[JayBallentine]

I wonder if there is an corollary between the reviews (strength or weakness) a business gets and default rates?

Furthermore is the corollary between reviews and DECLINE rates. Anyone test against that?

What if there were tests done and we did find that there was a corollary between reviews and default / decline rates? How profitable could that be?

[Chambo]

My guess is that is what a marketing company should be doing to help promote themselves

[JayBallentine]

My guess is that is what a marketing company should be doing to help promote themselves

I am slightly confused... It seems like testing everything internally is what an MCA company should be doing to identify and exploit areas where they are losing value. I asked a few guys a few days ago; "how many of the leads you originate ultimately fund elsewhere?" No one knows. How is a marketing company to find this type of information out?

A marketing company would have to first become a funding company before they were able to test anything like the question I posed. Because, marketing companies know nothing about underwriting.

Maybe that's it Chambo... You're on to something. Good marketing companies should morph into funding companies, or whatever kind of companies where there is fierce competition for leads... That would be way more profitable than "collecting a fee."

It the same thing as great product people (Mark Zuckerberg, Marissa Mayer, Steve Jobs) becoming CEO...

[MCNetwork]

Some underwriters use Yelp and Google reviews as part of the application review process so I would say there is a connection.

[Sean Cash]

I wonder if there is an corollary between the reviews (strength or weakness) a business gets and default rates?

Furthermore is the corollary between reviews and DECLINE rates. Anyone test against that?

What if there were tests done and we did find that there was a corollary between reviews and default / decline rates? How profitable could that be?

Some correlation exists, to what degree I don't know. Some lenders already incorporate this data into their risk algorithms. There was an article floating around on here mentioning that Kabbage and other lenders already incorporate social data (which I'm sure includes reviews) into their underwriting process. I know many underwriters scan for reviews manually to see if there are extreme trends such as 98 out of 100 people rating a business 1 star out of 5. That kind of information could turn a borderline deal into a decline no question about it.

But you bring up a good point Jay, so I'm sure you're familiar with the Harvard Study that measured Yelp's ratings on restaurant revenue.
Summary: http://hbswk.hbs.edu/item/6833.html
Full text: http://www.hbs.edu/research/pdf/12-016.pdf

For the average non-chain affiliated restaurant the study shows that a one-star increase on Yelp leads to a 5 to 9 percent increase in revenue. This is substantial. If you want to help your merchants actually grow, it might not be a bad idea to collaborate with them on how to drive customers to yelp to leave reviews (hopefully positive). Heck, send them a copy of this study and really provide them with value.

---
Underwriters looking at reviews should also consider that not every review they read is real. Yelp is pretty good about weeding out fake ones and they have even been known to go so far as to delete real reviews just because they sounded fake.

But in general, a study by Gartner predicted that by 2014, 10-15% of all reviews and ratings online will be fake. The algorithms will need to incorporate that...
The summary: http://www.gartner.com/newsroom/id/2161315

[JayBallentine]

Ugh, second time I am trying to reply to this thread Sean. But great insight about the funders' using reputation management to help their merchants increase their sales. Absolutely brilliant!

This is one of many things I'd do as an underwriter to secure my money. For instance, SMS marketing flat out works and may cost as little as $20 per year. 1 cents per message. Why are funders not requiring merchants to use SMS marketing after first showing them its' benefits?

There's a ton of value to be derived of simply showing merchants basic things. For instance, more than 80% of Google listings go unclaimed. You cannot make into the "7 Box" with an unclaimed listing...

[funding pro]

Why are funders not requiring merchants to use SMS marketing after first showing them its' benefits?

To answer simply, someone else will not require it and the funder will lose business.

To add to the complication of that, if a cash advance company is selling my merchant a product or service that I bring them, you better believe I want a share of the revenue. Also realize the funding company is making (or should be making) a healthy profit on the funding. How much revenue can be generated from SMS marketing to make it worth all the hassle involved? Lastly, I am not so sure SMS marketing is all its cracked up to be. As a consumer I get the texts here and there and disregard just about every one of them.

[Sean Cash]

I thought it was illegal to do sms marketing. Not too long ago, it cost me money to receive texts under the plan I had. I would be pissed if I got an unsolicited commercial text and would probably file a complaint.

[JayBallentine]

To answer simply, someone else will not require it and the funder will lose business.

To add to the complication of that, if a cash advance company is selling my merchant a product or service that I bring them, you better believe I want a share of the revenue. Also realize the funding company is making (or should be making) a healthy profit on the funding. How much revenue can be generated from SMS marketing to make it worth all the hassle involved? Lastly, I am not so sure SMS marketing is all its cracked up to be. As a consumer I get the texts here and there and disregard just about every one of them.

I think you missed the larger point... SMS marketing is usually SPAM texts messages that are sent to you by companies who you have zero interest in doing business with.

Here's an example. There is a restaurant that opened up near me locally. I wanted to be able to get as much free food and drinks as possible. So I went in and gave this guy the kitchen sink - things he can do to have an immediate impact on his bottom line. I took him to Yext.com - which you can do for your merchants.

So we set him up with an SMS driven birthday club. On each table, and on each menu there's a strong offer / incentive to join the club.

GET A FREE MEAL ON YOUR BIRTHDAY!

They then are DOUBLE OPTED IN via SMS.

When someone opts in to hear from you - it's not SPAM.

So, today, it's a rainy Weds and he knows that business is likely not to be so great. But guess what? Today is probably still someone's birthday. And Today only they can get free food... Who goes out by themselves to a "nice" place on their birthday?

If he gets ONE more table on a crappy weather Wednesday because someone brought their friends in for their birthday - for the entire year, the $20 he spent covers it...

This can all be set up in 3 screens (maybe 2) via the "Resources" section of "MyFundingCompany.com" No need to touch, taste, feel, or see anything. The technology should run itself with zero human involvement. Automatic set up, and automatic instructions sent out to the merchant.

SMS marketing when done correctly works because when you use it correctly, it brings in customers at times when you need them the most. That's value to the merchant, and that's value to me if I ever had my money on the street.


EDIT: I FORGOT THE MOST IMPORTANT PART. To do an offer, all this guy has to do is open his phone, and send a text to a designated number. Just one. Then a relay occurs and bam, all of his customers get the text message.

[funding pro]

I feel like every time you reply to another comment on here you completely shift directions with what you are getting at. I'd love to discuss this, but I have no idea where this is going. First you were talking about the correlation between reviews and cash advance performance. Then it was why doesn't a funding company mandate their customers to sign up for 3rd party services. Now you are discussing how a business owner would use SMS marketing to increase sales.

[JayBallentine]

I have no idea where this is going. First you were talking about the correlation between reviews and cash advance performance.

Lol... I totally replied to the wrong comment. Sorry about that!

[Sean Cash]

Jay just has too many ideas bursting at the seams and he can't wait to get them all out. lol

[Chambo]

I thought it was illegal to do sms marketing. Not too long ago, it cost me money to receive texts under the plan I had. I would be pissed if I got an unsolicited commercial text and would probably file a complaint.

That is why fax blasts and text blasts are against FCC policy and carry substantial fines (just ask Second Source, they got hit for almost 43 million in penalties for fax blasts)