I’ve spent the last six months chewing on a hiring problem that I’ve watched companies get wrong again and again: how to hire a VP of Partnerships.

After a decade in consumer lending partnerships—first scaling the partnerships team at Credit Karma from 3 to 25 people, then running acquisitions at Caribou, and now advising clients across millions in monthly affiliate spend at New Market Growth—I’ve developed a framework that I wish someone had handed me years ago.

But before we get to the seven traits, we need to dismantle a fundamental misconception.

The Big Lie About This Role

The VP of Partnerships job description reads like an external sales role. Go call on publishers. Negotiate deals. Turn on relationships. Shake hands. Move on.

That’s maybe 10-20% of the job.

Here’s the uncomfortable truth: the best VPs of Partnerships spend most of their time internally—talking to credit, product, engineering, legal, compliance, analytics. The hard work isn’t closing the partner. It’s aligning your entire organization to deliver on what the partnership requires.

Think about it. When a partnership goes live, it touches the product. It touches the marketing funnel. It touches credit policy. It touches compliance. It touches analytics and reporting. One person sits at the center of all of that, owning the outcome but controlling none of the levers.

This is the paradox of the role: you control nothing, but you influence everything.

A performance marketer running the Facebook or Google channel can buy media, control the message, control the audience, control frequency. A VP of Partnerships can do none of that. You can’t control what your external partners do. You can influence them, but you can’t control them. And internally? Every team you depend on has their own priorities, their own constraints, their own definition of what matters.

So if I had to distill this role down to one capability, it would be this: the ability to influence without authority.

That’s the single question you’re trying to answer in every interview. Can this person influence across multiple vectors—externally with partners, internally across every function they’ll touch?

With that frame in mind, here are the seven traits that separate great VP of Partnerships hires from expensive mistakes.

Trait 1: Deep Empathy for the Publishing Side

This one is most obvious when it’s missing. You’ll see a candidate who talks about “strong-arming” results, who leads with “do this or else,” or who expects compliance simply because they’re the client spending money.

That approach might work in some business relationships. In affiliate partnerships, it won’t get you anywhere.

The reality: publishers run dozens of offers—sometimes 50 to 100. You’re coming in to be offer number 101. To everyone except the handful of Fortune 500 giants in the category, you need them more than they need you.

The mindset shift I encourage is simple but profound: behave as if you work for the affiliate publisher.

This isn’t servility. It’s strategic clarity. You earn your seat at the table by bringing great customer value, a marketing funnel that converts, offers that monetize well for the publisher or serve an incremental audience they can’t reach otherwise. Everything you do needs to be a win for them first.

The interview question: Tell me about a time when an affiliate publisher wasn’t getting you what you needed. What was the situation and how did you handle it?

You’re not listening for the example itself. You’re listening for tone, word choice, how they frame the power dynamic. Do they come with a service mindset? Are they offering ideas that work for both sides, but selling them in the context of what makes it good for the publisher? That’s what you’re looking for.

Trait 2: A Positive-Sum Thinker

A candidate with this trait believes—genuinely—that both sides should come away better from every deal. It’s not one side extracting value from another.

The antithesis looks like this: a VP of Partnerships whose first strategic idea is to squeeze every affiliate publisher on payouts. “Let’s go negotiate down our CPAs.”

If that’s the agenda, you don’t have a positive-sum thinker. You have someone who’s going to make the publisher worse off to make the lender better off. The pie doesn’t grow. You’re just transferring value.

In consumer lending, there are actually three constituents to consider: the consumer, the affiliate publisher, and the lender. The best VPs of Partnerships apply all three lenses to every strategic initiative. Is it good for the lender’s economics? Is it good for the consumer (because the publisher will absolutely be evaluating this—that’s their customer)? Is it good for the publisher’s economics?

The interview question: Walk me through a deal or initiative you led that you were really proud of, and why.

Listen for whether the outcome was a clear win-win. Was there creativity in how it came together? Extra credit if they mention the third constituent—the consumer—without being prompted.

Trait 3: Deep Awareness of the Credit-Marketing Feedback Loop

This might be my favorite trait because it separates people who’ve done this job from people who’ve observed this job.

Here’s the concept: every marketing decision is a credit decision.

When you tweak an offer, change how you explain it, adjust pricing, modify how you communicate to consumers—you don’t just change the number of people who respond. You change the types of people who respond. The consumer selection shifts.

Now flip it. Credit tightens the buy-box. The VP of Partnerships didn’t make that decision, but they need to understand its ramifications. Fewer consumers will be eligible for the offer. That reduces the approval rate and may encourage the publisher to reduce impression volume or reduce offer ranking, because now the marketing funnel looks less efficient from their perspective. Credit decisions are marketing decisions, too.

You need a leader who spots these connection points instinctively. It helps them avoid strategic mistakes, and it helps them spot opportunities others miss.

The interview question: How do credit and underwriting decisions impact your work? Walk me through an example when marketing and credit worked in close alignment.

If they struggle, try the inverse: Walk me through an example where marketing and credit weren’t well aligned. If you could wave a magic wand, how should that interaction have gone?

You’re looking for someone who not only understands the feedback loop but has experience negotiating with credit teams to get good outcomes in the affiliate channel.

Trait 4: Able to Explain Complex Concepts Simply and Clearly

Under the umbrella of influencing without authority, this person needs to land complex topics with diverse audiences—quickly and clearly. When that doesn’t happen, they can’t influence because no one knows what they want (or why they want it)!

I’m thinking specifically about verbal communication here.

The interview question: Tell me about a time you had to communicate something complex to a CEO.

Some candidates assume the CEO needs every detail and nuance. It’s the opposite. The CEO needs what matters, the context, and a couple of headlines or stories that let them wrap their arms around the theme and understand why it matters to both the partner and the business.

Look for stories, metaphors, analogies. Did they eliminate the jargon? Every industry has its own shorthand, but in partnerships you can never assume the other side shares your vocabulary. Clear, concise, non-technical language—that’s the bar.

Trait 5: Telling Stories With Data (in PowerPoint)

This one seems almost too obvious to mention. But it’s on the list because I’ve made senior hires who weren’t great at this, and it turned into me into their personal deck writing assistant. (Never again. Never again).

In a role where you influence everything but control nothing, you cannot get away with messy decks. Other functions can survive this because they have direct levers—they can change things in the business that drive outcomes. This role doesn’t have that luxury. This role needs other people to do things. And that means convincing people, which means communication quality is mission critical.

Here’s the compounding problem: if you hire a VP of Partnerships who isn’t good at this, their team won’t be good at it either. They won’t know what to look for when hiring. They won’t be able to coach. You’ll end up with an entire function that’s ineffective at communicating in the medium that matters most.

There’s no interview question for this one. You have to test it directly.

Give them an Excel sheet with real (anonymized) data. Keep it manageable—10 to 20 observations, five to eight columns. Something you could stare at on one laptop screen. Ask them to study the data, identify trends, then prepare a short deck answering two or three business questions.

What you’re looking for:

• A story, not a data dump. I’ve seen candidates take an eight-column dataset and show up with 32 charts—just re-visualizing the table with no narrative, no point of view.

• Clear writing. Sharp. No jargon.

• Charts that make a point. They’re extracting the insight, not just displaying the data.

• Defensibility. Pressure test them. Make sure nothing is misleading. They should be able to defend what’s on the page.

A four-to-eight slide deck won’t produce a bulletproof argument, and that’s not the point. The point is clear storylines and thoughtful visualization in service of a point of view.

I typically use this in the late stage of the interview process—after they’ve met key stakeholders, when they’re a finalist. Give them a weekend, design it so it takes four hours or less, and watch what they produce. If you’d cringe forwarding these slides to an existing partner, you’re done. They’re not the right fit.

Trait 6: A Marathon Mentality

Can they lose for a long time without it impacting their confidence?

If you’ve been in this business long enough, you know: the hit rate can be brutal. You pitch lots of ideas to lots of people. The minority get accepted. And I mean hit rate all the way through—not just an initial head nod, but the initiative is accepted, fleshed out, delivered, and it worked.

That entire process? Sometimes you’re talking single-digit percentages.

But here’s what great VPs of Partnerships understand: one huge win is all it takes.

One key initiative, one new partnership can single-handedly change the trajectory of a business—especially at earlier stages. The power law applies. One winner can make a lot of other losses irrelevant.

You’re looking for someone who’s mentally tough, who doesn’t lose momentum when things don’t go their way, who stays positive and optimistic even through extended dry spells. You want evidence they’ve run marathons before—that they’re willing to endure pain for the right outcome without it wearing down their morale or how they treat others.

The interview question: Tell me about an extended period in your career where it seemed like nothing you were doing was working. How did you handle it? (Option 2: How would you coach someone on your team who wants immediate results after launching new partnerships?)

Listen for awareness that the hit rate can be very low, but one win can change everything. Listen for someone who enjoys the process—the game, the craft—even when outcomes aren’t cooperating.

Trait 7: An Artful Collector of Information

Here’s the final trait, and it’s subtle: can this person get someone else talking and talking and talking without ever asking a direct question or making them feel interrogated?

This matters because you need your VP of Partnerships to learn about partner needs, motivations, and constraints—from external publishers and internal stakeholders alike—without triggering defensiveness.

I’d point you to Chris Voss’s book Never Split the Difference for the tactical playbook here. The core tools are mirrors and labels.

Mirrors: playing back the last few words of what someone says with upward inflection, sounding curious. Partner: “I’m not happy with this contract.” VP of Partnerships: “Not happy with this contract?”

Labels: naming what you’re observing. Someone seems frustrated, so you say, “It sounds like you’re frustrated about XYZ thing” and let them correct you or agree and continue talking about that thing.

These techniques get people talking without you ever asking a question or making anyone feel defensive. I’ve been on the other side of the table with people who are masterful at this, and it’s remarkable how much I’ll share—information I wouldn’t have offered otherwise—because they’re so good at mirroring, labeling, and listening.

There’s no single interview question for this. What you do instead is give them space to learn about the role and company. Frame it up: “This is your time now. Is there anything you’d like to learn about the company, about me, about the role?”

