[happysales]

I keep hearing people on the forum talking about selling ADVANCES at 2-5 points over the buy rate. Unless these are million $$ deals it is usually is a clue that they are in the wrong business and probably don't belong in sales at all. People who don't know how to sell flooding an industry will be the death of an industry if anything is.
The industry becomes A RACE TO THE BOTTOM-the winner makes the least amount of money and works the hardest.

I just hate hearing that regulation is coming because people sell high rates, the sky is falling and that the virtuous way to sell cash advance is to upsell by 2-5%. This kind of mark up on an advance ( not an APR program or consolidation which has other considerations involved) doesn't make sense as a rule unless you are the Walmart of MCA (if you are Congrats)

I sold 1 advance this year at under 5 points total profit -only because someone who didn't know how to sell an advance tried (and failed) to sell it by cutting out the profit. I beat out a broker who couldn't close him (his mealy lack of salesmanship was what drove the pricing down so low). After trying and failing to sell the advance at a rock bottom price he was nursing him along and trying to sell the merchant on waiting 3 months so he would be eligible to try for a low APR deal-probably thinking he was a hero for "educating the merchant to wait for the best possible program"
I explained to the merchant why this was a bad strategy. I paid attention to what he needed and got him the money because I explained the value of taking the money he needed when he needed it.

If he wants a low APR loan in 3 months who do you think he will have confidence in to get the job done? The person who "educated" the merchant about why he should take the money NOW when he needs it and got him what he was looking for or the guy who had his credit pulled a few times for nothing (because he didn't know how to sell the deal) then told him to wait 3 mo for something he couldn't guarantee?
( I will sell APR or low payout consolidations when they make sense for me, the company I am currently with and the merchant)
MOST cash advance deals in this business can be upsold 7 to 15 points by a broker/ sales person who actually knows how to sell-even if it is A paper.

If you have properly qualified your merchant you should know how to sell them at a profitable rate that will keep you and the industry going strong. Educating your merchant doesn't mean coaching them to pay you as little as possible. It means selling them on a program that makes sense for everyone.

[channin19]

Except that's not how a market works.

[jotucker1983]

I keep hearing people on the forum talking about selling ADVANCES at 2-5 points over the buy rate. Unless these are million $$ deals it is usually is a clue that they are in the wrong business and probably don't belong in sales at all.

I don't know why some of you guys keep making this argument lol, it doesn't make any sense, let's break it down this way:

- Merchant is approved for $25,000 from Broker A and Broker B, both on a 6 month payback cycle.

- Broker A prices him at a 1.20 and will get 5 points on the deal

- Broker B prices him at a 1.25 and will get 10 points on the deal

According to your mentality, Broker A "can't sell" so that's why he's pricing him at a 1.20 and only seeking 5 points on the deal, but Broker B "can sell" so that's why he's putting him at 1.25 with 10 points instead?

How does that make any sense whatsoever when the merchant is still going to have to be "sold" on taking out a 6 month program with at least a 1.20 cost for capital on it? Do you really think a 6 month 1.20 doesn't require the sales rep to have some sort of "consultation/selling ability"? Since when is a 6 month 1.20 program "cheap money" lol?

Let me tell you what it comes down to, it comes down to pricing merchants based on their Paper Grade, by giving him the best deal he can get, while pricing your "mark-up" based on market competition. Following this strategy, you should make 2 - 6 points on average per deal, not 10 - 20 points.

When you have 10 points on a deal, most of the time, it means you are pricing the merchant "too high" and are more likely to lose him to competition. This is just basic economics, has nothing to do with anybody's ability to "sell", as if (like I stated above) selling a merchant a 6 month 1.20 factor program is some walk in the park lol, that is still insanely expensive money, but if that's the merchant's Paper Grade, then that's the best deal he can get.

Just like for example, if a merchant is A+ Paper, you should be pricing him with "Marketplace Lender-like" pricing. Go ahead and quote that A+ Paper merchant like he's C Paper trying to make 15 points, when he gets a call from John Tucker who gives him that Marketplace Lender pricing he qualifies for and takes him from you lol.

[WestCoastFunding]

I keep hearing people on the forum talking about selling ADVANCES at 2-5 points over the buy rate. Unless these are million $$ deals it is usually is a clue that they are in the wrong business and probably don't belong in sales at all. People who don't know how to sell flooding an industry will be the death of an industry if anything is.

What a whiner. First off, you're just complaining because another broker out "beat" you. Want to make money? CLOSE YOUR DEALS! If cutting your buy rate gets it done, so be it.

[WestCoastFunding]

.If you have properly qualified your merchant you should know how to sell them at a profitable rate that will keep you and the industry going strong. Educating your merchant doesn't mean coaching them to pay you as little as possible. It means selling them on a program that makes sense for everyone.

