I hope you had a great July. Many of my clients had record months in both funding and new accounts. Get a fast start on August and reach as many merchants as possible. Competition has never been higher than it is right now but with the 4 Pillars of MCA you can easily defeat short term players.
Week 7-29
How Many Leads Should I buy?
This past week I received a call from a broker who wanted to put in an order for $200 worth of leads, and if the leads worked out possibly 500 dollars for next week. This is a strategy that will not work and create disappointment for the broker. In my eight years in MCA lead generation, I have seen the cost to acquire a merchant stay at approximately $1000. You can spend $300 on a list and acquire several merchants, but it seems like at the end of the year when you add up all your lead purchases the number evens out to 1000 dollars per customer. If you’re planning on building your iso shop to a $10-$15 million per month business, you must invest in leads. The number of repeat customers that I see who have purchased 100 to $300 worth of leads in the past is very small. One of the reasons is with 100 to $300 worth of leads there is no way to contact enough people to get an understanding of how good the leads actually are. To consistently open new accounts and increase funding you must invest weekly in a good lead source. This will give you enough leads to call and to build your pipeline of merchants to follow up with by phone, text an email over the course of the year, A large number of high-quality leads with the proper technology should lead to many months of a high number of new accounts and funding.
Defaults
Last week I had a broker call me to complain about the number of defaults that were in the leads that he purchased from me. This particular broker bought a list of 2000 merchants. Over the course of two weeks, he was able to fund 2 Merchants for a total of $55,000. This broker indicated he had a large number of submissions and was hoping to fund many more merchants from the list. The broker expressed disappointment when several of the submissions were not able to be funded. When I discussed the math with him, he had told me on the $55,000 in funding, he received approximately $4500 in commission. As i broker down the purchase with him I showed him minus the $1500 that he paid for the leads he realized a profit of $3000.These results also came out to be a CPA of 750.00 which is well below industry standards. In addition we both agreed with follow up, there were many more potential deals over the next few months. In today’s Merchant cash advance industry with massive competition and the emergence of more debt settlement companies, I believe that iso teams need to factor in defaults and non-fundable merchants into their marketing cost. I am seeing between 4-5 new ISO Shops popping up weekly looking to buy my leads and I have never seen more debt settlement ads on Instagram then I see today. These two factors will lead to more and more merchants becoming non fundable. No matter what lead source you use, when buying leads, it makes sense to evaluate the lead source by interested merchants, apps out, submissions and ultimately the number of deals funded. This should be done over the long term; you should compare the cost of leads against commissions earned to see how profitable the investment was over 3 ,6 and 12 months. Do not factor in what could have been – consider profit and loss on your investment.