The best candidates will already have demonstrated this trait throughout the interview—in how they’ve handled all your questions. But in this dedicated time, watch for:

• Observations that land like questions: “Based on something you said earlier, it seems like you’re concerned about the long-term health of the LendingTree relationship...” (upward inflection at the end, inviting you to elaborate)

• Evidence they were paying attention

• A conversational, generative vibe

Red flags: Direct, pointed questions that make you feel defensive or uncomfortable. If they’re doing that to you in an interview, they’ll do it to a partner in a high-stakes situation—and turn what could have been an exploratory conversation into a tense interrogation.

If you ever feel interrogated, if you ever feel pushed to share more than you’re comfortable with, that’s a sign this person may not be right for the role.

On the other side of the coin, a candidate that doesn’t dig, dig, dig for more information isn’t going to work either. You need to feel like you shared alot without feeling like you were on the witness stand.

Wrap Up

The VP of Partnerships role is not what it looks like on paper.

It looks external, but it’s actually highly internal. It looks like sales, but it’s actually influence. It looks like closing deals, but it’s actually aligning organizations.

You want someone who can influence without authority—externally with publishers who have dozens of other options, and internally with teams who have their own priorities.

These seven traits give you a lens into how well a candidate can do that:

1. Deep empathy for the publishing side

2. Positive-sum thinker

3. Credit-marketing feedback loop guru

4. Explains complex concepts simply & clearly

5. Tells great stories with data (in Powerpoint)

6. Marathon mentality

7. Artful collector of information

Get this hire right, and you’ve got someone who can move mountains without owning any of the excavators.

Get it wrong, and you’ll spend the next year wondering why your partnerships aren’t scaling despite all the deals you’ve signed.

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Some of you know I play poker for fun, and that I used to play quite seriously in my early 20s.

After 1000s of hours at the poker table, I'm well-attuned to how people react to adversity and loss in games with high risk and uncertainty.

Over the last two years, working with 12 different consumer lenders at my marketing agency New Market Growth, I was reminded of a player profile I LOVE to play against.

Scared money.

In poker circles, once you tell a buddy that so-and-so is "scared money", they know exactly how to adjust. These players are among the most predictable and profitable opponents.

The author at the 2011 WSOPC in Atlantic City

The Psychology Of Scared Money

People can become scared money for several reasons, but the most common is recent losses.

Picture Bob, who's hit a brutal run of cards. His pocket aces lose to pocket kings. When the flush completes, his opponent always has it. When he raises pocket nines, he gets called in 3 places and the flop comes down AKQ.

Anyone who's played poker semi-seriously knows these runs can last weeks or months.

What Bob SHOULD do is continue to get his money in as a favorite and keep his opponents on defense through aggressive, well-calculated play.

But what Bob actually does - like 95% of players in his situation - is completely pivot his strategy.

He's no longer at the table to win. He's at the table to not lose.

The pain of losing has become too severe, and his emotions are clouding his judgment.

The Doom Loop

Bob used to look for situations where he had a mathematical edge. Now he's looking for near-guarantees before he wagers.

He folds pocket jacks to pressure. When the flush comes in, he always folds. When he raises kings and an Ace flops, he assumes his opponent has it 100% of the time.

His opponents notice. They start bluffing him more. When Bob finally bets with a good hand, everyone folds because his betting frequency is so low.

Bob's emotional desire to REDUCE risk had a perverse effect - it actually INCREASED his risk.

He went from being a mathematical favorite (who was getting unlucky in the short-term) to a player who's easily exploitable. He doesn't have big losses anymore, but he rarely wins either. The blinds and antes slowly erode his stack.

He feels safer - no big losses with marginal hands - but in reality he’s locking in a slow but steady loss in the game.

The Scared Money Problem In Lending

Some lenders experience higher than expected losses from accounts booked through the affiliate channel.

The classic response?

Increase APRs and add friction to application flows to gather more information from applicants. Tighten policy and reduce the approval rate.

At a glance, this seems reasonable. Lenders have margins to protect.

But remember the context: affiliate channels are probably the most competitive channel. Your offer sits side by side with dozens of competitors.

That APR increase? It just made your offer less compelling. Fewer people click now, and the ones who do are riskier and adversely selected.

Those extra questions? More people abandon the form (your competitors aren't asking for those details), and the ones who stay are riskier with fewer alternatives.

But it gets worse.

Publishers will likely lower your ad position in their marketplace. That’s because the higher APR reduced your click-through rate, and the extra friction reduced your application and approval rates.

Now we have three sources of lower volume and adverse selection.

The next time your risk team reviews performance, losses and DQs will likely come in higher than expectations again because they didn't price in these compounding 2nd order effects.

So they raise APRs again and add more criteria to the underwriting process.

And the doom loop spins on.

Offense Is The Only Option

If there's one thing I've repeated to clients throughout 2025, it's this: if you're going to compete for traffic in affiliate channels, you need to be on offense.

Scared money can't win in affiliate channels, just like Bob can't win at poker by trying to flop full houses every hand.

The competitive dynamic in affiliate channels is ruthless. Without a competitive product, price, and application funnel, the deck is stacked against you. Consumers gravitate to brands "on offense."

How To Reset Your Strategy

Pivoting from defense to offense isn't easy, but it's imperative to booking high-quality accounts in affiliate channels.

The good news? You don't have to turn it all around overnight.

Here's how to start:

Run a small test. Launch a limited test with a new product, price point, or application experience. Keep the volume small so you can learn without risking your entire book. You’re looking for signals that demonstrate the more competitive (“on offense”) product and experience produce positive select, driving lower than expected losses.

Partner with your affiliates. Ask them to cap your volume while you refine your processes. Good partners understand that your long-term success is their success.

Benchmark your competitors. Pull 5-10 competitor offers from major comparison sites. Document their APRs, application steps, and approval messaging. Identify where you're adding friction (that they're not).

Calculate the real cost of defense. Run the numbers on what "playing it safe" is actually costing you in volume and customer quality. Often, the "risky" path is actually less risky than slowly bleeding out.

Take a strategic pause if needed. If organizational emotions are running high, it's okay to sit out the channel temporarily. Come back when you can approach the strategy objectively. This can be better than running a high priced, high friction offer that could be a magnet for the riskiest customers out there.

The key is making a deliberate choice rather than letting fear drive the bus.

In both poker and affiliate marketing, there are second-order consequences to pivoting from offense to defense. The scared money approach feels safer in the moment, but it's the surest path to getting ground down over time, and is usually misaligned with long-term goals.

The players who win (in the long run) are the ones who stay aggressive, stay calculated, and trust their edge even when the cards aren't falling their way.

If you’d like to chat with external experts who have seen this pattern before and have helped brands turn it around contact me at carlos@newmarketgrowth.com.

Back in April, Dennis Fish at the ICS Corporation invited me for a tour of his direct mail production facility just outside of Philadelphia.

Last week, I finally took him up on it.

If you’ve ever wondered how millions of loan offers end up in mailboxes every week, this is where the magic happens.

Let’s set the scene.

ICS runs a 450,000 square foot operation. To me, it looked 3X larger than my local Costco, filled not with shoppers but with giant rolls of paper, conveyor belts, and machines that rarely sleep.

A less than perfect photo of the ICS production facility outside of Philadelphia. Blame my Android phone.

They’re currently running 24 hours a day, six days a week, and sometimes seven when demand spikes. Four million pieces of mail move through the building every single day.

The first thing that hits you is the scale. (And then after that was the decibel level. Near the largest machines, we had to shout to hear each other!)

You walk past five-foot-tall, 900-pound rolls of paper—each one holding up to 85,000 loan letters. These rolls feed into high-speed printers that churn out 14,000 pieces an hour. The paper moves from printing to cutting to folding to envelope stuffing, all in one continuous ballet of machines and people. There’s a relentless rhythm to it. Loud, fast, and precise.

Me standing next to 900 lbs. of direct mail pieces.

But here’s what surprised me: for all the automation, the human element is everywhere.

At the end of every production line, someone is checking—by eye and by hand—that every name, address, and barcode lines up perfectly in the envelope window. If it doesn’t, USPS won’t mail it. I counted at least 50 to 100 people on the floor, each one part of a choreography that keeps the mail moving and the errors out.

ICS doesn’t just print letters and stuff envelopes.

They also pre-sort mail by destination, load it onto their own trucks, and drive it all the way to cities like Houston, bypassing local post offices entirely (they do that do get better postage rates and speed up the timeline from printer to in-home).

So it’s a logistics operation as much as a print shop.

The capital investment is real. Some of the machines cost over $2 million each, and I learned some vendors provide financing (3rd party financing is an option, too).

Dennis and team are just as focused on their customers’ experience as they are with printing perfect letters and envelopes.

Before the tour, ICS asked me for a few personal details—where I went to school, where I live, hobbies, things like that. I assumed it was for a “get to know each other” game we’d do during lunch.

They had other plans.

When I arrived, I found custom welcome mats with my name, the Columbia logo, my Zodiac signs, and a few others, right there in the hallway. It’s a small thing, but it tells you a lot about their attention to detail.

A custom floor mat they printed for me, placed in the hallway between their corporate offices and the production facility.

My alma matter

They nailed my Zodiac sign, too

Last year, consumer lenders sent ~6 billion pieces of mail. About 1.2 billion of those pieces come from ICS’ facility in Philadelphia.

Closing Thoughts

One of the benefits of walking the floor was that I got to see who was sending direct mail letters.

For confidentially reasons, I can’t share names of brands or offers or anything like that.

But what did stand out was that there was a good mix of established, household name lenders, and some fintechs I had never heard of before.

It seemed to me like there are consumer lenders out there quietly building scale businesses totally under the radar. They might not be on Google, Facebook, or Credit Karma.

But they are in the mail.

Because they can dial in the audience, control the creative and messaging 100%, and scale without permission from anyone else once they find something that works.

Direct mail has been a steady or perhaps slowly declining marketing channel in consumer lending.

With how competitive the affiliate, paid social, and paid search channels are getting these days, I wouldn’t be surprised if the Direct Mail category started growing again.

Layer in what’s possible here with AI, and a full-blown renaissance isn’t out of the question.

To Learn More

To learn more about direct mail, check out the following resources:

• Industry overview (from The Free Toaster Newsletter)

• Direct Mail Deep Dive (from The Free Toaster Podcast)

And if you want to chat with the ICS team, you can contact Dennis Fish at dfish@ics-corporation.com.