Actually, educating your merchant really is coaching them to pay as little as possible. The merchant has no fiduciary rule to do what's best for their broker and brokering industry.

Gotta love this "sell" mentality. Stop trying to "sell" a particular products and focus on providing your merchant with the right products. If you don't, we'll continue eating your lunch. And you'll come to this board to whine about it. The industry isn't being hurt, ****ty brokers (and lenders) are being weeded out. Find a new profession.

[jotucker1983]

Gotta love this "sell" mentality. Stop trying to "sell" a particular products and focus on providing your merchant with the right products. If you don't, we'll continue eating your lunch. And you'll come to this board to whine about it. The industry isn't being hurt, ****ty brokers (and lenders) are being weeded out. Find a new profession.

Now we are in agreement West!!

[WestCoastFunding]

Now we are in agreement West!!

I'm sure we agree with each other's views on MCAs about 95% of the time. But it's the 5% that gets argued on the internet. Lol

[MCNetwork]

Actually, educating your merchant really is coaching them to pay as little as possible.

Anyone can "sell" on rate alone. A salesperson who does this is nothing more than an order taker. A one trick pony. This is not really sales.

A good salesman knows how to sell based on the value and benefits a cash advance will bring to a merchant's business. A good salesperson knows how to manage expectations properly so that rate becomes secondary or in some instances, is never even mentioned at all. A good salesperson builds strong rapport and trust and can explain how building a relationship with his company will help the merchant in the future. So when a Tom, Dick or Harry calls the merchant trying to sell on rate alone, he won't be easily convinced. Most salespeople fail at this job because they think merchants are only motivated by rate. Merchants are looking to solve pain points or achieve specific goals. Veteran salespeople know how to elicit the proper information and present themselves as problem solvers and partners to help grow their businesses. There are many wannabe salespeople racing to the bottom on rate and scraping by with a 2% commission and a pat on the head. There are far too few gifted salespeople who know the art of value-based and consultative selling, thereby maximizing commissions while preserving a strong relationship with the client.

[Michael I]

I don't know why some of you guys keep making this argument lol, it doesn't make any sense, let's break it down this way:

- Merchant is approved for $25,000 from Broker A and Broker B, both on a 6 month payback cycle.

- Broker A prices him at a 1.20 and will get 5 points on the deal

- Broker B prices him at a 1.25 and will get 10 points on the deal

According to your mentality, Broker A "can't sell" so that's why he's pricing him at a 1.20 and only seeking 5 points on the deal, but Broker B "can sell" so that's why he's putting him at 1.25 with 10 points instead?

How does that make any sense whatsoever when the merchant is still going to have to be "sold" on taking out a 6 month program with at least a 1.20 cost for capital on it? Do you really think a 6 month 1.20 doesn't require the sales rep to have some sort of "consultation/selling ability"? Since when is a 6 month 1.20 program "cheap money" lol?

Let me tell you what it comes down to, it comes down to pricing merchants based on their Paper Grade, by giving him the best deal he can get, while pricing your "mark-up" based on market competition. Following this strategy, you should make 2 - 6 points on average per deal, not 10 - 20 points.

When you have 10 points on a deal, most of the time, it means you are pricing the merchant "too high" and are more likely to lose him to competition. This is just basic economics, has nothing to do with anybody's ability to "sell", as if (like I stated above) selling a merchant a 6 month 1.20 factor program is some walk in the park lol, that is still insanely expensive money, but if that's the merchant's Paper Grade, then that's the best deal he can get.

Just like for example, if a merchant is A+ Paper, you should be pricing him with "Marketplace Lender-like" pricing. Go ahead and quote that A+ Paper merchant like he's C Paper trying to make 15 points, when he gets a call from John Tucker who gives him that Marketplace Lender pricing he qualifies for and takes him from you lol.

Anyone can "sell" on rate alone. A salesperson who does this is nothing more than an order taker. A one trick pony. This is not really sales.

A good salesman knows how to sell based on the value and benefits a cash advance will bring to a merchant's business. A good salesperson knows how to manage expectations properly so that rate becomes secondary or in some instances, is never even mentioned at all. A good salesperson builds strong rapport and trust and can explain how building a relationship with his company will help the merchant in the future. So when a Tom, Dick or Harry calls the merchant trying to sell on rate alone, he won't be easily convinced. Most salespeople fail at this job because they think merchants are only motivated by rate. Merchants are looking to solve pain points or achieve specific goals. Veteran salespeople know how to elicit the proper information and present themselves as problem solvers and partners to help grow their businesses. There are many wannabe salespeople racing to the bottom on rate and scraping by with a 2% commission and a pat on the head. There are far too few gifted salespeople who know how to maximize commissions while preserving a strong relationship with the client.

well said .

