The secret to increasing your business’s bottom line isn’t much of a mystery: find ways to bring in more money than you spend.
A Temkin Group study underscores this point, revealing that the average company worth $1 billion can gain $775 million on average over a three-year period. The customer experience directly influences repurchasing rates, net promoter score, and customer loyalty.
Whether your customer is an end consumer or distributor, a customer-centric mindset is essential for the success of your business. The RAIN Group examined the practices of successful sellers to identify which actions generated the greatest sales. They found that successful companies do the following:
Most importantly, today’s customer expects real-time responsiveness and easy-to-use systems optimized for smartphones and other mobile devices. Personalized services go a long way toward building trust and loyalty between brands and their customers.
Co-brand lending solutions are one way to offer your customers the personalized service that’s increasingly more important in a post-pandemic world. During the pandemic, point of sale financing was the only unsecured-lending asset class to see double-digit growth. McKinsey expects that by 2023, point of sale financing will make up 13% to 15% of unsecured lending balances.
McKinsey also outlines five different business models in the “buy now pay later” space. They include:
Surprisingly, point-of-sale financing consumers aren’t restricted to those with low credit scores. More than half of the receivables generated through such services come from customers with a credit score higher than 700. It’s also not limited to individual consumers. Businesses also need access to point-of-sale financing options.
The emerging trend of lending as a service is a growing segment of banking as a service. Technology has made it possible for banks and lenders to offer their services outside of traditional banking channels. Marketplace and point of sale lending have already gained traction in the B2C sector, where “buy now pay later” solutions have already outpaced private label credit cards in key metrics like customer engagement and return on assets.
Lending as a service is also trending in the B2B sector. Financial institutions have traditionally avoided lending to small businesses with less than two years of demonstrated revenue, creating a widening gap in business credit. As a result, less than half of small businesses are able to meet their financing needs through traditional channels despite the fact that more than half of them seek funding to expand the business and acquire assets needed for growth.
This gap has created an opportunity for companies willing to offer private label lending solutions. Nearly one-third of small businesses seek financing through online vendors. Most of these businesses wanted to borrow less than $100,000, and more than one-third of them were denied because of their credit scores. This is one reason why the lending as a service market was valued at $466.27 million in 2018, and analysts expect it to grow to $742.15 million by 2027. Although the gap—and the market—exists, Loanspark is the first to market in this space specifically for B2B, brokering, banking, marketing, and accounting companies.
Here’s how it works:
That’s it. Loanspark works behind the scenes by providing the technology and resources necessary to ensure a seamless and pleasant experience for you and your customer.
Business lending products, including co-brand lending solutions, provide several benefits for companies willing to offer them. Notably, they increase sales, revenue, and customer satisfaction, as detailed below.
Your brand is essential to the customer experience and your business’s success. If the customer experience is rooted in how your customers perceive your brand, then your brand is at the center of the customer experience. It creates and establishes what customers expect when interacting with your representatives, purchasing process, and product.
This is true especially in the B2B space. BCG and Google found that when companies ignore the importance of brand marketing, they see a lower return on marketing investment, customer advocacy, and employee satisfaction. Price and features aren’t the only factors businesses consider when making purchases. Yet, nearly 25% of B2B companies allocate less than 20% of the marketing budget to branding.
Top companies understand the value of branding. They have a clearly defined strategy that engages stakeholders and incorporates automated and integrated technologies. Their brand is activated across all channels, including — and especially — digital customer touchpoints. After making key investments in branding, they work hard to protect it.
Co-brand lending lets you keep wholesale control of the brand at a critical point in the process: the sale. You partner with a third party like Loanspark to leverage their knowledge and technology, but the customer sees your business name and logo. This helps generate product exclusivity while promoting brand loyalty and customer recognition.
Designing and building lending as a service solution takes time and expertise that doesn’t end with the completed product ready for market. Quite frankly, it’s a pain if you don’t have the necessary resources to write code, test code, and maintain code, in addition to customer support for the platform. These platforms require regular maintenance to ensure they work properly and meet compliance needs.
Instead of making this investment, you can outsource the entire process. Let the experts handle the details. You don’t have to do anything more than tell your customers about the new lending service you’re offering. Loanspark handles updates and upgrades to the existing system to keep up with the quickly evolving technology and innovation.
This frees up your time (and your team’s time) to focus on what you do best, whether that’s generating leads, interacting with customers, or expanding the business. You won’t have to tie up your resources with a project that may be out of your area of expertise. Even worse, ignoring the importance of building and maintaining relationships with your customers can be considerably more costly than allocating those resources in other ways.
Offering your customers financing services creates opportunities to close more deals, which then increases revenue. First, you are differentiating yourself from your competitors who do not offer such services. A customer who wants the convenience of point of sale financing will choose you every time if yours is the only company offering it.
Second, you give your customers a reason to do — or keep doing — business with you. If they’re part of the group that doesn’t qualify for a business loan from a bank, they can still complete the purchase from your company without tying up their own lines of credit. This can be a tremendous advantage for a company that’s rapidly expanding and needs additional resources.
Your co-brand lending service gives you a key advantage because it gives you more control to help your customers when they need it. You won’t have to send them away to secure lending, and you’re offering them a service that allows them to have more money to spend with your company. As an added incentive, you’ll also receive a fee each time a loan closes, and this fee can scale as the loan scales.
Your primary job is to build relationships with your customers, and you do this by offering an exceptional product and an unparalleled customer experience. When you do that, you create a foundation for customer loyalty. Unless you’re the only operator in your industry, your customers have other options. Give them a reason to choose you over the competition.
Although many marketers prioritize generating new leads, it costs less money to retain the customers you already have. There are three important steps you can take to boost customer loyalty, and co-brand financing aligns with each of them.
Partnering with Loanspark also allows for consistency in the branding that you’ve worked for years to build - they see your brand through the entire process. At the same time, you benefit from Loanspark’s expertise and technology, which produces a service better than what you could build on your own. Let the industry experts put their well-oiled machine to work for you while you focus on what you do best.
You already have some familiarity with co-brand financing: store credit cards. These cards carry the store’s name and logo. You can only use them in the named store or other stores owned by the parent company. It’s a win-win for the customer and the company. The customer gets access to special offers available only to cardholders. The company has access to an impressive amount of data about its customers and their shopping habits.
This segment of the co-brand lending sector is effective. Cardholders typically spend more and choose to shop with retailers branded on the cards. From 2016 to 2018, co-brand card purchases rose by 3%. Giving customers access to convenient financing increases both loyalty and total sales.
Co-brand business lending is similar. The details of how co-brand business lending providers operate can vary from company to company, but you will see some common practices.
When choosing a third-party company to collaborate with for your co-brand lending solution, you have several factors to consider. Key is the company’s history and track record within the industry. You want one that takes the time to understand your business and aligns with your brand.
At Loanspark, we understand how important your brand is to your customers and your company. We offer a full-service business lending marketplace platform that allows any company to provide lending services to its customers. Our partners include banks, B2B service companies, internet-based companies, and more.
The Loanspark solution is a 100% turnkey solution that works out of the box. We provide call center sales and operations, the lending platform, and access to the marketplace with the lending capital options. All you have to do is tell your customers about the service and watch your sales grow. To learn more about our co-brand lending solutions, reach out to our representatives today.