Full Disclosure: I am not affiliated with ICS and they did not pay me to write this. But, before they knew I was going to write this piece, they did butter me up with 3 ICS golf balls, an IM Group hat, an ICS golf sweater, and some excellent mints. A little swag never hurts.

Coming Soon: Direct Mail Meetup

Want to meet other folks in the consumer lending industry who are interested in building world class direct mail programs?

In Q1, Nick and I plan to host a dinner to create a networking opportunity for folks in the space (including folks from the lending & DM production side).

To receive more information about that meetup (location: likely NYC), please reply to this email with “DM meetup” and we’ll keep you in the loop.

About Us

Welcome to The Free Toaster! The newsletter for marketing pros at fintechs, banks, and lenders.

Inspired by the free toasters banks used to give to each new customer, we’re here to help you acquire more customers at scale. We deliver fresh news, data, and insights to help you acquire more customers, minus the breadcrumbs.

Want to follow the authors on social media?

Carlos Caro is the founder of NMG, an agency that helps lenders build affiliate programs.

Nick Madrid is the co-founder of Uncovered Media and a co-founder of Ghostmode (a media company that builds Newsletters, Podcasts, and communities in high-value B2B niches).

There's a moment that happens in every new VP of Partnerships role, usually around day three.

You're sitting in your seventh onboarding meeting. Someone is walking you through a Tableau dashboard that hasn't been overhauled since Q2 2024. The sales team just promised a partner something that product says is "technically impossible." And you realize: Oh. This is why they hired me.

Not because everything was running smoothly and they needed someone to maintain the excellence. Because something wasn’t quite working, and they needed someone who knew how to take it to the next level.

Here's the thing nobody tells you: This is actually a great scenario for you (professionally)!

Your first 30 days aren't about pretending everything is fine. They're about earning the credibility to have a strong voice at the executive level.

And that's genuinely exciting if you're the kind of person who gets energized by seeing the direct impact of your work on a company’s results.

Here’s how I think about those crucial first weeks.

The partnership leader’s growth flywheel starts spinning once clarity replaces chaos.

Hopping On Planes

Here's what makes a great partnership leader different from someone who's just filling a seat: You're going to see things that everyone else has stopped noticing.

Step 1? Go visit every major partner in person within the first 4 weeks.

You're going to sit across from your counterpart at LendingTree or NerdWallet, and they're going to tell you things that nobody internally knows. Maybe your API has been timing out and costing them millions. Maybe your predecessor promised features that never shipped. Maybe there's a competitor integration they love that you could learn from.

These conversations aren't uncomfortable truths to dread – they're opportunities to uncover that nobody else has. Every problem a partner shares is a problem you now have permission to solve.

You're not walking into these meetings to defend the past. You're there to build the future. And partners can feel that difference. They'll open up to you in ways they never would to someone who's been around long enough to be defensive about the status quo.

Building Your Internal Alliance

The same principle applies internally.

Step 2? Go have coffee with everyone who works on partnerships. That includes account managers, product managers, engineers, credit analysts.

The PM who's been screaming into the void about impossible promises? They just found an ally. Your analytics person who knows the attribution is broken but couldn't get anyone to react? You’re there to take notes. That sales rep who's frustrated that product never seems to deliver? You're going to be the bridge.

What looks like organizational dysfunction from the outside is actually a room full of smart people who've been waiting for someone to connect the dots. They know what's broken. They've been living with it. They just needed someone with the authority and credibility to communicate it clearly and with conviction to the C-level, so that the right actions get prioritized.

Every one of those conversations is someone you're adding to your alliance. Document everything, yes – but also recognize that you're building relationships with the people who are going to help you succeed.

External Benchmarking As A Foundation

Let's talk about benchmarking, because this is where things get concrete and real.

Some lending companies are operating on vibes. "We're competitive." "We're in the mix." "We're doing okay."

You're about to replace that fog with clarity. Your market share in every marketplace. Your click-through rates versus competitors. Your approval rates, funding rates, every step of the funnel side by side against the competition.

What you discover might be humbling.

Maybe your CTR is half the category average. Maybe your approval rate is trailing. But here's the flip side: Now you know exactly what to fix and how much it matters.

A 2% CTR when the category average is 5% isn't a condemnation – it's a roadmap. Fix your positioning (or pricing) and you could double your volume. That's not a problem; that's an opportunity with a dollar sign on it that you can use to prioritize resources.

The benchmarking exercise gives you something rare in partnerships: clarity about what winning actually looks like. You'll know exactly where you're punching above your weight and where you're leaving money on the table.

That's important because the organization at large is unlikely to just “take your word” for it. Showing hard data on what success looks like makes a big difference.

Your Most Important Relationship

The relationship-building with credit and pricing teams is one of those pieces of advice that sounds like corporate politics.

But the reality is that these teams have more control over your success than you do.

Credit teams are optimizing for risk, maybe yield, and rarely top-line volumes. And often they don't have visibility into how their work impacts the top of the funnel and overall acquisition volume.

You're about to give them that visibility.

Show them how pricing, eligibility, and credit model alignment impacts volumes from the various marketplaces.

The pricing team don't always appreciate that being 50 basis points higher than your competitor means you disappear from the first page of results. You can show them that.

These aren't battles to win. They're relationships to build. And when you build them early – before you need a favor, before there's a crisis – you're creating a foundation for the kind of cross-functional collaboration that fuels great partnership programs.

So, About Those Volume Goals You Got On Day 1

The volume goals you inherited might have been made up by someone who Googled "aggressive growth rate" and added 40% to last year's number. That's okay.

You're not going to pretend these fantasy numbers are achievable, but you're also not going to walk in on day one and tell everyone they're wrong. Instead, you're going to build something better: a bottom-up model grounded in actual TAM, realistic market share assumptions, and real funnel metrics.

This is your chance to reset expectations with credibility.

Around day 30, when you've done the benchmarking and built the relationships and gathered the data, you can have a very different conversation. One based on numbers that everyone can rally around because they’re rooted in reality and the laws of physics of the marketplaces you’re competing in.

This isn't lowering the bar.

It's replacing fictional targets with achievable ones, then systematically beating them. That's how you build momentum.

You’ll Be A Student Of Direct Marketing, Too

You did your homework and got smart about the dynamics of the marketplaces you’ll be competing in.

Now get grounded in what your CFO is looking at - how your direct marketing channels are performing.

When someone asks – "Why are we paying LendingTree $40 per lead when we can get leads from Facebook for $20?" – it isn’t a trap. It's an opportunity to educate.

You're going to learn these channels cold. Not to copy them, but to articulate why partnerships are different and valuable. Facebook gives you a look at different audiences with different levels of intent. You’ll want to compare and contrast all the details, lead quality, CPC, CPL, CAC, and LTV across channels comfortably in an executive setting.

This requires more homework and probably a good relationship with a Director Of Performance marketing who can show you the ropes of their operation.

When you can speak the language of CAC and LTV and cohort analysis fluently, you're not just defending partnerships – you're helping the whole company understand how channels work together. That's the kind of strategic thinking that gets you invited to bigger conversations, and sets you up to have a bigger impact in your role.

What Success Looks Like

So what does a great first 30 days actually deliver?

You haven't closed massive new partnerships or doubled your volume. But you've done something more valuable: You've built a foundation for sustainable success.

You know exactly where you're winning and losing. You've identified the highest-leverage fixes. You've built relationships with everyone who matters. You've established credibility by replacing comforting fictions with uncomfortable facts. You've created an alliance of people who are excited to help you succeed.

And here's the beautiful part: All those problems you've documented?

They're not indictments. They're your roadmap.

Every broken process, every misaligned incentive, every missed opportunity – that's why you're here. That's why they hired someone with your experience and skills.

Think about the alternative for a second.

What if you showed up and started onboarding new partners in a silo?

The most likely outcome is that you would have overpromised to the partner, and created a bunch of commitments internally that the team wasn’t ready to support. In that world, you just created a bigger mess that you’ll eventually need to clean up.

Skip all of that.

Do your homework first, set the foundations for the relationships you need, and then build on a steady foundation. It feels “slower”, but it actually gets you the growth you need WAY faster.

Support The Free Toaster

Need an affiliate marketing platform/network? Chat with Fintel Connect

Need help hiring key roles? Email Connie Buehler and mention TOASTER

Need to improve application page conversions? Chat with Spinwheel

Need to accelerate your affiliate marketing? Chat with New Market Growth

Need to win on other growth channels? Chat with FIAT Growth

None of the above? Share our Newsletter in your favorite Slack channel

About Us

Welcome to The Free Toaster! The newsletter for marketing pros at fintechs, banks, and lenders. 

Inspired by the free toasters banks used to give to each new customer, we’re here to help you acquire more customers at scale. We deliver fresh news, data, and insights to help you acquire more customers, minus the breadcrumbs.

Want to follow the authors on social media?

Carlos Caro is the founder of NMG, an agency that helps lenders build affiliate programs.

Nick Madrid is the co-founder of Ghostmode, a media company that builds Newsletters, Podcasts, and communities in high-value B2B niches.

I’d like to tell you about a conversation I had last week that reframed how I think about Reddit in the context of an overall distribution strategy.

Michael Hewitt, a performance marketer and founder of MHH Ventures, walked me through how his fintech clients are building acquisition engines on Reddit. Not through affiliate links or paid placements, but through something that sounds too simple: actually helping people.

Here's the part that made me sit up: it's working for fintech brands he advises. And the rise of LLMs is about to make it exponentially more important.

The Problem with Calling This Affiliate Marketing

Let's be clear about what this isn't. You're not negotiating rev shares. You're not signing insertion orders. You can't turn on a switch and watch conversions flow in.

In fact, if you approach Reddit like a traditional affiliate channel, you'll probably get banned.

What's actually happening is more interesting. Brands are building credibility in communities where their ideal customers already congregate. They're answering questions. Providing education. Being genuinely useful.

The attribution is messy. The conversion paths are indirect. CFOs will hate trying to put this in a spreadsheet.

But the brands doing this are seeing branded search queries double or triple. Direct traffic climbing steadily. Conversion rates improving across their paid channels.

It's the kind of thing that makes traditional performance marketers uncomfortable because it doesn't fit neatly into their dashboards (which is probably why it still works).

