In today’s competitive online lending market, where over 70% of consumers prefer digital channels for financial services, effective user acquisition is more critical than ever. According to Glassbox, customer acquisition costs (CAC) in the fintech space are steadily rising, making it imperative for companies to leverage cutting-edge tactics to stay ahead. This blog post will explore proven strategies that can help your online lending company not just survive but thrive, by building a robust acquisition system that drives sustainable growth. If you are a marketing leader in the online lending sector, then this article is for you.
What does user acquisition mean to Online Lending Companies?
Research indicates that during times of economic instability, lending companies may adopt a more conservative approach to spending, often focusing on cost-effective customer acquisition strategies. In contrast, during periods of economic growth, these companies might significantly increase their marketing budgets to aggressively acquire new customers. This approach is a blend of organic tactics, such as leveraging content to educate and inspire potential borrowers, and paid acquisition methods, like targeted ads and promotions, ensuring a balanced and adaptive strategy.
The challenges of acquiring new customers for your Online Lending Business
Acquiring new customers can be tough and costly, as it requires that acquired customers meet all the requirements to borrow money, are able to pay back their loans and then go on to become repeat customers. Here are a few challenges you may encounter :
- Fierce Competition:
The Lending industry is highly competitive, with numerous financial technologies infused to create an interactive interface for customers. The lending sector is a blend of companies that use websites, others who have mobile apps, and those who offer both web and mobile experiences to their customers. The number of approved digital money lenders in Nigeria is substantial, with over 120 companies fully approved by the Federal Competition and Consumer Protection Commission (FCCPC) as of 2023. This includes a wide range of players from fintech startups to more established microfinance banks, indicating a highly competitive market landscape (Consumertrics) (Blog). The unapproved are numerous and daring as much as taking significant portions of the pie.
- Customer Acquisition Cost (CAC):
As mentioned earlier, acquiring new customers can be costly, from marketing expenses to the resources required for onboarding and customer support. The average customer acquisition cost (CAC) for companies has increased by nearly 50% over the past five years due to rising marketing expenses and the resources required for onboarding and customer support. This makes it essential for online lending companies to optimize their acquisition strategies to increase cost efficiency and maximize ROI.
- Customer Retention
Customer retention can be challenging for online lending companies due to a number of factors, including customer expectations, resources, and data privacy. Customers expect a lot from online lending companies, including personalized experiences, great products and services, and timely responses to questions. Limited budgets and resources can also make it difficult to meet customer expectations. Data privacy regulations, iOS privacy updates, and the anonymity of third-party tools all make it more challenging to manage customer data. Other reasons customer retention can be challenging include disengaged customers, lack of internal processes to implement customer feedback. Finally, poor customer service is one of the major reasons online lending companies lose customers they struggled to acquire. It is common knowledge that some Online lending companies resort to threats and force as a means to secure loan repayments from their customers.
How to create a repeatable customer acquisition system for your lending company
Acquisition for lending companies can be a little different from other sectors … Let’s look through the process, touching on case studies as well.
1. Identify Your Customer Avatar
This may sound cliche, but be a little patient, as this is a little different for you as a lending company. Customer avatars for a lending company may look something like this
Persona 1: Young Professional (25-35 years old)
- Requirements: Personal loan for purchasing a vehicle or enhancing their home.
- Challenges: High interest rates and a complicated application process.
- Preferred Channels: Mobile app and social media.
- Persona 2: Small Business Owner (35-55 years old)
- Requirements: Working capital to grow their business or invest in new equipment.
- Challenges: Lengthy loan approval times and restricted access to funding.
- Preferred Channels: Email and phone calls.
Do note that there are several other buyer personas depending on the offering and unique selling proposition of each online lending company.
Source: Renmoney
A perfect example is Renmoney, whose acquisition process highlights the requirements to be a borrower, stating the loans available, and going as far as asking for evidence of employment. The goal for each borrower is to find the perfect platform for them, likewise the lender’s goal is to find the perfect customer for them.
