'CPA - the heart of a sustainable online business model?', Simon Isaacs, Founding Director, eBroker
"The balance between the cost of generating demand and the efficiency in which we convert it into the act of supply, is the all-consuming challenge for any online business..."
In the business lending space, building the product or service to meet the general demand doesn’t seem to be the difficult obstacle it once was. The speed of innovation and flourishing competition with new brands joining every few months looks to be proof of this.
While the sector that eBroker participates in shifts into new channels of supply & demand the most sought after and valuable asset is quality leads and it’s drawing focus and pressure onto the traditional sources, being Human Brokers & Advisors. Not long ago these brokers & advisors had few lending choices outside banks to send their leads and these lenders enjoyed a long period of a regular & relatively unchallenged flow of quality leads for free. With the mass of competition the cost of maintaining loyalty in these channels is growing by the day, along with the commission on offer and it’s hard to imagine that it’s CPA will continue to remain significantly lower than that of driving traffic through direct marketing.
“Coming from the shared attitude that the banks are kings for which a huge pool and regular flow of demand is inherited. I wonder in the new age of business lending who the kings are supposed to be, seeing that the balance of power appears to sit squarely with the brokers & advisors holding the quality leads in hand”.
I’m hopeful it will be more like a partnership while we all work on building awareness of this thriving sector, educate and expose business owners to the many alternatives to banks with a wide range of lending products that didn’t even exist a few years ago. At the end of the day small business is the heart and soul of the Australian economy and access to alternative capital will fuel growth that would actually trickle through. Will the banks lend a helping hand and refer the business’s they cannot service onto a pool of alternative lenders much like the UK initiative or will they forge partnerships with individual lenders. So far they seem to have chosen the later and somehow managed to select perhaps the least cost effective lenders.
Like the UK, to see rejected bank clients passed onto alternative business lenders we will likely have to wait for Government to intervene. The quicker we get working capital into small business’s the better when you look at the latest ABS numbers showing “the number of actively trading businesses in Australia increasing for the third year in a row”. “At the same time, fewer businesses were leaving across the year, with an exit rate of only 12.3 per cent at June 2016 compared with 14 per cent at June 2013”.
To add further complexity to the cost of acquiring new customers, we can’t just go to Jo Blo advertiser around the corner offering SEO, SEM and Social as quality B2B traffic is notoriously difficult to drive at a sustainable cost.