« U.S. Bank Integrates Self-Service Collection Module into Online Banking | Main | Finovate 2009 Demoing Companies Revealed »

Lending Club Offers New Lenders $50 to Get Started on its Peer-to-Peer Platform

By Jim Bruene on August 4, 2009 12:12 PM | Comments

image This morning Lending Club emailed its existing lenders encouraging them to refer friends to become lenders on the peer-to-peer lending platform. The peer-to-peer lending pioneer says that is has added 11,000 new lenders this year, an impressive 1,600 monthly pace. Lending Club now has 20,000 registered lenders (note 1).

The pitch: Instead of paying referral fees, the $50 incentive is earmarked entirely for the new lender/investor. Basically they get a free trial of the service. The offer is available for only two weeks, otherwise Lending Club risks being flooded with new accounts that just want to get a hold of the $50.

Analysis: Typically, companies pay a fee to user who made a successful referral. Sometimes with an equal incentive to the new customer. While that may result in a slew of new accounts, converting them to long-term profitable participants can be difficult.

I believe the more-sophisticated investor/lender attracted to Lending Club will be MORE likely to make good referrals if they don't personally benefit from the referral (note 2). No matter how much users like Lending Club, if they are being paid to spam friends, it just doesn't feel right. While Lending Club may get fewer referrals this way, the ones they do get should convert better in the long run.

Lending Club is making it incredibly easy to spread the word. Existing customers can use an automated wizard to send messages to friends (see second screenshot) or prospects may simply enter the referring customer's member name to qualify for the $50. And there appears to be no fine print on the offer other than the Aug. 15 expiration date.

Lending Club email (sent 4 Aug 2009 at 6 AM Pacific)
Subject: Give your friends $50 to try Lending Club

image

Landing page
Includes tools for automating the process of reaching out to friends

image

Notes:
1. So far this year, $21 million in loans have been originated at Lending Club, approximately $1,000 per lender.
2. Lending Club does pay $25 to the referral source for new APPROVED borrowers. That's an affiliate marketing strategy and makes economic sense because it's only paid for approved loans. 

Comments

Most Recent Posts:

TrackBack

TrackBack URL for this entry:
http://www.netbanker.com/cgi-bin/mt/mt-t.cgi/2165

Upcoming Events

Recent Research

  • NEW! Mobile Account Opening (MAO): Port online account opening to smartphones to reach the sizable mobile-only segment - Find out more
  • NEW! Mobile Banking Security: The new channel is a boon for improving security, both real and perceived - Find out more
  • NEW! Money 3.0: Payments Go Mobile Apple, Bitcoin, & mobile apps are changing the game. What’s a bank to do? - Find out more
  • NEW! Digital Banking Forecast: Current, future and historical usage: 1994 to 2023 - Find out more

 

   

RSS Subscribe via RSS
RSS Subscribe to Comments



Email:


@NetBanker Twitter Feed



See all @NetBanker tweets