US online lender SoFi retains millennial customers by finding them jobs (and life partners) – Quartz
When Joanna Mathews was laid off from her job as an advertising strategist in Dallas, Texas, she called her online lender to get a forbearance on her credit consolidation loan. The lender agreed, but on one condition: he should let him help him find a new job.
Mathews, 31, and the counselor provided by SoFi, an American online finance company, spoke at least once a week while looking for work. She also took advantage of SoFi webinars on how to write resumes and interviews. His conversations with his coach focused on job search strategies and, eventually, salary negotiation. With the help of her coach, she landed 15 interviews. After three months of searching, she found a position with another company in Seattle, a city where she lived and where she was eager to return.
In a world where lending is a commodity and banks virtually indistinguishable, SoFi was looking for new ways to separate itself from other lenders. For SoFi, providing career advice to its borrowers serves two purposes. It helps the unemployed find a job, where they can start repaying their loans. And it helps forge a bond between customer and lender that SoFi hopes will lead to a lifelong relationship with the people it woos, primarily millennials making their first big financial transaction, like buying a home. or starting a business.
In addition to career advice, SoFi also organizes social events, such as rock climbing sessions and cocktail mixers for singles. (After all, people tend to make big and expensive life choices as a couple.)
“We’re really trying to combine this idea of money, career and relationships, which we see as the main drivers for this demographic that we’re targeting,” CEO Mike Cagney said. “If you lose a job, we don’t call you and threaten to take your car. We help you find a new job.
Another customer struggling to make payments, Ramona Liszt, was directed to SoFi’s career counseling website, which she thought was a waste of time. Still, the Austin, Texas marketing manager kept SoFi top of mind, and the morning before a job interview, she called a coach for some salary negotiation advice.
The result “was the greatest advice of my life”, said Liszt; she was able to negotiate an additional annual salary of $6,000.
Selling new products to existing bank customers is known as cross-selling. Despite its recent negative reputation – the promotion of the practice has led to the fake accounts scandal At Cagney’s former employer, Wells Fargo, there is nothing inherently sinister about this strategy. Banks love cross-selling to their customers because it’s so much cheaper than acquiring new ones – the advertising and marketing needed to attract new customers can be 10 times greater than to retain current customers, according to an estimate.
The more products a customer has, the more their finances become tangled and the less likely they are to leave. It’s a strategy worth trying, as millennials are particularly wary of banks.
In interviews with 10,000 millennials– an age group broadly defined as people born in 1982 and later – a consultancy firm owned by Viacom found that most young people don’t believe their bank offers them anything special and a third are open to change. Over 70% would be more excited about a new financial product from Google, Amazon or Paypal than a traditional bank.
SoFi has therefore tried to orient itself according to millennial priorities, Cagney said. The company emphasizes speed, which Cagney was surprised to find above all for young people. “Millennials have a completely irrational idea of the value of their time,” he says, adding that they’ll avoid spending 20 minutes figuring out how to consolidate their student loans, even if it means saving thousands of dollars a year.
The approach seems to work. San Francisco-based SoFi issued $8 billion in loans in 2016, up from $5.2 billion in 2015, and received $1.5 billion in funding from investors. SoFi now says it has 230,000 customers, many of whom have used the company to refinance student loans. SoFi also provides student loan repayment plans as a workplace benefit.
SoFi launched its career strategy program in 2013, and more than 2,000 of its borrowers have taken advantage of it. The vast majority are young professionals who are already employed and want to improve their jobs or careers, although more than 100 were out of work when they used the service, the lender said. And it’s adding more coaches as SoFi grows.
SoFi does not act as a job site or connect job seekers with job postings, but does offer resources and advice. For now, the model makes sense, given the homogeneous and highly employable demographics of SoFi. It’s unclear what might happen if its business model expands to support a more diverse array of borrowers.
The program is led by Mark Gasche, who joined SoFi last year after a long career in higher education career services, including at Northwestern and the University of Chicago. His primary concern is to ensure Career Services can forge closer ties with the SoFi borrower. “We can help, and the loans will come,” he said.
For her part, Mathews, the strategist who moved from Dallas to Seattle, said she understood SoFi’s motivation, “but that’s not how the relationship with the coach felt,” she said. declared. “It didn’t feel corporate at all. I think I could have ended up in the same place [without SoFi] but their advice made a very dramatic process a little less dramatic.
“The most important thing was having a real person to talk to,” she added. Mathews has never met his trainer in person, but they plan to meet over coffee soon.