Community Focused Growth by@jonnyprice
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Community Focused Growth

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Over the last six months, our Kiva U.S. team has undergone a significant shift in how we are approaching the growth of our program. I think it’s probably an unfashionable shift — especially here in Silicon Valley. And who knows — maybe it will turn out to be a misguided shift. But on the Kiva U.S. team we’re excited by it, and aligned behind it. Whereas a year ago, our growth strategy was more focused on “mass marketing”, in 2017 we are focused on a community based approach to growth.

Mass marketing: Solid execution, Disappointing results

In our 2016 budget, our Kiva U.S. team got some significant marketing budget for the first time. The hope was that we could find an advertising / marketing channel where we could make the economics work. We don’t charge any interest or fees on the U.S. loans that we make here at Kiva, but we do consider that each loan has revenue associated with it — in a couple of ways. Firstly, the average lender “tips” us a few dollars for every Kiva loan they make. So if our average loan size for U.S. loans is $6,000, then we earn around $300 of revenue in “tips” on that loan. Secondly, the average funded U.S. borrower invites 25 new lenders to fund their loan, and join the Kiva movement. If the average lender “tips” Kiva $12 over the course of their lifetime, then again the revenue per funded loan works out at $300. So as we experimented with different marketing channels in early 2016, our question was whether we could find one where our cost per acquisition of a fully funded loan was (ideally significantly) less than the $300 “lifetime value” that we could budget from the revenue associated with that loan.

And unfortunately, the answer was an emphatic “no”.

Led by our Marketing Manager Adam Kirk, we tried Facebook ads to targeted small business owner audiences in geographies where we had significant on-the-ground presence. We tried bidding on Google AdWords like “small business loan”. We ran direct mail campaigns — both our own, and in conjunction with partners like The Greenhorns or Farmer Veteran Coalition. And we established referral partnerships with more conventional lenders, who would send us the loan applications that they were rejecting. We bought contact information of small business owners throughout the country from Radius, and optimized our landing pages using Unbounce and Optimost.

Adam and our team executed extremely well on these strategies, in series. But while we saw significant growth at the top of our funnel — i.e. loan applications started — , the conversion through our funnel (to loan applications submitted, loans posted to the Kiva website, and then loans fully funded) through these “mass marketing” (usually digital) channels was very, very low.

Reflecting on why we saw this low funnel conversion, I see three principal likely explanations:

1) Low quality leads. Compared to loan applications that come to us from our community partners (Kiva “Trustees”), loan applications that came in through these mass marketing channels were just lower quality. These small business owners were less interested in, and committed to, taking out a Kiva loan in the short-term, when they were small business owners at all!

2) Lack of trust. Chatting with one of our borrowers in Oakland one day, she told me something very enlightening: “You know, people in this community have been burned a ton of times by lenders in the past. There’s a real lack of trust.” When our Trustees recommend Kiva loans to their community members, their credibility in the eyes of their community is conveyed to Kiva. But when someone sees an ad for a 0% interest loan cold, they might well think it sounds too good to be true, and be asking themselves “where’s the catch?”

3) Perceived barriers to entry. Lastly, while we have tried to streamline the Kiva loan process as much as possible (no bank statements, tax returns, business plans, arduous financial forms, etc. etc.), it can still be daunting to a small business owner who has never undertaken a crowdfunding campaign before, and is working 100-hour-weeks desperately trying to keep their business going and growing, with extremely limited resources. Again, our Trustees can hold the hands of the small business owners they are referring to Kiva, help answer any questions they might have about how the process works, and reassure them that the benefits of applying for a Kiva loan will significantly outweigh the costs.

As a result of our very low funnel conversion through these mass marketing channels, in the fall of 2016 we decided to move away from this approach. It was a little bit scary to “turn off” these digital ad channels — see the chart below. We went from 1,685 loan applications started in October with digital ads running, to 1,210 in November without digital ads — a drop of 28%. But we had a vision — for a more community based approach to growth — and we were excited to move in that direction.


Towards a community focused growth strategy

At a high level, we see community focused growth as growth that comes more from our existing community, than cold outreach to new people that we are not connected to yet. In a sense, it’s similar to viral growth (which is, in fact, very fashionable in Silicon Valley!), but our definition of community focused growth includes other elements too, which I attempt to outline below. This (non-exhaustive) list of components of our community focused growth strategy is obviously most relevant to our Kiva U.S. program, but I expect there are many parallels with other industries and companies too:

  • Trustee endorsed loans over No Trustee loans. Over 700 Trustee partners have endorsed a Kiva loan over the last few years. Most of these are non-profits on a mission to support entrepreneurs in their community — like Build Institute in Detroit, Centro Community Partners in Oakland, or Rising Tide Capital in Jersey City. But we don’t want a small business owner to be prevented from qualifying for a Kiva U.S. loan if they are not yet connected to one of our Trustees, and so in 2014, we launched a “No Trustee” model, where borrowers could just apply for a Kiva loan directly, without requiring a Trustee endorsement. This No Trustee model grew quickly, but we found that the repayment of these loans was lower than loans endorsed by Trustees, and often the social impact of these No Trustee loans was not as deep either. A core component of our community focused growth involves re-focusing on these partnerships with our Trustees, and especially our most active and excellent Trustees. Since hiring Ran Fan to lead this Trustee engagement work at the end of 2016, we have seen a significant increase in the number of loans being endorsed by Trustees, as the chart below illustrates.


