Full Stack Marketer: A go-to-market traction case study in fintech with Jeff Goldenberg

Full Stack Marketer is a series where we delve into go-to-market case studies from thought leaders (or full stack marketers) in the MaRS community. Our goals are to highlight some of the incredible ventures we work with, to share the key lessons they’ve learned while implementing their go-to-market strategies and to provide actionable insights for other entrepreneurs.

Full stack marketer: Jeff Goldenberg, head of growth, Borrowell

Jeff Goldenberg is a sought-after expert and speaker in the areas of digital marketing, growth hacking and business development for innovative high-growth companies. He is currently the head of growth at Borrowell, a financial services startup that offers personal loans to Canadians, as well as an entrepreneur-in-residence at MaRS and a mentor at pre-accelerator program Startup Next. He is the co-author of the book The Growth Hacker’s Guide to the Galaxy.

Nathan: In your experience, what growth challenges do early-stage fintech companies face as they scale?

Jeff: The early stage is critical for all startups, but especially for fintech startups because their incumbents typically have more customer data and long-term relationships. The first job is to achieve product-market fit. This involves evaluating both sides of the value equation: the value proposition that your product is uniquely positioned to deliver and the specific customer who benefits the most from your value proposition.

On the customer development side, there is no substitute for talking to your customers (and lots of them). Startups often succeed in identifying the needs of their customers, but fail to identify which need is the most acute or where customers should spend their money first. The goal here is to learn as much as you can and to dispel any customer legends that have developed at your startup, because legends can send you desperately down the wrong customer path. The result of this process is the first draft of your target customer segments.

On the product side, your value proposition is going to be very malleable and it will evolve based on further customer development. Frequently your value proposition will remain the same, but your messaging will need to evolve to recognize the needs of your various buyer personas. At this stage, you want to begin to craft your brand story and experiment with different ways of telling that story to see which method elicits the strongest response.

You’ll also need to begin to drive traffic to your product, so you’ll likely start to experiment with direct response advertising that can drive steady and predictable traffic to your site. This will also present an opportunity to rapidly test various messaging concepts. Keep an eye out for a data spike and then investigate the cause and/or try to replicate it.

The founders and marketers who understand that this stage is very fluid and flexible are typically the ones who achieve product-market fit. Those who defend their concept of value in the face of different customer demands often never turn the corner. Whatever you do, do not proceed to the growth stage if you cannot clearly demonstrate product-market fit. This is always the wrong idea. Iterate until you find that fit and then grow as fast as you can.

Nathan: How does that change from the early days, when you have little understanding of the customer, to when you’re a later stage fintech company?

Jeff: As you move from early to middle stage, many things need to change for your startup to be successful. The move from early adopters to mass-market adopters requires a deep understanding of your customers’ needs and how your value proposition uniquely serves those needs.

In this stage you begin to look for more scalable and efficient channels that can produce leads at a greater velocity and lower cost. The good growth marketer is looking to build a marketing machine that takes limited funds and turns them into leads at a rate that is acceptable for this stage of growth.

At this stage, our growth team at Borrowell evaluated 19 potential customer acquisition channels and looked to efficiently and quickly test the most promising channels for signs that the audience was responding to our brand story and that we evaluated their needs correctly. Once we had a sign of life—a sign that a particular channel was working—we worked feverishly to experiment within the channel and to rapidly increase the channel.

As you collect more and more data about your customers, you can continue to re-evaluate your initial buyer personas. You may find that some are correct while others aren’t. You may find that they’re all correct, but that there’s a more useful way to segment them. As long as you’re constantly evaluating your personas and testing them against your data, they will continue to evolve and become more useful. The more finely you segment your market and the more you understand its needs, the more your messaging can evolve and improve. At this point, the growing startup will want to automate processes to allow for faster growth.

During this phase you’re obsessing not only about growth, but also about reducing your customer acquisition costs. These are difficult initiatives to optimize in tandem, but if you’re hoping to raise institutional financing to fuel your growth, they’re to be expected. To do so, a number of different key performance indicators must be optimized in parallel, including marketing efficiency, conversion rates, funnel optimizations and new channel development. Tracking month-over-month growth increases against customer acquisition cost decreases becomes the basis for your startup’s story. The smart startup, seeing the competitiveness increase within its launch channels, will begin to search for proprietary acquisition channels that will give it an unfair acquisition advantage.

Nathan: What are your traction channels of expertise and what do you love and hate about them?

Jeff: One of my areas of expertise is digital. There’s a lot to love about digital channels. They’re massively scalable because most Canadians use search engines and social media daily, if not hourly. They offer opportunities to be amazingly creative and to try different things that wouldn’t be rewarded by other channels. They allow for personalization tactics that enable you to connect with each customer on a higher level. They allow for automation in terms of both execution and optimization/personalization, which is the foundation for rapid growth. They help the marketer find customers in their “moments of truth” when their needs are the greatest. Most importantly, they allow for a super-quick learning cycle, where you can test, learn and optimize your campaigns weekly.

There are a few downsides to digital channels that marketers should be aware of as they grow. First, they’re very competitive and that makes them expensive. On Facebook, a particular user could be the target of dozens of diverse marketers, driving up the cost of that placement. Second, the costs can be seasonal. A non-seasonal business, like a financial services business, will be competing for ad space with marketers who drive over 85% of their revenue in the second half of their fourth quarter. As a result, fourth-quarter click costs get extremely expensive. Finally, when you rely on a digital platform you’re at the mercy of any changes in that platform’s algorithm, ad types or terms of use. There’s an inherent risk in relying heavily on platforms that can change in those directions.

Nathan: Where do you see the future of fintech marketing heading?

Jeff: The next five years will be really exciting to watch as the fintech revolution begins to leave its mark on the Canadian financial services industry. I think the key for fintech companies is to focus on areas in which they have competitive advantages over the larger incumbent institutions.

I think that fintech companies obsess over the needs of their customers and always make decisions that ensure their customers are the winners. Fintech companies can also leverage their quick learning cycles and innovate much more quickly. They aren’t beholden to any legacy systems and are able to approach customer needs with fresh eyes.

I also think that fintech companies need to focus on the data they collect that is different from the data of other institutions in order to help bridge the data gap between the incumbents and the challengers. Successful fintech companies will move extremely quickly, but will also always act in the best interest of the industry in the long term. What’s really interesting in the fintech space is that the innovators are collectively competing against inertia more than they’re competing against each other and we all share the responsibility of educating consumers and acting in their best interest.