FinTech Company Prospers With Direct Mail
Here’s an intriguing story of an online lender using direct mail to catapult its revenues. While it may seem counterintuitive to some, online companies using direct mail marketing is not uncommon. And many of those who rely heavily on direct mail often come out with increased revenues.
Prosper is no different. They are now the second leading peer-to-peer lender in America. And although their story is one that wasn’t always so encouraging, they show that a focused marketing strategy can help businesses of any size reach their financial goals.
As mentioned, Prosper wasn’t always a mega giant in the industry of peer-to-peer lending. In fact, just three years ago, they were losing money. The company was generating only $8.0 million in revenue on approximately $150 million in loans. That meant trouble for the upstart financial technology (FinTech) company.Essentially
The beginning part of 2013 brought about a significant change. Stephan and Aaron Vermut, a father-son duo, joined the upper ranks of Prosper. Essentially, they were brought in to save the company and ended up restructuring much of the existing business. Three years later and Prosper is near the top of peer-to-peer lending, much of it thanks to the efforts of these two individuals.
How They Did It
Now-CEO Aaron Vermut says he owes much of the success of Prosper to direct mail marketing. He says that the company was previously using 100% SEO tactics to target customers, but when he stepped in, they took a different approach.
“When we got started, we re-calibrated our risk model so it was predicated on pulling people’s credit files then sending them direct mail with offers. Prior to that it was key words and direct to site traffic. A lot of that turned out to be a lot more subprime than we anticipated,” he says.
Preapproved loans were sent through direct mail to individuals based on their credit rating. Those direct mail pieces contained a link to complete the signup online through the Prosper web site. It’s estimated that Prosper sent upwards of 20.2 million pre-approved loans through direct mail, though Vermut won’t confirm that figure. He would confirm, however, that the figure has been rising in the U.S.
Direct Mail Works
Whether businesses are based online or in a brick and mortar building, it’s been proven that direct mail gets results. Vermut also has a very specific reason for not using online methods to search for targets. He says, “If they’re at their computer searching for money, they’re probably not going to pay you back.” He goes on to say that the aim is to find individuals who would benefit from the loan but don’t necessarily need it.
Prosper uses about 40% direct mail in its marketing efforts, with another 40% done with partnerships and 20% digital. They earn about a 7% return.
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