[Matrix1]

Practically every single one of my sales this off the dialer. Yes I have my renewals, yes I have a pipeline however majority of my sales are directly from the dialer. From the gatekeeper to the merchant himself. I started as a stockbroker I was very successful at that. **** happens, I never got in the mortgages but came straight to MCA after. After 20 years I still get that euphoric just before I pick the phone up.
How long will that last I have no idea. But I will continue to take advantage of it as long as it does.

[MCNetwork]

That's the spirit! If you can make a good living from the dialer you can write your ticket in this industry. Unfortunately there are very few people with your attitude. One thing that good ex-stockbrokers bring to this industry is the hustle, cold calling stamina and fearlessness. I was never that good on a dialer and I freely admit it. Good luck Matrix1!

[Matrix1]

Thank you very very much MCnetwork, I sincerely appreciate that and wish you nothing but success is well

[Karen37a]

Matrix The feeling never goes away for people who love the sales industry ...except when a 150k deal gets blown out or the client "changes " his mind.

That's why the best salespeople come from a competitive background...you get the high of scoring a goal or touch down.

Its fun most of the time untill you hang with the gloom and doom crowd. ( which I cant do anymore) Who cant sell over the phone, so they try to put down salespeople who cold call and will say anything to save their ego. Fear of Failure, Fear of Success motivates them to try humiliate you or denounce you.

So basically, the shorter version is: you failed as a stock broker, and then failed selling reverse mortgages. All while declaring yourself a master salesperson? Really nothing to brag about.

So you think I sit with all my knowledge and sales skills and not actually profit off of it. I just read up on it for 30 years, memorized it to post on the Df.You do not have any idea how much money I made nor how much money I made other people.(psst it was a lot ). Nor how much I will make going forward. But you will 1-2 years from now.

You are not helpful to newbies because you do not have a successful sales strategy for anyone new to get started. Just SEO.( which doesn't work effectively and you cant have a big team doing SEO)

Bernard Baruch said. When the shoe shine boy is giving you tips, its time to leave the market.

Timing is key. Selling or Cashing in at every High or coming in on the low is not a failed business strategy. Its great timing. And I am sitting here like a hawk waiting to pull money in, as soon as the last knuckle heads are gone.

[WestCoastFunding]

Karen, you are a newbie.

[Karen37a]

Yes I am. ( agreeing to insanity )Now what?

[WestCoastFunding]

I don't know, but you come off as silly lecturing people who have been brokering for a decade. But, amazingly, you get worked-up when others mention they actually focus on, you know, marketing -- rather than focus solely on cold-calling sales. But hey, dial away.

I'll point out basic facts: 99% of businesses that need money don't wait around for cold-callers. They actively seek-out financing either through previous relationships, referral relationship, or look for options themselves.

[MCNetwork]

99% of businesses that need money don't wait around for cold-callers. They actively seek-out financing either through previous relationships, referral relationship, or look for options themselves.

True. But when a cold caller stumbles upon this merchant, he's more receptive to listen to the pitch than a merchant who doesn't need money. That's why cold callers who use a dialer can still build a pipeline. They just have to be willing to make hundreds of calls a day.

[anonymous]

160 I.Q.

impressive. mensa?

[MCNetwork]

I think mine was 117. If I had a 160 I'd be working for NASA or Elon Musk.

[Karen37a]

No . Mensa is separate from Iq tests. I was going to get tested for Mensa once just for the hell of it.

IQ isn't the greatest measurement ( I said it to annoy the big bang theory, even though it was true ) . Age isn't a quantifiable number, and IQ drops as you get older.For IQ to be reliable it would have to be linear with age. Which it isn't therefore its truly a garbage number.

My garbage in garbage out theory, I knew they would take the bait...hedging : )

Sales is a psychological science where you can lead to the close or illicit a response from the data or words you put out.

Like playing whack a mole with no prize or commission on the end.


**Everyone use what ever method they have been using to effectively make money. If someone sells door to door and is successful and loves doing it, continue on. Id rather get the phone numbers out of the yellow pages and call first; saves gas and time. To each their own. The point being made from the beginning is to not judge one persons success or failure on the rest. Everyone has different independent results from various marketing strategies. You cant say cold calling does not work because I still do it and it works, maybe just not for you. Competition is stronger lately IMO**

[jotucker1983]

True. But when a cold caller stumbles upon this merchant, he's more receptive to listen to the pitch than a merchant who doesn't need money. That's why cold callers who use a dialer can still build a pipeline. They just have to be willing to make hundreds of calls a day.