LLMs Lean on Reddit For Content

Here's where this gets interesting: Perplexity AI sources 49% of its references from Reddit.

Read that again. When someone asks an AI assistant about managing debt or choosing a credit card, roughly half the time the answer is being pulled from Reddit conversations.

Source: Exploding Topics

ChatGPT was recently at 15%.

This creates a compounding effect that traditional marketing channels can't match. Your helpful comment on a subreddit doesn't just reach the few hundred people browsing that thread. It becomes training data for AI systems that millions of people query daily.

We're watching the early stages of a fundamental shift in how information discovery works. The brands figuring this out now are building advantages in how AI systems understand and recommend solutions in their categories.

Google is already all-in on this. Reddit results regularly rank first, second, or third for most queries. The algorithm has clearly decided that Reddit conversations contain signal that polished marketing content doesn't.

Note to our readers: New data this week showed ChatGPT’s references to Reddit dropped from almost 10 percent in August to just 2 percent in early October. The decline sent Reddit’s stock down more than 10 percent in a single day, raising questions about how dependent the platform has become on AI visibility. The stock has since held relatively steady.

This story is still developing in other news outlets like this one (The Tradeable).

We wrote this article before the ChatGPT news was released, and it is unclear to us whether that story indicates a market shift or just noise that we’ll forget about in 3 months.

With that said, we’ve keep our story unchanged as we believe the high-level messages and ideas are still relevant.

How To Build A Brand (and Revenue) on Reddit

The playbook has three layers, and they're all more labor-intensive than traditional affiliate partnerships:

First, build your own subreddit. Not as a promotional channel—as a genuine resource. Your best people (ideally founders or senior team members) need to staff it. The goal is to become genuinely useful first, a brand touchpoint second.

You need a comprehensive wiki. Sidebar resources. Active moderation that encourages open discussion, even when people mention competitors.

Second, build credibility at the user level. This is the guerrilla phase. Your founder or product experts participate authentically in relevant subreddits. They answer questions in r/personalfinance, r/debt, r/investing—wherever your ideal customers are seeking help.

The key is focusing on education, not promotion. Answer thoroughly. Demonstrate expertise. Only occasionally mention your product when genuinely relevant.

Over time, you build reputation. People recognize your username. You get permission to share resources. Community members seek out your perspective.

Third, optimize for search and AI discovery. Track which keywords your posts rank for. Focus on long-tail queries where you can realistically hit top three results. A detailed discussion with 50+ upvotes can easily rank #1 on Google for specific queries.

This creates a flywheel that feeds itself: Reddit posts rank → People discover your brand → Branded search increases → AI systems reference you more → The cycle amplifies.

The Uncomfortable Truth About ROI

Source: Backlinko

If you're getting 5-8% of traffic directly from Reddit, you're doing exceptionally well.

But that's not where the value shows up.

The real gains are in branded search volume climbing month-over-month. Direct traffic increases. Higher click-through rates on your paid search ads because prospects have seen you discussed positively. Improved conversion rates across channels because you're providing pre-conversion education.

One example: a branded search term that went from 500 monthly searches to 2,000 within a few months of consistent Reddit engagement.

That's not just traffic. That's mindshare coming from the trust built inside of Reddit.

But here's the uncomfortable part: you can't draw a clean attribution line from Reddit comment to conversion. Your performance marketing dashboards will undervalue this. Your media buyers will argue the budget should go to channels with clearer ROAS.

Why Most Brands (Who Are Great At Affiliate Marketing) Won't Do This

This requires a fundamentally different skillset than affiliate marketing. You're not optimizing commission structures. You're creating genuinely helpful content and building community trust.

The best person for this often isn't your affiliate manager at all. It's your founder, a senior product person, or someone who combines deep domain expertise with genuine empathy for customer problems.

You can't fake it. Reddit communities have highly calibrated BS detectors. Come in too promotional and you get downvoted or banned.

Most brands won't commit the resources. They'll try it for a month, see limited direct conversions, and move budget back to channels with cleaner attribution.

That’s precisely why it generates alpha for the brands that stick with it.

(Kinda like how helpful LinkedIn content from B2B founders builds brand and revenue for their businesses).

Tactical Note On Affiliate Links

Source: Lidl

Here’s our little PSA:

Direct affiliate links on Reddit remain controversial.

Rules vary by community.

Most successful operators focus on building brand presence and driving traffic to their owned subreddit rather than dropping affiliate links in comments.

Make sure you understand the specific rules of the community before dropping an affiliate link and messing up your reputation.

Who Should (and Shouldn’t) Invest In Reddit Communities

This works if your customers actively seek advice and community around the problem you solve. If you have team members with genuine expertise willing to engage authentically. If you're comfortable with longer attribution windows and indirect conversion paths.

It's particularly powerful for fintech, investing, personal finance, SaaS—any category where people research extensively before converting.

It doesn't work if you need immediate, directly attributable conversions to justify channel investment.

Closing Thoughts

The marketers figuring out Reddit now are building advantages that will compound as AI assistants grow. Every helpful comment written today could become reference material that LLMs may cite for years.

This isn't about gaming algorithms or finding arbitrage. It's about being genuinely useful where your customers already are.

That's always been the foundation of great marketing.

The question is whether your organization can execute strategies that don't fit neatly into traditional performance marketing dashboards.

Most can't or won’t.

The fact that’s its hard is actually good, assuming you want to take share from your competitors.

Reddit isn’t a shortcut or a new affiliate tactic.

It’s a return to something older and harder to fake: credibility. When your brand earns its place in real conversations, you raise your brand’s profile, which makes every other channel perform better.

And AI seems to be amplifying that.

Michael Hewitt (who sat this us and gave us the basis for the content in this article) runs MHH Ventures, a boutique consulting and growth partner that builds and scales affiliate & performance-marketing programs for leading consumer-finance platforms in investing, banking, and crypto.

Through hands-on affiliate management across 250+ partners, they’ve driven over $1 billion in deposits and $40 million+ in attributable revenue.

Support The Free Toaster

Need an affiliate marketing platform/network? Chat with Fintel Connect

Need help hiring key roles? Email Connie Buehler and mention TOASTER

Need to improve application page conversions? Chat with Spinwheel

Need to accelerate your affiliate marketing? Chat with New Market Growth

Need to win on other growth channels? Chat with FIAT Growth

None of the above? Share our Newsletter in your favorite Slack channel

About Us

Welcome to The Free Toaster! The newsletter for marketing pros at fintechs, banks, and lenders. 

Inspired by the free toasters banks used to give to each new customer, we’re here to help you acquire more customers at scale. We deliver fresh news, data, and insights to help you acquire more customers, minus the breadcrumbs.

Want to follow the authors on social media?

Carlos Caro is the founder of NMG, an agency that helps lenders build affiliate programs.

Nick Madrid is the co-founder of Ghostmode, a media company that builds Newsletters, Podcasts, and communities in high-value B2B niches.

So here’s the analogy I use: recruiting.

Hiring people is the cleanest way I know to make sense of selection bias in lending.

Let’s get into it.

1. Outbound vs. Inbound: How it shapes talent (and credit quality)

Think about hiring.

If you’ve ever run a search for a new team member, you know the drill. You can post a job online and wait for applicants (inbound), or you can have a recruiter go out and tap people who aren’t even looking (outbound).

Recruiters know something most hiring managers forget:

When you post a job, you get a flood of resumes from people who are actively on the market—maybe unemployed, maybe unhappy, maybe just desperate for a change.

Some are great. Many aren’t.

The mix is skewed.

But when you go outbound—headhunt people who are happily employed, not looking—you get a totally different pool.

If you compared 1,000 inbound applicants with 1,000 outbound targets, you’d see the difference in quality, experience, and fit.

Outbound is more work, but the yield is better.

Now, swap “candidate” for “borrower.”

Direct mail is outbound: you build a list, you target people who aren’t hunting for loans, you nudge them.

Website/app traffic is inbound: people are searching for credit, maybe because they need it now.

Here’s the twist:

The people who need money most—who are actively searching—are, on average, riskier than the people you find through outbound.

Same as recruiting. The best talent usually isn’t pounding the job boards.

That’s positive selection (outbound) and adverse selection (inbound) in action.

2. Price Signals: Low APRs (and high salaries) attract the best applicants

Let’s stay in the hiring analogy.

You’re looking for a Director of Affiliate Marketing. Top-tier. Maybe a dozen people in the country fit the bill.

You post two identical jobs:

• One at $100K

• One at $200K

Which one gets the best candidates?

It’s not even close.

The $100K posting might get desperate applicants, or people who don’t know their market value. But the best? They won’t bother.

They’ll see the comp and move on, or worse, wonder if you even know what you’re looking for.

Same with lending.

If you offer a personal loan at 19% APR and your competitor is at 9%, the best credit risks will flock to the cheaper offer.

Even small differences in price matter—12% vs. 14% can shift your applicant mix.

The best borrowers—like the best candidates—have options, and they exercise them.

3. Funnel Friction: How friction scares away the best, leaving you with the rest

Imagine two companies hiring for the same role. Here’s what their hiring processes look like:

Company A

• 6–8 weeks

• 20 interviews

• Homework, referrals, endless hoops

Company B

• 2 weeks

• A couple calls, one in-person day, decision

Sure, Company A gets more data on each candidate.

But there’s a catch:

The best people—the ones with options—won’t jump through all those hoops.

They’ll bail halfway, take another offer, or just ghost you.

Who sticks with the Company A (high friction) process?

People with fewer options.

Maybe they’re less qualified, maybe they’re desperate, maybe they just have the time.

Same thing in lending.

You add steps—income verification, document uploads, bank logins, whatever—to your funnel.

The best credit risks, the ones who could get a loan anywhere, bounce at the first sign of friction.

The folks who stick around? Often, they’re the ones who need the money most.

So yes, collect what you need for solid underwriting.

But if your process is heavier than your competitors’, you’re a magnet for risk—not filtering against it.

The Recap

Selection bias is real—and it’s shaped by channel, price, and process.

• Outbound (like direct mail) brings in stronger, lower-risk borrowers, just like recruiters find better talent by going after passive candidates.

• Price matters—a lot. If you’re not competitive, the best will pass you by.

• Funnel friction is a silent killer. Add too much, and you’re left with the riskiest applicants.

