Cash incentives remain popular P2P marketing tool
WHILE platforms step up their quest to attract new borrowers, many are still looking to entice investors as well, as cashback offers and new client incentives continue to play a role in their marketing strategies.
Even the more established players such as RateSetter and Funding Circle are rolling over their lucrative reward schemes – the former giving new customers a £100 bonus on a minimum one-year £1,000 investment, and the latter offering its existing members a £50 promotion if they bring a friend on board by the end of March, on a minimum £2,000 investment.
“We don’t currently have an end date for the campaign,” said a spokesperson from RateSetter.
“We’ve found that these are an effective way to attract investors for the long term, as the vast majority of investors who have joined as a result of the campaign (which was also running at the start of last year) have stayed on after the offer period has ended.”
Cashback offers are even more popular among smaller players, who often have a greater need to attract new customers, explained Relendex’s chief executive Michael Lynn.
“If you have to compete with bigger platforms, that have a market-scale business model with paid ads all over Google and price comparison websites, it’s important to keep a different composition of marketing tools,” he said.
“And until you reach a sufficient level of liquidity on your platform, you still have short-term mismatches between investors and borrowers to account for.”
The P2P platform, which specialises in secured property lending, offers a 0.5 per cent bonus to new investors. It also pays out a 0.5 per cent sum to any investor who transfers funds within the first two working days of a new loan launch – a type of incentive that is particularly important to its auction-based model, Lynn said.
“This is key in getting the bulk of commitment in as early on as possible, to make the auction as effective and efficient as possible,” he said.
Meanwhile Growth Street, which was formerly a business-to-business lender, is using cash incentives to access the retail investor market.
The platform received regulatory permission to accept retail money last December. In preparation for the new business, it said at the time that it would offer a £100 welcome bonus for new clients lending at least £1,000 and a separate £100 referral bonus rewarding both existing members and the new lenders they bring on board.