Pssst… mind if I share a secret with you?
Well… okay… it’s not really a secret but here it is…
Most Merchant Cash Advance lead vendors are usually selling beat up lists of merchants who got contacted by dozens of lenders already.
Have you ever wondered why this is so prevalent in the industry?
Today, I’m going to reveal:
- The reason why MCA lead vendors sell the same lists to dozens of different brokers without a second thought
- Why purchasing these shopped out lists is keeping you and your financial firm at the bottom of the industry fighting over scraps with other similar brokers buying the same lists
- How to evolve and become like the tech giants who hold a tight grip on the alternative lending industry
Part I. Why do MCA lead vendors sell the same lists to dozens of different brokers without a second thought?
Well, to be a little blunt, here’s the reason why they do what they do:
The core reason is that the cost of new acquisitions is much higher at sometimes more than $50 per lead (if you plan on going for bigger deal sizes like merchants with revenue above $20,000/month).
Lead vendors would have slim margins if they spend their $50 on 1 lead and then only sell that to 1 exclusive client for $80.
Most of the time, you’ll see them selling leads at $50 per lead, which means that they are breaking even on their lead cost by selling to 1 client.
The profit doesn’t start rolling in until they’ve sold to 2+ clients.
This leads us into asking…
Why don’t they sell you the leads at a higher price so they can break a profit?
Well, they don’t do it because that kind of business surely won’t make them as much money as if they sell it to 12 different brokers.
In other words, they’re more concerned about making money than about scratching your back.
Short term instant gratification over long term strategic thinking.
Most lead vendors are usually guys who dropped out of the MCA game because they couldn’t meet sales quotas, and they saw that everyone in the industry is hungry for leads and so they got greedy and decided to start selling leads with the wrong frame of mind.
Greed blinds people from solving problems in a customer centric way.
Think about why Amazon is one of the richest companies in the world.
It’s because they have an intrinsic focus on customer desires and wants.
Hell, Amazon wasn’t even profitable for so long, but now it’s dominating all types of industries because of its long term vision and because it focused intensely on what was the right thing to do for the customer.
So, as I was saying… lead vendors are basically focused on short term instant gratification and selling you scraps.
Their train of thought is like this:
Misguided Lead Vendor: “I’ll buy these leads with my money by investing into some advertising and then I’ll make a profit by selling to multiple vendors instead of only 1 guy. Let the schmuck brokers fight over them. Let them fight over who gets the deal funded. No skin off my back, eh?”
Yeah, I know. Awful, right?
So… why does this strategy work for these “lead gen” guys?
It works because this industry is full of salesmen who love to be competitive and they see a hard sell as a challenge, without fully being aware of why it’s hard to sell that loan to that lead they got from the lead vendor.
It’s a hard sell because the merchant’s attention is split across 15 different brokers calling him dozens of times a day. This is a merchant’s wet dream. So many people fighting over his business! He’ll just buy from the guy with the lowest factor rate because money is a commodity for him.
Everyone loses when this happens.
- Brokers and ISOs lose when they experience poor close rates either due to heavy competition or due to the merchant having poor qualifications because he’s been stacked with debt.
- Merchants lose trust in the alternative lending industry and their guard goes up ever increasingly.
- Lead vendors lose when they experience distrust from ISOs and Brokers because their leads aren’t converting.
Indeed, if most people in this industry weren’t so greedy and were focused on actually helping their clients solve problems, we wouldn’t see such a trend where seemingly 90% of the brokers are fighting over the 10% of poorly qualified merchants, while the 10% of tech giants like Ondeck, Fundera, Lendio acquire new, fresh deals that no one has ever touched before.
Part II. Why is purchasing these shopped out lists keeping you and your financial firm at the bottom of the industry fighting over scraps?
Marketing in the financial industry is highly competitive, with the majority of market share in the hands of people like Ondeck, who are actively seeking new acquisitions instead of trying to stack business owners with debt.
Here’s The Shocker: The majority of people in the alternative lending industry are NOT pursuing new business. They’re fishing for merchants who were already funded and are familiar with the merchant cash advance product.
The problem with this strategy is that everyone else is doing the same thing.
- UCCs (Previously funded. Maybe they want more money?)
- Aged leads (already cold called by hundreds of brokers)
- Web Optin leads (digital marketing leads shopped out to as many brokers as possible)
- Live transfers (everyone in this industry is cold calling and annoying merchants. This method of acquisition is way played out now.)
- Realtime leads (Again, shopped out to dozens of brokers as soon as they come in)
The Sad Reality Of The Merchant Cash Advance Industry
What Happens Over Time?
As you can see, it doesn’t pay to jump on a bandwagon and do the same thing that everyone else in this industry is doing.
Part III. How to evolve and become like the tech giants who hold a tight grip on the alternative lending industry
So, you’re probably kinda pissed off right now…
Good… because that’s a starting point to fixing things inside your cash advance business.
Most people don’t even know they have a problem and blindly keep making cold calls, thinking they’re winning.
Let me tell you the real key to success in this industry (and I haven’t seen even one of the big leaders in this industry without one).
That key is to have your own automated inbound lead gen system.
And no, I’m not talking about digital marketing.
I’m talking about the combination of financial technology with a field-tested marketing and qualification system that predictably brings fresh, new prospects into your email inbox.
Below is a diagram of what one looks like…
Sample Automated Inbound Lead Gen System
You see, the problem with most lead vendors is that they set up a generic marketing funnel with a generic opt-in box. And then they put generic ads in front of a poorly targeted audience, and then they call that a lead.
That is NOT what a lead is.
A real lead is a guy who has gone through the sequence above. He came to your “landing page”. Then, he opted in to receive more information. BUT IT DOESN’T END THERE.
We further pre-qualify the guy in order to make sure his monthly deposits meet our criteria, to make sure his bank statements don’t have a bazillion NSFs, and to make sure the guy actually qualifies for more than just a slice of pizza (lol). This is all done in our pre-qualification filter.
Then, once we KNOW that he is pre-qualified, we take him through our backend technology that is designed to streamline the document retrieval process.
Then, once we’ve got his signed app and docs, we send it out to the appropriate lender (or send it to underwriting in-house if you’re a direct funder), and then get the offer and contracts out to the guy within literally hours of him applying.
Then finally, we are able to focus most of our energy where it counts: SELLING THE DEAL.
With an inbound system like this, you’ll get:
- Merchants whom you know are qualified for funding because you have qualified them thoroughly with your inbound system.
- Merchants who are serious about funding and didn’t just click on some random ad and kinda, maybe, sometime in the future want funding. (aka Digital Marketing)
- Merchants who have gone through a streamlined process and committed to getting funded from you before you even get on the phone with them.
- Merchants who uploaded their docs (loan app, bank statements, stips) on their own without you ever having needed to chase them.
Now I want to ask you something…
What would an inbound system that automatically and predictably brings fresh, qualified deals into your pocket allow you to do?
Would it allow you to scale? (and how would your life change as a result of being able to scale your Merchant Cash Advance business?)
Would it allow you to spend more time on revenue generating activities like sales and closing more deals? (and if so, how many more deals do you think you could close with an efficient system like this?)
Check this out…
I’ve created a 30 minute video case study that reveals the EXACT step-by-step system to:
- Target merchants who are shopping right now and need funding right now
- Get the merchants bank statements BEFORE you ever even get on the phone with them
- Create a magnetic effect where merchants come to you instead of you going to them, getting hung up on, or cursed at over the phone
[Case Study] How To Get The Freshest Leads In The Merchant Cash Advance Business
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