The next time you’re walking a “non credit person” through a positive or negative select dynamic, remember the recruiting analogy. It may help connect the dots.

Check out the Podcast version

E026 - Positive & Negative Select (Think Like A Recruiter)

Find the show here:

Spotify // Apple // Audible // Podbean // iHeart

About Us

Welcome to The Free Toaster! The newsletter for marketing pros at fintechs, banks, and lenders. 

Inspired by the free toasters banks used to give to each new customer, we’re here to help you acquire more customers at scale. We deliver fresh news, data, and insights to help you acquire more customers, minus the breadcrumbs.

Want to follow the authors on social media? Find Nick Madrid and Carlos Caro on LinkedIn.

Let’s get one thing out of the way:

Most of what you’ve heard about negotiating CPA (cost per acquisition) in affiliate lending is noise.

Every new entrant wants to channel their inner Chris Voss—anchoring, countering, “tactical empathy.”

The reality: If you treat CPA like a chess match, you’re playing the wrong game.

It’s not about outwitting your partner. It’s about understanding the math (from the publisher’s perspective).

So, here’s a few things you need to know about CPA negotiations. Nine lessons from the field, not the classroom.

1. Negotiating CPA Is Overrated (For Most)

For most organizations, haggling over CPA is a gigantic waste of time.

You get what you pay for. Pay more, get more. Pay less, get less.

Why?

Because affiliates aren’t running on hope—they’re optimizing for revenue per impression (RPI), revenue per click (RPC), or some close cousin. Usually, there’s a relevance or conversion metric in the background, but it all boils down to one thing: how well your product monetizes as an affiliate partner, not your negotiation skills.

Your funnel—served ad impression to funded customer—is what drives their economics. CPA is just one input.

If your downstream funnel isn’t competitive, no amount of clever negotiation will save you.

Pro tip: Ask the publisher, “What’s a competitive RPI (or RPC or conversion funnel) on your platform in my product category?” They’ll usually tell you. If you hit or exceed it, you’ll see volume. If you don’t, you won’t. They have every incentive to be honest—if you deliver, it’s better for their customers and their bottom line.

2. New Entrants: You’ll Need to Pay Up

Coming into a marketplace as a new lender?

You are not on a level playing field with the incumbents.

They’ve tuned their funnels for years. Their ad position is better. Their conversion rates are better.

If you come in cheap, you’ll compound your disadvantage. The affiliate will rationally place you at or near the bottom of the list until the data convinces them otherwise. Guilty until proven innocent.

My advice: Come in slightly or materially above market. Buy your way into the conversation.

That higher CPA helps you make up for the deficiencies you’re likely to have—lower conversion, worse ad position, no track record.

You can always optimize down later—if your conversion funnel proves it deserves to be there.

3. It’s nice being at the top of the food chain

If you’re a top-three or top-five brand in your category, affiliates want you.

You’re table stakes for their marketplace.

That means you can flex—maybe even negotiate CPA down.

The quick pulse check: if your product is well-known, if customers expect to see it in the marketplace, if your absence would make the affiliate look incomplete—you have leverage.

But if you’re an unknown fintech? Forget it. You’ll pay at or above market. Unless you’re covering a segment nobody else serves, or you’re bringing a truly unique offer, it’s unlikely the revenue you generate for a publisher will be incremental (at least in the early years of your partnership).

4. Smaller Affiliates = Lower CPAs (Usually)

Obvious, but worth stating:

Smaller affiliates usually take lower CPAs than the big names.

It’s just market power.

Don’t overthink it.

But, remember this. If you pay a smaller affiliate “big affiliate” CPAs, you might find yourself climbing the ranking and securing more volume. I see fintechs deploying this strategy today with great success. They’re stealing the market share that the incumbents aren’t watching (or protecting) very closely.

5. Using CPA as a Margin Lever? Dangerous Game

I’ve seen plenty of performance marketers pat themselves on the back for negotiating a lower CPA.

But here’s the catch:

Those vintages can end up being lower quality, and in smaller quantity, than the ones booked at a higher CPA.

It’s easy to fool yourself into thinking you “won” a deal—only to realize later that your best cohorts came from periods when you paid more.

Watch your quality metrics like a hawk if you’re playing with CPA as a margin lever.

You might “win” on price and lose on volume and quality.

6. Watch Your Rank Like It’s Your P&L

If your ad position or rank is slipping, CPA is your fastest lever to pull.

But don’t confuse the symptom for the disease.

If your marketing funnel (click-through X app rate X approval rate) is weak, raising CPA is a band-aid, not a cure.

Still, in a pinch, a quick CPA bump can buy you time to fix what’s broken downstream.

But you won’t know when to pull it unless you’re watching your rank, placement, and volume closely—weekly, if not daily.

7. Lowball Bids Get Lowball Results

Affiliates will accept almost any CPA above their minimum, but if you come in too low—intentionally or out of ignorance—don’t expect much.

Your placements will be uncompetitive, your funnel will get adverse selection, and you’ll end up with scraps.

Again: Do your homework. Know what “market” looks like before you walk in the door.

If you’re not competitive, you’ll get what you paid for—less volume, lower quality, and a seat at the kids’ table.

8. Beware the FP&A “Just Cut CPA” Mirage

Here’s a classic:

FP&A wants to lower your blended CAC, so they tell you to “just cut CPA” by 10-20%.

And sure, affiliates will “accept” it. But unlike your direct mail vendor or your SEM partner, affiliates rarely deliver the same for less.

In direct mail, you earn your CAC through performance. In affiliate, it’s tempting to think you can just instruct your partners to lower the rate and call it a win.

But affiliate partners don’t play by those rules. They’ll adjust your placement, your volume, your quality—sometimes subtly, sometimes not.

Pull in your credit risk officers and veteran marketers before you let a spreadsheet from the finance team dictate your partner strategy.

Otherwise, you’ll save pennies to lose dollars.

9. Don’t Be Afraid To Call Some Bluffs

Lenders and affiliates still play games with CPA.

You might get an email to the tune of: “Raise your CPA by 60% or lose your top ranking.”

Here’s a real story: A lender gets that email—nicely worded, threatening a big increase with a short timeline, but vague on consequences.

But it’s from a person they’ve never met, at an affiliate with little market power, and a CPA ask that makes the lender’s economics unworkable.

What happened? The lender ignored it, kept a close eye on rankings, and… nothing changed. The due date came and went. Only months later did the lender slip slightly in position, to a spot that still didn’t merit a renegotiation.

So, take these “urgent” asks with a grain of salt—especially when they’re coming from partners who aren’t critical to your mix.

Don’t let yourself get played.

But also—don’t be the one playing games for the sake of it. The best relationships are built on math, transparency, and mutual upside—not bluffs and posturing.

The Bottom Line: Setting CPAs is a Math Problem, Not a Negotiation

If you approach CPA as a quantitative research project—backing into a competitive RPI/RPC, knowing your funnel data, understanding your real leverage—you’ll land in the right place.

If you treat it like a negotiation game from B-school, you’ll waste time, lose focus, and probably miss the big levers.

The real game is increasing the efficiency of your whole marketing funnel, not just the payout at the end.

Support The Free Toaster

Need an affiliate marketing platform/network? Chat with Fintel Connect

Need help hiring key roles? Email Connie Buehler and mention TOASTER

Need to improve application page conversions? Chat with Spinwheel

Need to accelerate your affiliate marketing? Chat with New Market Growth

Need to win on other growth channels? Chat with FIAT Growth

None of the above? Share our Newsletter in your favorite Slack channel

About Us

Welcome to The Free Toaster! The newsletter for marketing pros at fintechs, banks, and lenders. 

Inspired by the free toasters banks used to give to each new customer, we’re here to help you acquire more customers at scale. We deliver fresh news, data, and insights to help you acquire more customers, minus the breadcrumbs.

Want to follow the authors on social media?

Carlos Caro is the founder of NMG, an agency that helps lenders build affiliate programs.

Nick Madrid the co-founder of Ghostmode, a media company that builds Newsletters, Podcasts, and communities in high-value B2B niches.

Reposted from www.thefreetoaster.com on Nov 22, 2024.

TL;DR - Aligning your messaging from your ad, to your landing page, to your final conversion steps creates lift in your marketing funnel, reducing your CACs and increasing your customer acquisition volumes. It sounds elementary. Yet many organizations forget to do it.

In a recent Podcast, Alex Hormozi explains Congruence, and why it matters:

One of the easiest uplifts that we can create is following the click journey, which is following the path from prospect to customer. And as crazy as this sounds, you probably haven't done yours in six months or more. And the crazy thing is, is that you've changed like three or four things in that process during that time period, but you haven't looked at how different it is for the prospect.

And although you may have improved some things, you're still leaving money on the table. The big word for this is Congruence. […]

You can always increase how much money you make by making everything from the beginning to the end congruent. One of the issues with businesses is that you have handoffs between departments, handoffs between employees, handoffs between platforms and technology. And so there's many transition points for a prospect to become a customer and even a customer to become a repeat purchaser.

-Alex Hormozi

Let’s make this concrete for a bank marketer.

Wells Fargo’s Flow From NerdWallet

Let’s look at Wells Fargo’s Active Cash®️ Card.

Here’s how NerdWallet, one of Wells Fargo’s affiliate partners, promotes the product:

You’ll notice 3 key selling points: the $0 annual fee, a $200 introductory bonus, and a 2% Cashback rewards rate. All 3 are clear to the customer.

When the customer clicks on the green “APPLY NOW” button, the customer sees:

You’ll notice Wells Fargo has the 3 key selling points in bold or underlined. So there’s a good deal of Congruence here.

What could make it better?

1. Put the benefits in the same order NerdWallet has them: annual fee, intro bonus, rewards rate

2. Show the information in a similar visual presentation to the NerdWallet page

3. Cobrand the landing page with NerdWallet’s logo

4. De-emphasize some of the other details so the 3 key selling points stand out

With all that said, Well Fargo’s landing page is reasonably Congruent to the NerdWallet listing page. A solid 8 out of 10 in my book.

The next Fortune 500 issuer scored a 3 out of 10.

Let’s unpack what I observed.

Subscribe now

Discover’s Flow From NerdWallet

Let’s look at a different example.

This one again from NerdWallet.

