Embedded lending is emerging as a key business driver for the companies that embrace it. By engaging with customers in a new way, businesses adopting lending programs open up a whole range of benefits. The numbers speak for themselves — embedded lending solutions increase revenue per customer by two to five times.
Our guide to embedded lending offered a 10,000 foot view to explain the trend and answered basic questions. But how do you start lending to your SMB customers?
A Blueprint for Starting Your Embedded Lending Program
Begin your embedded lending program by outlining your goals for the project as a whole. What are you trying to get out of your embedded lending program? What KPIs are you trying to drive, and how will they be measured? Knowing your targets from the outset keeps your embedded capital program firmly focused on generating the most value-add possible.
Once you’ve identified your goals, it’s time to establish your program and solidify your spot in the embedded finance ecosystem. That means finding a partner that can connect your SMB customers to capital right from your website or product experience. This type of partner will allow you to seamlessly facilitate the connection between funders and SMBs — and provide your customers with critical funds at their point of need.
The Do’s and Don’ts of a Successful Embedded Lending Program
There are many things to consider when starting an embedded lending program. Stay mindful of these key do’s and don’ts to improve your prospects. To create a successful embedded finance program, you need to:
- Plan for the future: Solidify your present objectives and start planning your future accordingly. Spend time before launch researching and understanding the capital needs of your customers, so you can optimize the long-term value of your program. Explore questions like these to jumpstart your program:
- ~What other financial services will you be launching in the future? How will they all tie together? Will they build off of each other (i.e. credit card processing, invoice payments and access to capital)?
- ~Will the onboarding experience for one financial service improve when users are onboarded for another one or will customers go through the same onboarding flow for all financial products? When will the launches for each financial service take place?
- ~How will key metrics identified in the course of your outlined objectives improve with each release? How will you measure success?
- Commit resources to your embedded lending program: With Lendflow, you can launch your own capital program in just one day. But once you’ve launched, you need to dedicate resources to promoting this new service to your customers. Your capital platform is a new product launch and must be treated accordingly. Map out a PR and communications strategy that builds up the buzz around your new capital program and explains how you are best positioned to hit on all of your customers’ needs — capital needs included.
- Consider your SMB customers: Customer service can make or break any SaaS company. So when you choose your embedded lending partner, make sure that you pick a platform that fully maps out customer support and services in advance. The name of the game here is to seek solutions that optimize coverage for all your customers, and not just a few.
- Strategize how it can help with feature adoption: Introducing lending services to your platform adds a whole new element to your suite of offerings. The additional data your company is able to gather when providing capital to clients should be used wisely, further informing the product roadmap of your core offerings. By offering your SMB customers access to valuable capital, the full range of your products becomes stickier. And in turn, customer value, retention, engagement, and NPS all stand to increase.
- Think about how this fits into your general product messaging: Embedded lending provides an avenue for engaging with your customers in a new way. Remember that you don’t have to count financial products or services amongst your core offerings to start offering embedded financial services. That’s the point, since the introduction of embedded lending services diversifies your product line and amplifies your existing value proposition across the board. The different lines of services you now offer your clients should be integrated within a holistic messaging and branding strategy to drive cross-platform value.
The success of your embedded lending program is not only contingent on what you do, but what you don’t do. To create a successful embedded finance program, DON’T:
- Think along the lines of "build it and they will come:" Don’t assume that by simply throwing up a landing page and providing an application, your customers will start using your lending program automatically. Marketing matters when creating a relevant embedded finance solution that is actually used by SMB customers.
Remember that your program’s payoff comes from consistently driving engagement and user adoption over a sustained period of time. Avoiding this pitfall becomes easier with the right partner. A best-in-class partner helps you develop a successful GTM strategy and supports subsequent communications and messaging strategies designed to consistently promote your capital program.
- Decide to build everything yourself: Building an embedded finance program can be tough if not impossible on your own. The scope is far greater than many businesses realize when they start out, leaving companies overwhelmed and scrambling to create solutions that they were unprepared to build in the first place. It took years of amassed industry experience and accrued expertise for us to finetune our product features and build out our all-encompassing platform. At Lendflow, we’ve handled the heavy lifting so SaaS companies can keep focusing on their core product while easily adding embedded lending into their ecosystem.
- Try to optimize for revenue only: Revenue shouldn’t be your only goal. After all, embedded lending drives customer engagement, customer retention, product stickiness, NPS, and LTV while also reducing CAC, to name just a few of the many benefits. So consider a more diverse set of targets for your program, and work towards building a program that suits all of them. Embedded lending substantiates your brand and adds further influence over your customers. Building a program designed for a multitude of objectives better positions you to hit on your needs and those of your SMB customers.
Start Your Embedded Lending Journey Today
When it comes to being a leader in any space, staying at the forefront of new developments is an absolute must. Embedded lending offers an opportunity for forward-thinking businesses to get a leg up on the competition and provide the seamless white-glove lending services their SMB customers want.
To make the most of your embedded lending program, you need a partner who can support you throughout the process. Lendflow is that partner. As the only platform that empowers SaaS companies to embed, enhance or build financial products within their ecosystems, we’re uniquely positioned to help companies provide the critical capital today’s SMBs need to survive.
Are you ready to expand your suite of services? Contact us today to get started!