2.Choose the right platforms to reach your ideal Customer Avatars
Understanding who your customers are is the first step, choosing the right platforms to reach them is the second step. Let’s use FairMoney as an example. Acquisition channels can include – Social media marketing, content marketing, influencer marketing, etc. FairMoney as a product explores all aspects of these channels, and here is why.
Content marketing: FairMoney uses educative long form content on their websites and guest websites to reach potential customers. Content marketing goes beyond just posting blogs on your website and hoping for traffic. It’s crucial to grasp the fundamentals of SEO and recognize that this is a long-term effort. It may take several months or up to a year before you start seeing tangible results.
Social media marketing: FairMoney recognizes the significance of trends and social media platforms in connecting with their audience. Exploring FairMoney’s Instagram handle, it’s clear that they utilize engaging content, visuals, designs, and current trends, along with a consistent tone of voice, to educate, entertain, and drive sales.
Paid advertisement: Whether you opt for PPC on Google or social media ads like Facebook, paid advertising is an effective way to quickly place your business in front of the right audience. While there’s a cost involved, it can be highly profitable if your customer acquisition Cost is lower than your Customer Lifetime Value
Influencer Partnerships: Influencer marketing is a powerful strategy that involves brands partnering with individuals who have a substantial online following to promote products or services. These influencers create genuine content that resonates with their audience, driving both engagement and brand awareness. Companies clearly see influencer marketing as a direction where they intend to head, with 67% of those respondents already budgeting for influencer marketing.
Image Source: Influencer campaign Chart
FairMoney is known to run lots of paid ads, from social ads, to google ads. They go beyond getting ads in your face, they as well implement the use of influencers and sometimes celebrities in their marketing to talk about their services via comedy skits, e-flyers, and promotional videos.
A good example of influencer advertising is the Introduction of the FairLock double interest promo with the influencer iamitom.
With the use of influencer messaging and energetic copies, online lending companies can grow their businesses. You can grow yours as well.
How to choose the ideal channel
Creating a repeatable customer acquisition system for your lending company requires a well-structured approach, much like building a robust marketing funnel. Just as Neil Patel outlines stages of a marketing funnel, you can apply a similar framework to systematically attract, nurture, and convert leads into loyal customers for your lending business.
a. Awareness Stage: Attracting Potential Borrowers
The first step in your customer acquisition system is to make potential borrowers aware of your services. This can be achieved through a combination of content marketing, social media engagement, and paid advertising. This can be achieved through a combination of content marketing, social media engagement, and paid advertising.
Content Marketing: Creating informative content that answers common questions borrowers may have, such as “How to Choose the Best Loan Option” or “Understanding Interest Rates.” This positions your company as an authority in the lending space. According to Neil Patel, blog posts, infographics, and videos are highly effective in capturing attention at this stage.
SEO and Paid Ads: Optimizing your content for search engines (SEO) and use paid ads to ensure your message reaches the right audience. For instance, running Google Ads targeting keywords like “low-interest personal loans” can drive traffic to your landing pages.
Social media: Engaging with potential borrowers on platforms like Facebook and Instagram by sharing educational posts and success stories. Influencer marketing can also be powerful here, as it leverages the trust influencers have built with their followers.
b. Interest Stage: Nurturing Leads
Once potential borrowers are aware of your services, the next step is to nurture their interest and build a relationship. This involves providing more in-depth information and addressing their specific needs.
Email Marketing: Using email campaigns to deliver personalized content that addresses borrowers’ pain points. For example, sending a series of emails that explain the benefits of different loan products, offer financial tips, or provide case studies of satisfied customers.
Webinars and Guides: Hosting webinars or creating downloadable guides that go deeper into topics like “How to Improve Your Credit Score” or “Understanding the Loan Approval Process.”