Let’s look at the Discover it®️ card. It has a $0 annual fee, a “Cashback Match™” intro bonus, and a 1%-5% Cashback rewards rate displayed clearly on the listing page.

Clicking out from NerdWallet, the customer sees the following from Discover:

Notice how the 3 key selling points I saw on NerdWallet — the $0 annual fee, the “Cashback Match™” intro bonus, and the 1%-5% Cashback — aren’t present.

On the bottom of the screen, I see a mention of “No annual fee”, but I don’t see the Cashback Match™ and the 1%-5% rewards benefits I saw on NerdWallet.

Scrolling further down the page, I see:

Now, I see all 3 key selling points on one page, but presented differently than what I saw on NerdWallet.

Let's get anal and compare how the selling points are communicated:

Discover also presented the selling points in a different order than NerdWallet.

NerdWallet’s sequence: annual fee → bonus → rewards rate

Discover’s sequence: annual fee → rewards rate → bonus

I give this a Congruence score of 3/10. That’s because the landing page (a) put the 3 key selling points below the fold, (b) described the selling points differently, and (c) changed the order of the selling points.

Simply getting all the info above the fold would have improved this to a 6/10.

More Congruence, Higher Conversion

That’s the bottom line.

When your pitch is consistent across the steps of the funnel, customers continue. When it’s not, customers get confused and leave.

Not rocket science.

In a lending business I worked on, we showed dynamic APRs on one of our partner’s websites. Sometimes those APRs mapped exactly to the APRs we displayed on our landing pages. And sometimes they didn’t.

When the APRs matched exactly, we got a 20+% pop on our conversion rates.

So guess what?

We got pretty obsessive about making sure the APRs matched across all segments, channels, and product types.

Conceptually hard work?

Of course not.

But in practice, doing it well took months of effort and coordination across various internal teams.

Ways to improve your Congruence

1. Identify the key selling points of your offer (what MUST the customer know to transact)

2. Reinforce key selling points using the same words and numbers (and visual display, if possible) across your funnel

3. Keep your key selling points above the fold

4. Optimize for both desktop and mobile

5. Recognize that your landing pages will vary across channels and distribution partners

6. Commit to re-assessing Congruence at least quarterly

Congruence isn’t the sexy, shiny object stuff that your CEO or board members will get excited about. But, it could be low-hanging fruit that can knock 10% to 20% off your CAC and increase your acquisition volumes by the same.

When your message is clear, aligned, and reinforced at every customer touchpoint, you win.

About The Free Toaster.

The Free Toaster Newsletter delivers curated news, insights, and interviews for fintech marketers, delivered in less than 7 minutes per week.

Subscribe now

The Quant Mindset

I spend most of my time around direct marketers. At banks. The vibe here is super clear:

For each $1.00 they spend, they want to generate $1.10, $1.50, or more, in tangible returns. It’s an arbitrage game.

Buy media. Scale winners. Kill losers. Rinse and repeat.

It’s a math game, and it’s tailor made for quants.

Here’s a question I rarely hear from them: “How much of our of budget should we spend on brand marketing?”

The quants leave that question up to the CEO & CMO. For the quants, the brand team is handed a pile of money to spend on TV and magazine ads that may or may not produce any tangible returns.

Here’s what many think but few say:

Brand marketers are cost centers. The company is required to do brand marketing—because the powers that be said so—but it’s not something that actually delivers ROI for the business.

Why Brand Marketing Terrifies Quants

The quants think brand marketing benefits:

1. Are hard to measure

2. Materially lag spend

This makes quants queasy. So they dismiss brand marketing as worthless.

I used to think this way, too.

That was until a LinkedIn writing experiment in 2022 that unintentionally created an inbound sales pipeline.

Now as a consultant, I rely almost exclusively on brand marketing—my LinkedIn posts, Podcast, and this Newsletter—to help potential clients find and trust me. It’s not as easily measurable in the short term, but it works—and I have no plans to stop.

My story about a little consulting business you’ve never heard of won’t change your mind about brand marketing.

But, New Balance’s story—how a new CMO came in and turned around a 15-year revenue decline by materially REDUCING direct marketing spend—might.

A 15-Year Decline At New Balance

Everyone assumed New Balance — the “dad shoe”—was finished.

I can’t fathom being in the CMO’s seat at that time.

I was in a head of marketing role where I witnessed a 15 month revenue decline, and the atmosphere there was grim. All but the most optimistic on the team figured it was game over for the business. The idea of turning things around with “brand marketing” was beyond laughable.

New Balance did what many companies do when they’re in a jam. In April 2020, they found a new CMO (Chris Davis).

Chris Davis (source: https://stories.complex.com/new-balance-reinvention/)

And, you guessed it, Chris wanted to turn the company around with brand marketing.

He approached the CEO and asked “are you cool if we swing for the fences, here?”

And the CEO, after seeing nothing work for the last 15 years, agreed.

Chris wanted to revamp how the public viewed New Balance. In his mind being a “dad shoe” was a death sentence that the even best performance marketers couldn’t fix.

Chris Davis’ Radical Brand Bet

He did what many CMOs & CEOs don’t have the stomach for.

He flipped New Balance’s existing marketing mix—70% direct response, 30% brand—to the exact opposite.

In the face of 15 years of revenue decline, and a mandate from the CEO to turn it around, he proposed SCALING DOWN directly asking people to buy shoes.

Instead, he wanted to SCALE UP the public’s opinion about New Balance’s vibe, what they believe in, and ultimately, their opinion on New Balance’s shoes.

In this setup, any quant that proposed scaling back performance channels—paid search, paid social, affiliates, catalogs, etc—in favor of woo woo brand TV commercials and influencer deals would have been laughed out of the room.

But this was Chris. New Balance hired him for a reason. He had a big vision for what the brand could mean to people. And what it could do for its revenues.

Chris tapped into streetwear culture. He convinced cool, high-profile people to wear the shoes. To talk about the shoes. To make the brand and the shoes convey a much bigger message.

(You can read about the gory details here. Warning: it’s a 3800 word article / 20 minute read).

New Balance magazine ad (source: https://stories.complex.com/new-balance-reinvention/)

Waiting For Results: Patience Paid Off

For the first 18 months after the pivot, revenue kept sliding.

Imagine the pressure: skeptical quants snickering, executive eyes on monthly reports, and no immediate payoff. But Chris stayed the course, driven by a vision that brand perception, not short-term conversions, would ultimately drive growth.

As this played out, Chris had his finger on the pulse. He spoke to influencers directly. Customers. People on the streets.

He found enough evidence that things were turning to keep New Balance committed to the bet.

And it worked. Big time.

Their revenues have been up and to the right ever since. (Hear more about New Balance’s turnaround on Alex Hormozi’s Podcast, The Game E793).

Brand Marketing Lessons For Quants

1. Brand marketing benefits take time to materialize

Chris didn’t flip New Balance’s spend from 70% direct response to 70% brand because he liked making TV commercials or signing influencers, he did it because he knew it would sell shoes.

But he also knew it would take time to have an impact. New Balance saw 18 months of revenue decline, after Chris got to work, before the turnaround. Chris knew he had to place the right bets, stay patient, and buy enough time before the data proved him right.

2. Brand marketing amplifies direct response marketing

This is the big lesson for the quants. Brand marketing is performance marketing in disguise, because it improves:

• Click-through rates (higher awareness and recognition)

• Conversion rates (stronger intent)

• Pricing power (customers pay a premium for brands they trust)

• Loyalty (repeat purchases and resistance to competitors)

All of this is directly measurable if you create the right experiments.

3. Nailing the give-to-ask ratio

Brand marketing is “giving”. Whether that be through education, entertainment, inspiration, or some other means.

Performance marketing is “asking”. Typically through direct-response ads.

Studies like Binet and Field’s ‘The Long and the Short of It’ advise a balanced mix—60% brand and 40% direct—to maximize long-term returns.

Alex Hormozi, a GTM influencer, recommends giving 3X more value (brand) than you ask for (direct response). (Fun fact: TV stations still live by the 3:1 give-to-ask ratio when determining how much show vs. commercial content to run).

4. Brand marketing is an art form

A textbook CMO could have come in and noticed that New Balance had a brand (perception) problem. She could have known that their 70% / 30% mix weighted towards performance needed to be flipped. But few could have done what Chris Davis did—create a vision for the new brand, and execute it brilliantly with a team of external influencers.

Brand marketing feels more like art than science, and it’s territory I rarely explore with clients given the “performance” nature of my work.

P.S. - Lessons here inspired by Hormozi’s Podcast, referenced above.

Closing Thoughts

I spend 100% of my professional time with direct response marketers. In that environment, it’s easy to feel like performance media is the only thing that drives revenue.

But, my recent experience building a consulting business has shown me brand marketing can drive revenue, too.

And, reading through New Balance’s story helped see something even more fundamental:

Brand marketing IS performance marketing.

The thing is it looks and feels a little different.

It works on a long time lag, and it’s difficult to measure. It isn’t easily taught or learned, because the number of possible strategies is vast (art not science). And without a solid brand foundation, even the best performance campaigns will under-perform.

That leaves the thoughtful marketer 3 big opportunities:

1. Be more patient than your competitors - the business world operates on a quarterly OKR framework. Build a better marketing program by extending your time horizon.

2. Be more curious than your competitors - most performance marketers I speak with aren’t curious about the impact of brand media on their performance spend. Be more curious and design the right experiments—it could be your hidden advantage.

3. Acknowledge the value of “art” within your program - knowing the right give-to-ask ratio isn’t enough. Collaborating with a team of brand professionals that understand how to deliver the gives could make the difference between a business that flatlines and one that grows for the next 50 years.

Lastly, New Balance’s story helped me internalize the value of brand marketing:

No amount of copy testing, conversion rate optimization, or bid optimization is going to make cool people buy “dad shoes” in increasing volumes, year over year. But, the right amount of brand marketing, done in just the right way, over a long enough period of time, might.

About the author: Carlos Caro is the founder of a New Market Growth, an agency focused on helping fintech lenders generate explosive growth on affiliate marketing channels like Credit Karma, Experian Marketplace, LendingTree, and others.

The Free Toaster is a newsletter for at the intersection of marketing, lending, and fintech. We deliver news, data, and insights (like this piece) to help you acquire more customers. Sign up to get it shipped weekly to your inbox.

