I find it cringe-worthy when people complain about how materialistic our society is. Not because I don’t believe them, but because that’s the natural order of capitalism. Money makes the world go round, and as marketers it’s our responsibility to help channel that money into the appropriate organisations.
But what happens when you can’t create any more revenue for your organisation? When – no matter how strong the marketing campaign – you can’t seem to boost sales any further?
Well, that’s simple, simply give the product away and get the customer to provide an “IOU”. Or – as it’s more commonly known – finance.
I have a few issues with the finance and small loan industry (not venture capital or banks, I should clarify).
Firstly, the business model is designed to take advantage of financially unstable impulse buyers, and can have long term negative affects to their credit score.
Secondly, companies don’t necessarily do a background check on consumers, creating a “loanshark” esque business model. They don’t care who they’re selling to or if they can afford it, but if that person misses payment the consequences can be awful.
Hairdresser who makes £8k a year? Sure, you can afford a 2019 Mercedes A-Class! Recruitment consultant earning £22k paying £800 in rent a month? Yes, of course you can have a Rolex!
Most of these businesses that offer finance or credit cards don’t adhere to the same standards as banks, which is worrying.
Following the housing crisis, banks have tightened their loaning considerably. However, businesses haven’t, thus allowing this loanshark business model to come into popularity.
Maybe the future will see more regulations coming into play or maybe it won’t, but I don’t see this sales solution having longevity. As we saw with the housing crisis, eventually people begin missing payments in the masses, and when that happens the whole business begins failing as a result.
If you own a company and are considering finance, be careful. This isn’t necessarily the “missing piece” that will result in long-term success, and if anything is a short-term game plan implemented to help boost sales.