Community Development Financial Institutions (CDFIs) use lending as a vehicle to bring opportunity to communities otherwise left without access to capital by commercial lending institutions. One of the major challenges for an established CDFI is to continuously build momentum. This is specifically true of a mid-sized CDFI that attribute success to grassroots efforts. Beyond one-on-one outreach, larger marketing initiatives are needed to replenish the loan portfolio.
In this post we will discuss the importance of CDFIs conducting marketing campaigns by identifying a target market, having a focused message, creating a marketing strategy, choosing the right partners, implementing a good system for tracking and reporting, and keeping existing clients happy.
Identify your Target Market
Identifying a target market is not only about understanding who belongs, but also understanding who does not. This is an important step that will make sure you are filling your pipeline with quality leads that meet your lending criteria. Whoever you identify as your target market will have a huge impact on other steps, so it is important to be specific.
For example, if you provide small business loans, are you more focused on start-ups, established businesses and/or women and minority-owned businesses? Or if housing assistance is core to your mission, are you limited to specific zip codes, building types (e.g. single family, apartment)? How do you segment the population? It might be obvious that as a CDFI you have already answered these questions dating back to your inception or contingent on funding sources. But, it is equally important to consider what messages, media or placement is this market most likely to respond to.
Focus your Message
There is a lot of competition in the lending market that is comprised of more than just CDFIs. Competition from other banks, credit cards, payday lenders and even family members providing loans may stand in the way of your target audience receiving the more favorable terms your organization has to offer. Your message should be focused and unique from the competition. Again, consider your target market and what they are most likely to respond to.
Your message should also be conscious of barriers your audience may experience. For example, if you know that small business owners are short on time, your product can address this upfront by emphasizing the simplicity of the application process and potential for fast decision-making.
Your message is only as important as the means in which you distribute it. Think about your target market again: Who are they and through what means are they most likely to see your messaging? More importantly: through what means are they most likely to have the information resonate?
Create a marketing strategy
It is very easy to get swept up in tactics: a large event, a specific grant application, a relationship with an influential partner. In order to not lose sight of the bigger picture, you should create a strategy – or a holistic approach to how you identify the market, focus and deliver messages, and allocate resources to reach a desired outcome.
The good news is that you have already started this process by identifying your target market and coming up with key messages. Think of the strategy as the long-term structure with specific goals or expected outcomes. Set these goals at the beginning, gain sanction from your organization, and stick to them. Tactics are elements in which the strategy is executed. If you get the strategy right at the beginning, it is much easier to take a step back from tactics and ask, “Is this helping me reach the intended goal?” “Have I lost sight of the target market?” or “How much time and resources are appropriate to invest in this tactic, what value is it bringing?”
Choose the Right Partners
Partnerships are an efficient way to spread your message, ensure your CDFI is recognized as a trusted member of the community, and expand your reach. Look for local leaders or influencers in your space. Think about the big picture here and remember which leaders are relevant to your target market. This can include local politicians, religious leaders, business chambers of commerce and influential business owners. Ensure that your staff is well-equipped to establish these relationships through consistent messaging. Your message should be clear and consistent no matter who in your organization someone is speaking with.
When considering partnerships remember there is rarely a need for exclusivity. In fact, you should avoid putting all of your eggs in one basket. Keep this in mind specifically, when you begin to partner with local branches of commercial banks. Their referrals can be a great contribution to your pipeline, but remember they are sending over referrals that do not fit their criteria – this does not necessarily mean that they match yours. The best way to manage this is to test the relationship and track success rates. Based on your data you will be able to identify which relationships are worth maintaining while still building a full pipeline.
Implement Systems + Organizational Structures
In addition to tracking partnerships you should have a system in place for tracking leads. This requires something efficient, easy-to-use and customizable. For example, if you are hosting a seminar, you should be able to capture participant information via tablet and have that feed directly into your system. Later on, your system should send automatic reminders to follow-up with these leads. Ideally, a system would be in place where all of your data including leads and partners is centralized. This will make reporting much simpler as it shows the relationship between them, conversion rates from leads to clients, and an overall view of how your CDFI is tracking to reach its goals.
Keep your Existing Clients Happy
Finally, one of your best sources for leads is your existing client base. They are a valuable source of case studies and client success stories, so consider implementing a plan for maintaining these relationships. Providing a product that meets an acute need of theirs along with extraordinary customer service not only increases your chances of repeat business (and thereby replenishing the loan portfolio), but can also result in client referrals. Word-of-mouth marketing is free and often has the highest rate of conversation. According to a Nielsen study, 92% of consumers believe suggestions from friends and family more than other advertising. Consider going above and beyond for vocal references to maintain the positive relationship.
Summary + Conclusions
The work of CDFI’s is critically important to ensure communities have access to capital that might not otherwise. And access to capital can make the difference for an individual staying in their home, starting a new business or otherwise handling life’s unexpected difficulties. But, CDFI’s can only succeed if they can find prospective borrowers and ensure funding is put in the hands of those that need it most. This begins with clearly identifying your target market, focusing your message, ensuring you have an effective strategy and partnerships, tracking progress and stewarding your existing clients.
A CDFI’s ability to market its work directly impacts its ability to deliver on its mission.
Digital (2012, April 10). Consumer Trust in Online Social and Mobile Advertising Grows. Retrieved from: www.nielsen.com/us/en/insights/news/2012/consumer-trust-in-online-social-and-mobile-advertising-grows.html