Retargeting Ads: Implementing retargeting campaigns to re-engage visitors who have shown interest but haven’t yet converted. These ads can remind them of the benefits of your lending services and encourage them to take the next step.
3. Develop a lead generation strategy
With your customer avatars and platforms in place, the next step is to create a robust lead generation strategy. This can include:
Targeted Advertising: Using platforms like Google Ads and Facebook Ads to run campaigns specifically designed to reach your customer avatars based on their interests and online behavior.
Content Marketing: Publishing valuable content such as blog posts, eBooks, and case studies that address your audience’s pain points and interests. This helps in attracting potential leads who are searching for relevant information.
Partnerships: Collaborating with influencers, financial advisors, or other businesses to reach a broader audience and build credibility.
By implementing these tactics, you can attract high-quality leads who are more likely to convert into customers.
4. Determine Your Overall Marketing Budget
Start by establishing your total marketing budget. This should be based on your company’s financial resources and growth goals. It’s important to allocate enough funds to cover all aspects of your acquisition strategy, including advertising, content creation, platform subscriptions, and personnel costs.
5. Allocate Budget by Channel:
Start by establishing your total marketing budget. This should be based on your company’s financial resources and growth goals. It’s important to allocate enough funds to cover all aspects of your acquisition strategy, including advertising, content creation, platform subscriptions, and personnel costs. Distribute your budget across different channels based on their expected effectiveness in reaching your customer avatars. For example:
a. Digital Advertising: Allocate funds to platforms like Google Ads and social media for targeted advertising campaigns.
b. Content Marketing: Budget for content creation, including blog posts, videos, and graphics.
c. Partnerships and Influencers: Set aside money for influencer collaborations and partnership deals.
6. Monitor and Adjust Your Spend:
Regularly track your spending against your budget to ensure you’re staying within limits. Use analytics tools to measure the performance of each channel and campaign. Adjust your budget allocations based on what’s delivering the best return on investment (ROI) and reallocate funds from underperforming areas to those showing better results.
7. Evaluate ROI and Reinvest:
After analyzing the results of your campaigns, calculate the ROI to understand which strategies are the most effective. Reinvest in successful tactics and adjust your budget for future campaigns based on these insights.
By integrating a well-planned budget into your customer acquisition strategy, you ensure that your resources are effectively utilized and that you can scale your efforts sustainably.
8. Develop a referral program:
Referral programs might seem clichéd, but they remain highly effective. Once you’ve identified successful channels and are generating leads, it’s crucial to leverage those leads to attract even more. For example, consider how Fairmoney’s referral program operates:
Image Source: FairMoney referral
3 tips to improve your acquisition strategy as an online lending company
Master the use of CTA
Once you’ve found a channel that works, (content marketing, social media, influencer marketing, etc.) that generates the most leads for your business, the next most important thing is to convert. Conversion may require testing varieties of call-to-actions. Let’s take for example, your strategy to acquire leads worked when you used “sign up and get an interest rate of 3% instead of 4%”, the next step is to use what works. The more compelling and relevant your CTA, the higher the chances of success. Make sure it addresses your target audience’s pain points directly. If you’re unsure, invest time in A/B testing different CTAs to determine which one performs best.
Track everything:
The more you know what works, the better it is to optimize your customer acquisition strategy as time passes. Know where your leads are coming from. It is important to improve your conversion rate. Conversion rate for you as an online lending company may not end with customers taking a loan, it may require repayment procedures and retention. Knowing all of these allows you to optimize what channel works best for you.
Make accessing you easy:
While running ads to attract borrowers can be effective, if you’re not seeing the expected leads, the issue might lie with your interface. Ensure that your app or website is user-friendly and easy to navigate, as a seamless experience is crucial for attracting and retaining users.
Conclusion
Acquisition is easier if you understand how to put the right pieces together. If you are a thought leader in the online lending sector, explore these strategies and grow your acquisition.
Need help with all of these and more? Contact us at intense digital