[Michael I]

john you are wrong . to many people in this industry are just order takers . yesterday i just funded a 50k loan on a 1.30 when he had a 1.2 on the table . It is a sales technique i have successfully used more then once .
I feel most people who start off at only 2-5 points are just scared as they know they suck and the only way they can win a deal , will be to have the cheapest price .
Now do not get me wrong i will go to 1 point if i had to not to lose a deal , however that is rare.

[WestCoastFunding]

Anyone can "sell" on rate alone. A salesperson who does this is nothing more than an order taker. A one trick pony. This is not really sales.

A good salesman knows how to sell based on the value and benefits a cash advance will bring to a merchant's business. A good salesperson knows how to manage expectations properly so that rate becomes secondary or in some instances, is never even mentioned at all.

Manage expectations to the point the merchant doesnt care about the cash advance rate? You've got to be kidding me.

First off, I'm an advisor first. I try to get the best facility possible for the business - not the best deal for me. If a cash advance happens to be the only thing they qualify for, so be it. And if I need to take only 6 points to get it done, that's fine with me.

Fact is, rate is all that matters. More profits in my pocket is less in the merchant's pocket. And if the deal gets done by another broker because I charged too much, then I get nothing.

I personally believe in doing good business, and that means not sticking merchants with a 15 point upsell. If you guys want to do it, knock yourself out, but merchants are savvy to the MCA game, and are shopping for the best rates. I'll close the deal at 6 points all day.

[jotucker1983]

Anyone can "sell" on rate alone. A salesperson who does this is nothing more than an order taker. A one trick pony. This is not really sales.

A good salesman knows how to sell based on the value and benefits a cash advance will bring to a merchant's business.

A good salesperson knows how to manage expectations properly so that rate becomes secondary or in some instances, is never even mentioned at all.

A good salesperson builds strong rapport and trust and can explain how building a relationship with his company will help the merchant in the future.

Archie, as you know in the other thread I put my numbers up on the board so people could see my results.

With that being said, I have not closed one MCA related deal based on "price", not one. Why? Because the vast majority of the deals I've closed have not been Marketplace Lender related deals, which means the merchants are getting the 6 - 8 month 1.18 - 1.22 offers, or 12 - 15 month 1.30 - 1.35 offers. If you think that's "low pricing", then I'm not sure what to say lol?

- Every deal I build rapport, trust, and establish a relationship, it's why I have some merchants I boarded back in 2010/2011 still renewing today.

- Every deal I sell the value of the financing in terms of what purpose the money is used for and how the funds being leveraged in the merchant's business produces X, Y, and Z benefit, and without said funds, X, Y, and Z benefits are no longer available.

- Every deal (or most deals) I do a profit analysis to show how the "money pays for itself" through whatever project the merchant is needing the funds for, even if it's just to keep the business afloat during a slow period.

I do all of this and still price the merchant based on his Paper Grade, where I make anywhere from 2 to 6 points per deal.

For you to say that a merchant "doesn't care about price" is completely inaccurate and is just more "sales mumbo jumbo" stuff lol. Price will always be important and to say it doesn't matter makes no business sense whatsoever.

With Pricing, whatever you price them, you just need a justification for the Price that makes "sense". So what's the justification for John Tucker's sky high 6 month MCA with a 1.20 factor on it? Well, it's because the MCA is unsecured, meaning he could go out of business tomorrow and we are stuck holding the bag. That adds significant risk and we have to price said risk, that's why the price is so high.

If he wants to bring the price down? He would have to add assets to put security on the deal. If the merchant has no such assets, then this is the best deal he can get.

[jotucker1983]

john you are wrong . to many people in this industry are just order takers . yesterday i just funded a 50k loan on a 1.30 when he had a 1.2 on the table . It is a sales technique i have successfully used more then once .
I feel most people who start off at only 2-5 points are just scared as they know they suck and the only way they can win a deal , will be to have the cheapest price .
Now do not get me wrong i will go to 1 point if i had to not to lose a deal , however that is rare.

Michael, once again lol, a 1.20 factor is not cheap pricing. Cheap Pricing is bank pricing or Marketplace Lender pricing, with terms of 24 - 60 months or more. Cheap Pricing is not a 1.20 on let's say a 6 month turn lol.

And okay, you sold the merchant a "higher pricing structure", what did your deal have that the other deal didn't have? Did you have a higher approval, a longer term, a better reload procedure down the road that made more sense for the merchant to choose your program?

Again, whatever "Price" you give him, just needs to be justified.

