Marketing Strategies for Payday Advances
According to a 2012 estimate by The Pew Charitable Trusts, the payday loan sector makes over $7.4 billion each year. Although the federal and state governments have clamped down on shady payday advance lenders, ethical lenders may still service the estimated 12 million Americans who take out these loans each year.
According to a Pew Charitable Trusts study, the average payday advance from a Same Day Deposit consumer is a female between 25 and 44 who earns less than $40,000 per year and does not have a four-year college degree. When deciding on a marketing plan, it’s critical to keep this target market in mind.
If you intend to create a storefront, make sure it’s in a convenient location for this sort of consumer, such as near big shopping malls or conventional banks. Consider situating your company near public transit hubs so that customers who do not own a car — or who are seeking a payday loan to get their automobile out of the shop — may readily access your services.
Message in Marketing
Customers use payday advance loans to solve short-term financial concerns. The importance of a loan from your shop in resolving these short-term issues and preventing them from losing their power or having their vehicle repossessed should be emphasized in your marketing materials. Customers may be ashamed or hesitant to obtain a payday loan, so make sure that all shop signage and marketing language stresses your company’s dedication to privacy.
Customers also expect a quick and easy application procedure for payday loans. Allow consumers to submit applications or extra papers online or provide a fax machine for those who do not have access to the Internet. On every marketing and promotion piece, be sure to include information about your quick application procedure.
You may provide a “one-stop-shop” for your consumers’ financial requirements by providing bill payment and money wire services. This simplifies your clients’ life while also providing extra cash streams for your company.
Consider providing credit counseling or information on how clients may get their financial life back on track. This will benefit your clients’ financial literacy while also establishing your payday advance shop as a respectable financial services company rather than a predatory lender preying on individuals in their time of need.
Marketing through direct mail
One of the most cost-effective methods to promote your payday advance loans is via direct marketing using posters, pamphlets, and other printed materials. Create and distribute these adverts where your client visits, such as apartment complexes, laundromats, and libraries.
In addition, consider forming a “street crew” to distribute your ads in the surrounding shopping districts and communities. Encourage these street team members to engage prospective consumers by paying them a commission for each new client they bring in.
According to Pew Research, the typical payday advance borrower takes out a $375 loan. Many clients, however, are unable to repay their loans after the loan term and instead “rollover” their payday loans an average of eight times over five months. This implies the buyer will pay $520 in interest on average.
Offer a discount for every new client introduced to your payday advance shop to relieve part of your customers’ interest load and build an additional business. It’s up to you how much of a discount you provide, but it should be large enough to entice your present consumers to take action. Create referral cards for your existing customers to distribute to their friends and family to make the referral tracking process more accessible.