reinvest in the ones that work. “It’s important to have a leads scoring system,” Benton said. The opposite of that, to him, looks like “Making a gumbo from scratch but you have no idea how you did it and cannot recreate it.”

Competition among financial companies will eventually force them to get more creative with their marketing tactics. Like Partners Funding for example, an MCA funder that markets to ISOs, uses incentives as baits. “If the ISOs fund three deals over $50,000, we reward them with extra points or give them marketing dollars,” said Michael Jenssen, ISO sales manager at Partners Funding, which sticks to marketing through email blasts, calls and exhibiting at trade shows.

Ultimately, the road to a lasting relationship with clients is paved with effective marketing. And the line between pushing call to action and being pesky is quite fine. “Funders have been using the same marketing campaigns and it’s making the clients sick,” said Obstfeld. “There are only so many mailers one can receive. They have to be creative about marketing to people without annoying them.”

For Obstfeld, the value in pursuing businesses through channels like Facebook is having more control over deals and interacting with the merchants directly, without any interference from ISOs. “It’s not just about saving money but the control over the deal. When there is no ISO involved, there is no stacking involved.”

The transition to moving all marketing online might be slow but inevitable. Until then, using bank check imagery to promote big pre-approvals will be more than just gags.

Last modified: October 7, 2016
Srividya KalyanaramanAs editor, Srividya drives daily news coverage and editorial strategy. Previously, her work has appeared in publications like Money magazine, Advertising Age, FirstPost and The Economic Times. She has also dabbled in business intelligence solutions, and holds a Masters degree in Business and Economic Reporting from NYU. Write to her at

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