How Online Lenders Can Refine Their Targeting of SMBs

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This is the first in a new Street Fight series on small business demand generation. Periodically, Sidewalk’s Mo Yehia will tap the perspectives of various data vendors who want to share best practices to help B2SMB companies use business intelligence to more efficiently target and sell to SMBs.

The current state of SMB sales and marketing is getting increasingly complex. With dozens of demand sources from WOM (word of mouth) to channel partners to paid acquisition; hundreds of demand-generation vendors looking to feed B2SMB, outbound, sales/marketing machines; thousands of software and hardware companies using data, analytics, and automation to sell products/services to SMBs; and millions of (V)SMBs that are adopting digital services faster than gamers do Pokémon Go, it’s quite the jungle out there.

Add in slowing SMB growth, ruthless public markets, soaring paid acquisition costs, and stiff competition/price cutting, and it’s easy to see why many B2SMB companies are flatlining.

While it may seem like selling to SMBs is like boiling an ocean, it doesn’t have to be all doom and gloom. Business intelligence is being tapped by quant-savvy firms like ChowNow, Occasion, and Opencare, to bolster their classic sales/marketing. To find an approach that might suit your outbound efforts, let’s dive into some non-conventional strategies.

For purposes of this article, we’ll focus on demand generation ideas for online lenders looking to lend more to SMBs. So companies like OnDeck, Funding Circle, Lendio, Dealstruck, and Square listen up.

Demand Generation
Working Capital, the capital a SMB uses in its day-to-day operations is the lifeblood of any SMB. Sometimes, due to higher payables or lower cash, there’s literally not enough money in the till to operate the business (e.g. pay rent, order inventory, give change, et cetera). SMBs in this situation may be ripe for short-term, WC-type loans, where lenders offer short term bridge loans based on expected cash flow — account receivables, unpaid invoices, et cetera.

So, which SMBs are in need of short term capital? One idea is to target SMBs that run multiple daily deals with companies like Groupon. These SMBs provide a highly-discounted, upfront service to customers, but have to wait 30, 60, even 90 days to receive payment from the hyper-local company. Imagine servicing a burst of hundreds or thousands of customers who pay for a deal upfront, and then not being paid for your service for months.

Another idea is to target SMBs that do the majority of their revenue via third-party, delivery platforms like GrubHub. Similar to Groupon users, SMBs that use GrubHub face 30 day net payment terms. So, the already low margin, highly competitive restaurant business just got even harder by forcing business owners to tread water for 30 days until they receive payment for orders filled weeks earlier.

Below are a couple of other tips for targeting SMBs from respected industry vendors.


Predictive Acquisition
“With some 30 million SMBs in the U.S. alone, it can be daunting to figure out which have capital needs. Predictive analytics can help lenders cut through the noise by using their historical customer data, along with external signals (like social media presence, job openings, etc.), to understand which SMBs are most likely to do business with lenders.

Predictive technology has matured rapidly, and there’s now a whole community of forward-looking companies that are showing proven results. Rather than relying on human intuition to guess who their best leads are, these companies use advanced predictive scoring models that take into account thousands of signals and employ sophisticated data science to compute accurate predictions. Smart sales and demand gen teams leverage advanced, predictive scoring models to double down on the most promising SMB prospects in their funnel.

For example, intelligent lead routing — evenly dispersing high-potential accounts across top performing sales reps vs. basing distribution on arbitrary attributes like geography or industry – is just one way lenders can punch above their weight class. Another small but impactful way teams can use predictive is to simply refresh their sales service-level agreements to reference predictive scores rather than a single data point like lead type, source, recency, etc. As a result, lenders can align the sales team’s effort with the lead’s true likelihood of conversion and avoid both wasted energy and missed opportunities.”

— Sean Zinsmeister, Sr Director of Product Marketing at Infer


Transactional Advertising
“To find and engage with SMBs that might be looking for capital, consider targeting SMBs in the places they (a) search for capital, (b) spend large sums of money, or (c) manage their finances. Transactional advertising on finance-related websites ensures offers are seen by contacts with purchasing authority, and in the case of SMBs, most likely the business owner.

For example, consider targeting SMBs on financial management platforms like Credit Karma or websites that draw newly formed/early stage SMBs like BizFilings or LegalZoom. For example, targeting SMBs that are newly incorporated by serving offers on the company formation checkout pages allows lenders to capture intent and build trust at the prospect’s earliest stage.

While new-to-world SMBs often face unexpected expenses, budget overruns, etc., growing, multi-location SMBs also need capital for different reasons. As such, targeting offers to SMBs (a) looking to buy franchises on sites like Franchise Gator or (b) hiring for new positions or locations on sites like Indeed or ZipRecruiter may help lenders get in front of expanding SMBs.”

— Sasha Sommerville, Marketing Manager at OfferLogic


I believe in educating lenders and providing them with simple, unique, persona-based, SMB data they need to be successful in an increasingly competitive, digital-first world. The combination of doubling down on the minority of SMBs that are most likely to be receptive to capital and making it easy to engage these SMBs across on/offline channels with personalized, automated campaigns can make al the difference. Business intelligence strategies like those aforementioned help elevate lenders’ sales/marketing efforts and even level the playing field with their larger peers.

Mo-YehiaMo Yehia is a former-banker-turned-human and co-founder of Sidewalk. He’s lesser known for stints at Sparkle Buggy Car Wash and Lehman Brothers. Backed by 500 Startups, Sidewalk’s business intelligence helps sales and marketing teams close more deals faster and to their dream SMB clients.