I agree, but let's look at the numbers....tell me if you agree or disagree with these:

- I would say off calling a UCC list, from 100 calls you are able to get through to 35 merchants/decision makers, with 8 of them being interested. Of the 8 that are interested, only 2 really "qualify" for anything right now, the other 6 are stacked to hell, NSFs through the roof, horrible credit, etc. Of the 2 that qualify, you convince 1 of them to send you an application package for submission.

- Calling from random/generic lists like the Yellow Pages or general SIC Codes, you need at least 200 calls to get through to 35 merchants/decision makers, with about 4 of them expressing "somewhat" interest. Of the 4 "somewhat interested", you get to 1 that is interested enough to submit an app.

- Then let's say in general, for every 5 apps you submit to your Funder/Lender Network, you get 3 approvals, and you close 1 of the 3.

- So to close 1 deal, a guy needs to make about 500 UCC calls.

- Or to close 1 deal, a guy needs to make about 1,000 Generic marketplace calls.

The guy would burn out, which is what they are doing right now.

Tell me if you agree or disagree with these numbers....

(Note, back before everybody and their mother started calling UCCs, you could call 100 UCC records, get 35 merchants on the phone, and get about 15 interested. Of the 15 interested, 12 of them qualified for submission, and 9 of them sent back an application package)

[MCNetwork]

Those stats are true. That's why the dialer didn't work for me personally. But some people are getting it done!

[Finance1]

I used to be a lot more active here but have been off the forum the last year or so. The market is constantly changing and we've had to adapt constantly (just like everyone else).

2016 started off horrendous. Our first quarter of 2016 was our worst since we first started doing this stuff in 2011. The second quarter was so-so. I had visions of shutting it all down at times. We weren't losing money or anything. Just wasn't a good stretch and if things didn't turn around it wouldn't be worth all the work that goes into it.

Something changed in the second half of 2016. We had a record 3rd quarter after struggling the first 2. 4th quarter can be hit and miss year over year but 4th Q of 2016 was excellent. Especially new originations in December. December is prone to be bad with new originations in any year. 2016 went down as our best year by a 12% margin. 48% of our 2016 revenue was renewal business so without including the existing book, the year wasn't all that great but 2016 as a whole was a record gross revenue year by 12%.

Unlike 2016, 1st Q of 2017 was our best 1st Q in company history. Still nearly 50% renewal business but still a strong origination quarter. I can't put a finger on it. We've made some smart investments in marketing but that alone can't solve embedded problems across the industry (saturation, stacking, reduced demand, etc).

I will say that the CAN implosion definitely helped us. That's not a long term solution of course but over the short term it helped. Our business model is a blend of direct funding, syndication, and broker. It wasn't by design as much as it was luck but something that has really helped us is moving away from the "popular" or larger funders for our ISO business. We rarely run into the "already in house" or "first to contract" anymore. Much of our ISO business is out on the fringes. We've established some unique relationships that set us apart from the herd for ISO fundings. It's taken years to develop these relationships so there's no shortcut but any ISO that finds themselves competing with clients over and over with the usual suspects should forge a path away from the fray. It makes a huge difference.


TL;DR version

2016 started off as a disaster and finished strong. 2017 has been great. Competition can be reduced if you put the effort into it. Marketing costs never stop climbing. The market is more saturated than it has ever been and rampant stacking is a massive pain in the ass. But working hard and making smart decisions keeps the wheels turning and you can still make a good living while playing in the shark tank.

[StackMonster]

I agree, but let's look at the numbers....tell me if you agree or disagree with these:

- I would say off calling a UCC list, from 100 calls you are able to get through to 35 merchants/decision makers, with 8 of them being interested. Of the 8 that are interested, only 2 really "qualify" for anything right now, the other 6 are stacked to hell, NSFs through the roof, horrible credit, etc. Of the 2 that qualify, you convince 1 of them to send you an application package for submission.

- Calling from random/generic lists like the Yellow Pages or general SIC Codes, you need at least 200 calls to get through to 35 merchants/decision makers, with about 4 of them expressing "somewhat" interest. Of the 4 "somewhat interested", you get to 1 that is interested enough to submit an app.

- Then let's say in general, for every 5 apps you submit to your Funder/Lender Network, you get 3 approvals, and you close 1 of the 3.

- So to close 1 deal, a guy needs to make about 500 UCC calls.

- Or to close 1 deal, a guy needs to make about 1,000 Generic marketplace calls.

The guy would burn out, which is what they are doing right now.

Tell me if you agree or disagree with these numbers....