- Broker A is at a $35,000 approval with a 1.25 over 6 months

- Broker B is at a $20,000 approval with a 1.20 over 6 months

Let's say Broker A wins the business, not because of some sales mumbo jumbo crap lol, but he wins the business because the merchant needs "at least $30,000" and Broker B was unable to come up with a high enough approval.

Plus the merchant estimates he will renew in 4 months and Broker A has explained the concept of "double dipping to him", showed how his company doesn't double dip, and how his platform would be better over the long term in terms of renewal funding.

All of that "justifies" the higher Price.

[MCNetwork]

Manage expectations to the point the merchant doesnt care about the cash advance rate? You've got to be kidding me.

Believe me. It happens all the time. Do you know how many cars or homes are sold without customers knowing the rate their paying? This happens because the salespeople can sell them based on the monthly payment alone. The same thing can be done with cash advances and business loans. You focus on the merchant's daily/monthly budget and the rate can become secondary. I better stop before I tell everyone all my tricks. I wouldn't want more competition...

[gail_waters]

First of all buyrate is 0 points, so since when are we in the charity business, we provide our financial services like any1 else. Also everyone keeps arguing back and forth, the fact is every merchant and every deal is it's own individual situation. We do what we can with what we have to work with and alot of the time, it's not that much or that easy. Be your clients financial adviser, fight for every deal with underwritter's, realistically speaking if ur good, the merchant wouldnt have been able to get the same funding you can get him...if you cant relate...its time maybe you think of a career change

[Sachip24]

if they buy you on price they will leave you on price. Educate them on what value you bring to the table no matter what the product is, that's what they are paying for.

[ridextreme]

yesterday i just funded a 50k loan on a 1.30 when he had a 1.2 on the table . It is a sales technique i have successfully used more then once .

Did you see the contract? A lot of people will use this tactic to try and get you to lower the cost.

[WestCoastFunding]

Did you see the contract? A lot of people will use this tactic to try and get you to lower the cost.

Haha. Yep. I just don't see someone choosing to pay for a more expensive product unless the terms are extended.

[WestCoastFunding]

Believe me. It happens all the time. Do you know how many cars or homes are sold without customers knowing the rate their paying? This happens because the salespeople can sell them based on the monthly payment alone. The same thing can be done with cash advances and business loans. You focus on the merchant's daily/monthly budget and the rate can become secondary. I better stop before I tell everyone all my tricks. I wouldn't want more competition...

Hey man, you guys do what works for you. I personally find that getting the client the best deal works with my business model. I'll take the volume any day, knowing that these are not one time deals. They renew, and renew, and renew.

[Vfunding]

Believe me. It happens all the time. Do you know how many cars or homes are sold without customers knowing the rate their paying? This happens because the salespeople can sell them based on the monthly payment alone. The same thing can be done with cash advances and business loans. You focus on the merchant's daily/monthly budget and the rate can become secondary. I better stop before I tell everyone all my tricks. I wouldn't want more competition...

There is an almost century old corporate finance product that is sold almost exclusively on payment, not rate. Its called equipment leasing lol. You are right that rate is not always king.

[WestCoastFunding]

There is an almost century old corporate finance product that is sold almost exclusively on payment, not rate. Its called equipment leasing lol. You are right that rate is not always king.

And the broker that produces the best offer for that equipment leasing opportunity will close the deal and collect the commission. If that means he has to cut his rate to beat out another broker, that's business. Seemed like that was what this argument was about.

[Vfunding]

And the broker that produces the best offer for that equipment leasing opportunity will close the deal and collect the commission. If that means he has to cut his rate to beat out another broker, that's business. Seemed like that was what this argument was about.

Always funny when we ask a client what the rate is on their equipment and they say "No idea they never told me".

[Michael I]

Did you see the contract? A lot of people will use this tactic to try and get you to lower the cost.

yup and it was a real offer that i had also .
westcoast pm me i will tell you how i did it

[ridextreme]

yup and it was a real offer that i had also .
westcoast pm me i will tell you how i did it

They most likely killed it in final UW.

[jotucker1983]

Always funny when we ask a client what the rate is on their equipment and they say "No idea they never told me".

Which now makes it a unique value proposition for a competitor to be more transparent with a merchant in detailing not just the approval amount, the term, and the monthly rate, but also what leasing factor tier the merchant fell into based on their credit grade.

I still don't understand the argument you guys are making here lol, nobody selling "financing" solutions based on credit sells primarily on "rate" because, there's a risk profile with every individual client with different variables of the deal that determine how the merchant moves forward, such as the final approval amount, the term, the renewal structure, if a funder will even approve them, etc.

Nobody is selling an MCA or an Equipment Lease based on "price" alone, every deal is being sold based on the individual metrics of the funder/lender as well as the risk profile of the merchant. This argument makes no sense.