In a recent Podcast, Alex Hormozi explains Congruence, and why it matters:

One of the easiest uplifts that we can create is following the click journey, which is following the path from prospect to customer. And as crazy as this sounds, you probably haven't done yours in six months or more. And the crazy thing is, is that you've changed like three or four things in that process during that time period, but you haven't looked at how different it is for the prospect.

And although you may have improved some things, you're still leaving money on the table. The big word for this is Congruence. […]

You can always increase how much money you make by making everything from the beginning to the end congruent. One of the issues with businesses is that you have handoffs between departments, handoffs between employees, handoffs between platforms and technology. And so there's many transition points for a prospect to become a customer and even a customer to become a repeat purchaser.

  -Alex Hormozi

Let’s make this concrete for a bank marketer.

Wells Fargo’s Flow From NerdWallet

Let’s look at Wells Fargo’s Active Cash®️ Card.

Here’s how NerdWallet, one of Wells Fargo’s affiliate partners, promotes the product:

You’ll notice 3 key selling points: the $0 annual fee, a $200 introductory bonus, and a 2% Cashback rewards rate. All 3 are clear to the customer.

When the customer clicks on the green “APPLY NOW” button, the customer sees:

You’ll notice Wells Fargo has the 3 key selling points in bold or underlined. So there’s a good deal of Congruence here.

What could make it better?

1. Put the benefits in the same order NerdWallet has them: annual fee, intro bonus, rewards rate

2. Show the information in a similar visual presentation to the NerdWallet page

3. Cobrand the landing page with NerdWallet’s logo

4. De-emphasize some of the other details so the 3 key selling points stand out

With all that said, Well Fargo’s landing page is reasonably Congruent to the NerdWallet listing page. A solid 8 out of 10 in my book.

The next Fortune 500 issuer scored a 3 out of 10.

Let’s unpack what I observed.

Discover’s Flow From NerdWallet

Let’s look at a different example.

This one again from NerdWallet.

Let’s look at the Discover it®️ card. It has a $0 annual fee, a “Cashback Match™” intro bonus, and a 1%-5% Cashback rewards rate displayed clearly on the listing page.

Clicking out from NerdWallet, the customer sees the following from Discover:

Notice how the 3 key selling points I saw on NerdWallet — the $0 annual fee, the “Cashback Match™” intro bonus, and the 1%-5% Cashback — aren’t present.

On the bottom of the screen, I see a mention of “No annual fee”, but I don’t see the Cashback Match™ and the 1%-5% rewards benefits I saw on NerdWallet.

Scrolling further down the page, I see:

Now, I see all 3 key selling points on one page, but presented differently than what I saw on NerdWallet.

Let's get anal and compare how the selling points are communicated:

NerdWallet

Discover

Annual Fee

$0

No annual fee

Intro bonus

Cashback Match™

Unlimited Cashback Match™

Rewards rate

1%-5%

5% (with a paragraph explaining what gets 1%)

Discover also presented the selling points in a different order than NerdWallet.

NerdWallet’s sequence: annual fee → bonus → rewards rate

Discover’s sequence: annual fee → rewards rate → bonus

I give this a Congruence score of 3/10. That’s because the landing page (a) put the 3 key selling points below the fold, (b) described the selling points differently, and (c) changed the order of the selling points.

Simply getting all the info above the fold would have improved this to a 6/10.

More Congruence, Higher Conversion

That’s the bottom line.

When your pitch is consistent across the steps of the funnel, customers continue. When it’s not, customers get confused and leave.

Not rocket science.

In a lending business I worked on, we showed dynamic APRs on one of our partner’s websites. Sometimes those APRs mapped exactly to the APRs we displayed on our landing pages. And sometimes they didn’t.

When the APRs matched exactly, we got a 20+% pop on our conversion rates.

So guess what?

We got pretty obsessive about making sure the APRs matched across all segments, channels, and product types.

Conceptually hard work?

Of course not.

But in practice, doing it well took months of effort and coordination across various internal teams.

Ways to improve your Congruence

1. Identify the key selling points of your offer (what MUST the customer know to transact)

2. Reinforce key selling points using the same words and numbers (and visual display, if possible) across your funnel

3. Keep your key selling points above the fold

4. Optimize for both desktop and mobile

5. Recognize that your landing pages will vary across channels and distribution partners

6. Commit to re-assessing Congruence at least quarterly

Congruence isn’t the sexy, shiny object stuff that your CEO or board members will get excited about. But, it could be low-hanging fruit that can knock 10% to 20% off your CAC and increase your acquisition volumes by the same.

When your message is clear, aligned, and reinforced at every customer touchpoint, you win.

The Free Toaster is a newsletter for marketers at banks and lenders. We deliver news, data, and insights (like this piece) to help you acquire more customers. Sign up to get it shipped weekly to your inbox.

Backdrop: How social channels match content to users

I write about a topic 99.999% of people don’t care about.

And yet, it’s worth my time to maintain an active LinkedIn feed, a Podcast, and this Newsletter.

That (small amount) of attention is powering relationships, networking, and ultimately business for my consulting/agency business.

Gary Vaynerchuk describes what’s happening on LinkedIn as the Tiktokification of social media.

Platforms like TikTok, Facebook, Instagram, LinkedIn and others have figured out how to distribute content based on WHAT people care about, not based on WHO they follow.

That means it’s game on for niche-creators.

Anyone with niche content that helps a small audience can build free distribution for their products and services.

The social media networks love it because they can serve highly relevant content for every person in their network, no matter how eclectic or rare their interests. That keeps eyeballs on their platforms. And that keeps advertiser marketing dollars rolling in.

The key ingredients that make this happen:

1. At scale audiences — this gives niche creators an incentive to create content to attract attention from the consumers in the platform.

2. Niche creators, at scale — without them, the platforms wouldn’t have content that’s hyper-relevant to each user. Without niche content, LinkedIn would feel like CNBC + resumes and messaging.

3. Matching algorithms — without sophistication in the matching between audiences and content (machine learning + AI), audiences wouldn’t get the most useful content, and creators wouldn’t get their content in front of their ICPs. Both sides would eventually give up.

The upshot of all of this?

A 2024 creator on LinkedIn with no resources, no connections, and no history of success can get a content piece in front of a billionaire angel investor who may decide to put $50MM into their next venture. And, that nobody creator might get more attention from VCs than entrepreneurs with much deeper pockets and traditional media connections.

That nobody creator didn’t have much of a chance against the deep-pocketed, well-connected entrepreneur even 15 years ago.

But, social media is a playing-field leveler, and the best content will win. Period.

The stage is set for hyper-niche financial services products

The same thing is about to happen in financial services. But, most don’t know it yet.

Let’s look at a platform like Credit Karma.

They have 130MM+ members, and they understand their users deeply.

Supriya Gupta, VP and GM of Product at Credit Karma, describes how Karma’s data is powering personalized recommendations for financial products in a recent interview with The AI In Business Podcast. “We’ve built on that trust throughout the years with not just credit scores, but also information about your car, your home…” (Source)

Going beyond recommendations, Karma is looking to automate personal finance decisions based on what they know.

Gupta describes it as “Autonomous finance is about figuring out what’s best for you with the least amount of work possible.” (Source)

Earlier, we described the 3 ingredients niche content needs to thrive on a platform: Large audiences, niche creators at scale, and matching algorithms that can connect users to the most relevant content.

Credit Karma has 2 of those 3 ingredients in place right now — at scale audiences and the matching algorithms.

But, it’s missing the niche creators, at scale.

You know that’s true simply by looking at their product inventory.

There’s 331 cards listed publicly on Credit Karma’s website.

Those 331 cards need to serve all 130MM users on Credit Karma’s platform.

The scale of Karma’s data and supply of card products means their matches are probably industry-leading.

But, it’s hard to consider them super-personalized.

Here’s how to see it:

If we divided 130MM members by 331 (the number of card product options), we get ~393,000. That means for each product on the platform, on average, there is a group of 393,000 members for which that product is the best match for their needs. And, since many of these products are very similar (e.g. 1.5% cash back products), the recommendations are less personalized than these numbers suggest.

Lenders build generic products intended to serve large swaths of consumers.

Those products were designed decades before at-scale platforms that can make 1-to-1 recommendations (like Credit Karma) existed.

Because they had to distribute their products in mass media channels without granular segmentation, product design was generic for broad appeal (e.g. 1.5% cash back on all categories).

That’s starting to change.

Now we’re seeing cards for kids and teenagers. For homeowners. For car owners. For international students.

Fintech players are moving the ball forward.

But, I don’t see enough lenders serving the hyper-niches in the same way content creators serve hyper-niches on LinkedIn.

Where are the lenders creating the card for the single mom with two kids under 7?

How about the card for the retired couple living on social security who travel to visit their grandchildren?

The number of possible niche segments and products is staggering.

And, as ecosystems like Credit Karma evolve, it makes sense that niche products will not only compete with the mass-appeal cards, they’ll actually win the consumer’s attention in many cases.

When 10,000+ niche card products are available on Credit Karma, how often will Karma recommend the plain vanilla 1.5% cash back card? Karma is bound to find a more relevant, more personalized option for each user. And, that is likely to increase the odds of conversion, which drives revenue growth for their business.

The platforms that nail relevance will win.

And the platforms with the most variety of products to choose from will stack the deck in their favor.

We’re still in the early days of the Copernican Revolution

Why build hyper-niche lending products?

You’re betting that the mega-platforms like Credit Karma will figure out to how connect hyper-niche products with consumers, making them commercially viable when previously distribution would have been too costly.

Furthermore, you’re betting that over time, the majority of product distribution from mega-platforms will migrate towards hyper-niche offerings, because they stand to drive better conversion rates.

In the popular paper - The Copernican Revolution in Banking - Frank Rotman made the following observation:

Share will increasingly become concentrated in the hands of best-in-class product providers as channel barriers fall and information becomes more abundant

Rotman predicted 4 types of players would emerge from this macro trend (bullets below quoted from Rotman’s paper):

1. Transactional Banks manufacture white-label versions of specific products and services

2. Genpop Banks serve the general population with a broad suite of products

3. Vertical Banks serve specific segments vs. the general population

4. Non-Bank players will be able to distribute Banking products manufactured by the Transactional Banks

Using Rotman’s language, the big banks are the Genpop Banks, some fintechs are starting to occupy the Vertical Banks category, and Credit Karma is one of the largest Non-Bank players that can distribute products to its massive base of engaged consumers.