(Note, back before everybody and their mother started calling UCCs, you could call 100 UCC records, get 35 merchants on the phone, and get about 15 interested. Of the 15 interested, 12 of them qualified for submission, and 9 of them sent back an application package)

Jo,

Assuming your numbers are correct, you're talking about 750 dials for each funded deal, assuming an evenly blended supply of UCC and non-UCC leads. Frankly, I think your numbers are a tad bit too conservative, but even if they're spot on, 750 dials for a funded deal is a formula for unlimited money-making.

Our average MCA deal size (and the industry average for that matter) is $35,000, and we gross approx 12% of funding volume between commission and fees. So using your math, we would make $4,200 for every 750 dials.

In your estimation, how many man-hours are required to make 750 dials? We're counting every dial, and using a predictive dialer, so let's go with 25 dials per man-hour. That's 200 per day in an 8-hour shift. The total comes to 30 man-hours to make 750 dials and, by your logic, 30 man-hours to get a funded deal.

So if I pay my people $15.00/hour on the books, it costs me about $540 in payroll to get $4,200 in revenue, leaving me a gross margin of 87%. I can even pay commission and still make a significant profit. You can gut the numbers all you want, it takes a LOT for this model to not hold up, including really poor management and operational oversight.

It's worth noting, the cost per qualified app in this scenario is around $100, because you're using a closing rate of 20% in your assumptions (1 out of every 5 apps received). For every 10 FTEs (full-time equivalents) on the phones, you're originating 65 applications and funding 13 deals EACH WEEK, generating weekly funding volume of $455K and $54,600 in gross revenue.

So yes, I agree with your numbers, and if only I could find good people in this podunk town I would have a call center the likes of which you've never seen!

[StackMonster]

[Duplicate]

[HDF]

Until you run out of data in two months.

[jotucker1983]

StackMonster,

Good notes, see below:

Our average MCA deal size (and the industry average for that matter) is $35,000, and we gross approx 12% of funding volume between commission and fees. So using your math, we would make $4,200 for every 750 dials.

I would say the wide-scale average deal is around $25,000 now with the average new deal commission being 5 - 6 points, or let's just say 5.5 points. So I would put the average pay out at $1,375.

Using a wide-scale approach, you aren't going to be able to score over 10 points per deal, on average. You can usually only get away with that on those high risk or stacked deals.

In your estimation, how many man-hours are required to make 750 dials? We're counting every dial, and using a predictive dialer, so let's go with 25 dials per man-hour. That's 200 per day in an 8-hour shift. The total comes to 30 man-hours to make 750 dials and, by your logic, 30 man-hours to get a funded deal.

Yes.

So if I pay my people $15.00/hour on the books, it costs me about $540 in payroll to get $4,200 in revenue, leaving me a gross margin of 87%.

I think you are over-estimating how much your average new deal is going to pay out, on a wide-scale approach like this. If I were you, I would use a basis of 30 hours in payroll to equal $1,375 in new revenue, which would be $835 in profit after you take off the $540 in payroll related costs. Now, this is still profitable, considering you get to keep the renewals in-house as well.

However, I must remind you that the conversion numbers I listed were some of my own, as well as, numbers similar to those who have years of experience doing this. The person willing to do all of these dials for $15 per hour might not be as "quality", thus, their numbers are likely to be lower.

I can't tell you what to do, but if you had a lot of money to throw around I would invest in:

- Exclusive Data with various data companies

- Strategic Networks with banks and other professionals to get exclusive leads/referrals/data

- Online and Innovative Marketing Channels/Mediums

I would not invest a lot of money in a "team" of $10 or $15 per hour people calling on UCCs or calling on generic listings out of the Yellow Pages.........unless you just have a ton of money to throw around and you are already investing in the three ideas I listed above.

The three ideas I listed above are the foundation of the industry. The players who create their "secret sauce" within the three ideas I listed above, are the ones that last the longest. Going forward, these players will mainly be the large + medium funders/lenders, and large + medium broker houses.

If you're the "small guy", for the most part, I think you should be looking at consolidating into a larger house.

[MCNetwork]

Our average MCA deal size (and the industry average for that matter) is $35,000, and we gross approx 12% of funding volume between commission and fees. So using your math, we would make $4,200 for every 750 dials.

In your estimation, how many man-hours are required to make 750 dials? We're counting every dial, and using a predictive dialer, so let's go with 25 dials per man-hour. That's 200 per day in an 8-hour shift. The total comes to 30 man-hours to make 750 dials and, by your logic, 30 man-hours to get a funded deal.