To emphasize the point I’m making in this article — that hyper-niche products will grow and disrupt many Genpop Banks — Rotman says:

Vertical Banks will be very disruptive to the Banking ecosystem. They will dominate a segment by offering a small number of world-class products that are hyper-focused on the segment’s needs.

Closing Thoughts

The TL;DR:

• We have platforms (like Credit Karma) with a massive audience, granular data on personal finances, and the strategic imperative to build personalized, 1-to-1 recommendations for their users

• Platforms like these present an opportunity for niche-lenders to distribute products efficiently, enabling the disruption Rotman predicts in his Copernican Revolution paper

• Despite the opportunity, we don’t observe this happening yet. Credit Karma’s credit card marketplace has 331 products to serve 130MM+ members, and many of those products have similar value propositions for mass audiences

Lenders — there’s a huge opportunity to build niche products that modern Non-Bank players can distribute. In the next 10 years, I expect we’ll see marketplaces like Credit Karma significantly expand their product catalogs as fintech players start to act on this opportunity.

The stage is set for lenders to distribute hyper-niche products efficiently.

The next question?

Will lenders be able to create & manage these products with unit economics (cost structures) that make sense? 

With an opportunity this large, it’s only a matter of time before someone figures it out.

P.S: If you’re building a hyper-niche product and aren’t sure how to approach your marketing/distribution strategy, let’s chat.

Before I dive in further, I want to make this clear: am I not a cash flow underwriting hater.

Quite the opposite. I’d love for it to work, as I think demand for my marketing agency — New Market Growth — could increase as a result.

But, something isn’t adding up.

Let’s start at the 30,000 foot level. I see a bunch of products like Cash Atlas (Nova Credit), Prism Data, and Plaid Check offering lenders CFU products.

And, these providers are raising big money. For example, Nova Credit raised a $45MM Series C last year to keep building their data platform. 

Meanwhile, cash flow lenders like Petal have stumbled. They launched in 2016, raised $300MM in equity capital, and then sold off their portfolio for an undisclosed amount to Empower in April of this year.

All signs point to a distress sale where the VCs backing Petal didn’t exactly hit their target returns.

But, one fintech that stumbles in the CFU world isn’t a story.

I talk to plenty of fintechs and bank lenders. And, I haven’t seen an example of a cash flow based lender who’s killing it right now.

That’s what doesn’t add up.

B2B CFU products are buzzy. But without lenders who are absolutely crushing it using these products, can these B2B providers keep growing?

Before I lay out the challenges (and potential solutions), let’s take a step back and review why CFU exists, some of the problems it could solve, and some of the challenges folks are already discussing.

Cash Flow Underwriting 101

If you’re new to CFU, do yourself a favor and check out Alex Johnson’s Deep Dive Essay. It’s called “Everything You Wanted To Know About Cash Flow Underwriting But Were Afraid To Ask.”

But, it’s nearly 5,000 words and a 20 minute read. So we’ll share some of the highlights here (quotes below are from the essay).

Cash flow underwriting is the use of cash flow data to evaluate and price the risk of credit default in a manner that is compliant with applicable laws and regulations.

That’s how Alex defines CFU.

My version: Lenders look at the money going in and out of your checking account and decide if you’re going to pay them back.

This innovation is exciting because:

According to the CFPB, there are roughly 26 million credit-invisible adults in the U.S. and another 10 million who lack sufficient credit data to be scorable using traditional models.

I hear: Tons of people don’t have access to credit through traditional credit bureau underwriting. Lending to these people — through CFU— means big $$$ for the lenders and B2B providers that enable it.

Cash flow data predicts risk. And, it’s orthogonal to credit bureau data. That’s pretty intuitive to me (and for most credit risk pros, I think). But, if you’re not convinced, check out Alex’s article. He’s got some compelling charts from Prism data that make the case.

To recap so far:

1. CFU is an alternative data source that banks can use to underwrite loans

2. A big population (at least 36MM U.S. adults) could benefit from this technology

3. Data shows that CFU works — it helps banks distinguish no-FICO customers who will and won’t pay back

But it’s not all flowers and sunshine. Alex points out some challenges in bringing this to market.

User Experience — CFU requires consumer-permissioned access to bank access. This is currently clunky in the U.S. and will frustrate some people.

Depth Of History — Lenders love big, long data sets. And they simply don’t have decades of performance reads on their CFU models, like they do with credit bureau models. This makes them nervous to go big.

Secondary Use — Alex drops a little bomb here. Apparently the CFPB’s draft rule on open banking prohibits using CF data for “secondary use.” This is a major blocker when you start thinking about how lenders bring products to market. It means it could be difficult or impossible to use CF data at the marketing stage. We’ll dig into this further.

Consumer Education — People understand how FICO works and are comfortable with banks using it. People don’t have a clue about CFU and we’re not sure how they’ll feel when they learn more about it.

Compliance — With CFU, a lender will know if you’re the type of person who frequents KFC or the local organic market. Whether you shop at Walmart or Saks Fifth Avenue. None of this stuff necessarily predicts risk, but they’ll have access to it. Now start thinking about how lenders will comply with Reg B/ECOA. These laws prohibit lenders from discriminating against protected classes, even if done unintentionally. And then consider machine learning which is prone to use data in unintended ways. Rabbit holes galore.

Securitization — Lenders like to sell loans in secondary markets. And secondary markets use FICO as a scorecard to price loans. Now remove FICO for these loans. How will these markets clear?

The Elephant In The Room

Earlier I said that I haven’t heard a single example of a cash flow based lender who’s killing it (growing rapidly) right now.

The reason?

Selling a CFU loan product is very high friction today. And that makes a performance marketer’s job hard as hell in the most common marketing channels.

Let’s illustrate the problem by thinking through how a lender would bring a CFU product to market in direct mail, paid search, and affiliates.

Direct Mail Will Be Expensive

Normally, lenders build audiences using a combination of credit and response models. The attributes they need sit at the credit bureau. Lenders send the bureau criteria, and they receive a list of names and addresses. These dialed-in audiences squeak out a good-enough cost of acquisition (CAC) to make the channel worthwhile.

CFU lenders will bump into a problem. The criteria they need to underwrite this audience (cash flow data), doesn’t sit at the credit bureaus.

To get this data, they have to get permission (usernames and passwords) from consumers. But they don’t know which consumers to ask. And if they ask everyone, their marketing budgets will blow up and their CACs will be sky high.

Now, recall the CFBP’s draft rule above on Secondary Use that could block marketers from using CF data in a prescreen (marketing stage) context.

Houston, we have a problem.

Paid Search Volume Will Be Limited

This is a little different. Here CFU lenders compete against the incumbents that use credit bureau data. They bid on terms like “credit card low FICO” and “personal loan no credit”.

The subprime lenders have been at it for years. They know what terms to bid on, and given competition, their marketing funnels are optimized to minimize friction.

You’ll often see ONE PAGE application forms after a consumer clicks on a search ad. Traditional lenders know that if they don’t convert the customer quickly, their paid click could vaporize into Google’s bank account.

A CFU lender could produce killer ad copy, beautiful landing pages, and offer a great product — an unsecured loan that serves customers with thin credit files.

So far so good.

But, what happens when the CFU lender pops the big question: “Please provide the username and password to your bank account.”

This is when consumers will balk.

Who wants to give a fintech lender they’ve never heard access to their checking account?

Low conversion rates will drive up CACs. A higher CAC means CFU lenders can afford to bid less on each keyword. Bidding less on each keyword means they’ll fight for the leftovers the traditional lenders leave behind.

Houston, we have another problem.

Affiliates Will Be Dominated By Traditional Lenders

Modern day affiliates like Credit Karma, Experian, Credit Sesame, NerdWallet, WalletHub and others have built products that help customers get approval certainty BEFORE they apply.

That means consumers compare products that they are likely to be approved for, creating a great shopping experience.

Enter the CFU lender.

They lend to customers the traditional lenders won’t consider. That’s attractive to the affiliate marketplaces, as it helps them serve more customers.

But, when the affiliate marketplaces ask the CFU lenders for targeting rules, they can only provide logic based on CF data. And, because many marketplaces don’t have access to cash flow data at the marketing stage, CFU lenders can’t deploy a targeting strategy that’s competitive with the traditional lenders.

The upshot? It’s challenging for affiliates to promote the CFU products with a high approval certainty.

That suggests CFU products will have lower click-through rates. Furthermore, many customers will drop off when the lender asks for the login to  their checking account.

I expect CFU product marketing funnels will be uncompetitive. That’s because a lower click-through rate and a lower application rate will compound to lower throughput for the affiliate channels.

This suggests affiliates will favor displaying the traditional products when they have a choice.

Houston, we still have a problem.

So Where Do We Go From Here?

Like I said at the top of the article, I’m rooting for CFU products to gain traction.

They help serve consumers who wouldn’t otherwise have access to credit. They open up opportunities for fintech lenders. They help affiliate marketplaces serve more customers with high-quality offers.

The big question is:

How do we get CFU products into customers’ hands at scale in an economically viable way?

So far, we don’t have a good answer to that question.

But, I think the answer will include 3 things:

1. Distribution channels that can use cash flow data at the marketing stage to identify what consumers qualify

2. Reducing the application friction in consumer-permissioned access to checking accounts

3. Educating consumers about the value and safety in sharing their cash flow information with lenders

The combination above can unlock consumer growth in the category.

Until we crack distribution, more risk-prediction and data processing innovation won’t help. Without low-cost, efficient distribution that competes with traditional lending products, cash flow underwriting will remain a niche offering that won’t live up to its full potential.

If you’re interested in solving this problem in affiliate channels, I’d love to chat.

P.S.: On October 7th, Plaid and MoneyLion announced Layer and Consumer Report, a solution that seems to address some of the distribution challenges raised in this article. I will contact Plaid and MoneyLion to see if they’ll share more about how it works.

About The Author

Carlos Caro is the founder of New Market Growth, a marketing agency that specializes in helping lenders generate explosive growth in affiliate channels. He’s also an editor and contributor at Ghostmode.