So if I pay my people $15.00/hour on the books, it costs me about $540 in payroll to get $4,200 in revenue, leaving me a gross margin of 87%. I can even pay commission and still make a significant profit. You can gut the numbers all you want, it takes a LOT for this model to not hold up, including really poor management and operational oversight.

Those numbers do generally hold up in theory (but in my experience the average MCA deal size is closer to $17,000). Even using your numbers of having an expected outcome of $4,200 for every $540 spent in payroll, you're still making the following key assumptions:

1. Each caller is capable of the same amount of productivity on the dialer (750 dials per 30 hours)
2. Each caller has the same level of phone efficiency in obtaining applications or closing deals

The reality is far different. If you take a 10 man office, you'll see the 80/20 rule take effect. 80% of your office's productivity will probably come from 20% of your callers. These individuals will have the combination of work ethic, phone skills, good leads and some luck on their side in order to close most of your deals. Another 30-40% will be woefully unproductive and you'll be lucky to get 100 dials a day from them. This group will comprise most of your revolving door of sales reps. The middle of the road group can probably sustain 750 dials per 30 hours for a few weeks until they get discouraged or burned out because some of these individuals may never fund a deal due to bad luck, a dry spell, not enough time at the job or any number of reasons. And let's not forget the skill disparity. One guy can make 500 calls a day and have terrible phone skills and not get a single app in. And the other guy can make 10 calls a day and get 1 or 2 applications back. Aside from that, once you've found your hotshot callers (the top 20%), a few of them will eventually choose to leave for greener pastures or start their own ISO shops (thanks to low barriers to entry) and you'll be back to square one, hiring and firing.

So while the expected outcome for the office may be $4,200 per every $540 spent on payroll (and you're not including rent and other fixed expenses), the actual outcome per individual will be vastly different because of skill level, work ethic, luck, etc. The office will end up burning a ton more money because of investing in bad personnel and a high turnover rate. You'll be making money on the top 20% of your team and losing money on the other 80%. The human element adds a high degree of unpredictability and uncertainty. Unless you have a team of cold calling robots working for you with great phone skills, it will be incredibly difficult to reach your numbers and sustain them.

[HDF]

So so true Archie. And early success or failure can be equally devastating. Early success, people go all-in only for reality to catch up and bury them. Early failure can be a quick flame out or fits and starts many times over.

There is a business model screaming to be germinated right now. Just not sure exactly the perfect move to make on the origination side.

[MCNetwork]

So so true Archie. And early success or failure can be equally devastating. Early success, people go all-in only for reality to catch up and bury them. Early failure can be a quick flame out or fits and starts many times over.

I have seen that many times. And I've watched the poor schmucks who never funded anything stick around for much longer than they should have because they saw one of their friends fund a $100K deal. And the office manager uses this guy as the poster child for what's possible in the industry. It's the casino slot machine mentality. That's why I avoid these minimum wage dialer operations like the plague. Just not my cup of tea.

[Finance1]

We cast a wide net so our annual numbers are a pretty good blend of the market. In 2016 our average comp was $2,480 and average deal size around $27k. Do people really average 12 points a deal? We fund a good # in the 10-12pt range but certainly not the average. Especially on the bigger clean deals. Trying to squeeze 12 points on cleaner A paper deals makes them ripe for competition to sweep the deal out from under you.

[WestCoastFunding]

We cast a wide net so our annual numbers are a pretty good blend of the market. In 2016 our average comp was $2,480 and average deal size around $27k. Do people really average 12 points a deal? We fund a good # in the 10-12pt range but certainly not the average. Especially on the bigger clean deals. Trying to squeeze 12 points on cleaner A paper deals makes them ripe for competition to sweep the deal out from under you.

****, some of these guys are charging 5-10 points on a PSF alone, not including the commission.

[MCNetwork]

I would guess the average comp breaks down as follows:

A paper - 3-6% total commission
B/C paper - 6-10% total commission
C-/D paper - 9-12% total commission

Blended all-in is probably closer to 8% unless you deal exclusively in lower tier paper. If you try to charge A paper guys 12% and you can get away with it, you can kiss that renewal goodbye.

[Finance1]

****, some of these guys are charging 5-10 points on a PSF alone, not including the commission.

We rarely if ever charge a PSF. It's mostly just an ethical thing and there is no right or wrong way to do it though. No judgement here. Are we leaving money on the table? Probably. Do we have higher retention by never charging fees off the top? Maybe.

Not charging a PSF is a good selling tool when in competition.