  • Spending more time building relationships with existing customers, rather than reaching out to new customers. In 2017, our team has tried to shift the allocation of how we spend our time a little — away from “top of the funnel” growth and outreach, and towards engaging our existing customers. In our Borrower Engagement initiative, led by our interns Porter Montgomery and Katie Powers, each month we are committing to try to call every borrower whose loan was funded six months ago — just to check in, and see if there is anything that we can do to support them or their business.
  • Borrower-to-borrower virality. Building stronger relationships with our existing borrowers, and enhancing their social capital by connecting them to customers, business advisors or resources that could be valuable to them, is an end in itself. But it’s also a means to the end of accelerating community focused growth. Delighting our customers will increase the likelihood that they will refer Kiva to their friends, family and neighbors. As one of our entrepreneurs in Columbus put it: “Getting an interest free loan from Kiva was great, but it was the doors that Kiva opened for me, and the connections I made as a result of it, which made me into the biggest evangelist for Kiva.” We have tried to boost this borrower-to-borrower virality by promoting the use of referral links, which we can then track the usage of. When a borrower who comes in through a referral link makes their first repayment, we are giving both the borrower and the referrer $25 of Kiva credit to lend out to support another entrepreneur. The chart below shows the range of Net Promoter Scores for companies in the “Money & Banking” sector, as judged by U.S. small business owners. The worst company had an NPS of -53, and the best company had an NPS of +45. So far this year, Kiva U.S. has been running at +61. That should lead to viral, community led growth.


  • Repeat loans. One of our most promising community focused growth initiatives is to increase our repeat lending to existing Kiva U.S. borrowers. Returning borrowers already have trust in Kiva, can much more easily navigate the process because they have been through it before and so know exactly what to expect, and (perhaps most importantly of all) know that Kiva really works, and is worth putting the upfront effort in for. Our typical funnel conversion is about 7–8% — that is, for every 100 loan applications started (and keep in mind, some of these might be from people living overseas who do not qualify for Kiva U.S. loans, or people looking for consumer loans that we do not service), 7 or 8 go on to receive a Kiva loan. For repeat loans, the conversion rate is almost 10 times that. Following some product improvements that unblocked repeat loan applications, over the last few months, Adam has been focused on making sure that any of our borrowers who are eligible for repeat loans, are made aware of that opportunity, in case they could benefit from it. The immediate results are clearly evident in the chart below:


  • Content marketing to niche audiences. Our mass marketing approach to content marketing was to focus on more generic content that appealed to the broadest possible audience of small business owners — like this blog post that I wrote last year comparing Kiva U.S. and Kickstarter. And the focus of our PR strategy was more on earning coverage in large publications like FastCompany or the Wall Street Journal. In shifting to a community focused content marketing strategy, we were more intent on producing content that was specific to much smaller, niche audiences — like this blog about financing your food truck with a Kiva loan, or this podcast that we produced with one of our Trustee partners The Greenhorns. From a PR perspective, these days we are just as excited about an article appearing in The Meadville Tribune, as we are about an article appearing in The New York Times. Again, the quantity of impressions is much less with the local, community based approach (at least, until you earn hundreds of articles in local publications like The Meadville Tribune, which we’re working on), but the quality of those impressions is much, much higher.
  • Social media marketing. Community focused marketing also increases the importance of social media, and so, led by our interns Junho Hyun-Sack and Kathy Gledhill, we have dedicated a little more time to actively managing our Kiva U.S. Twitter account over the last few months. The idea here is less focused on “outbound marketing” — getting Kiva’s brand in front of more eyeballs on Twitter, and more focused on “community engagement”. If we can recognize a small business owner that just successfully funded on Kiva, or a Trustee doing great work to support financially excluded entrepreneurs in their region, in a small way that builds goodwill and gratitude among our community.
  • The Kiva Leads Program. Most online lenders have teams of centralized “inside sales” staff in their head office. With the Kiva Leads Program, we are scaling out a more decentralized approach, where a Kiva representative works on the ground in a local community, building enduring relationships with small business owners, community based organizations, government officials and influencers. Whether the Lead is a full-time member of Kiva’s staf like Brian McKeown in Oakland or Sarah Adeel in San Jose; whether they are working out of a non-profit partner like Emily Keebler at Urban Innovation 21 in Pittsburgh or Nichole Crust at WWBIC in Milwaukee; or whether they are an employee of the local city government like Brad Willows in Rochester or Jossiel Cruseta in Philadelphia, our Kiva Leads are the faces of Kiva in the communities where they live and work, and which they care deeply about enriching. Under the management of Katherine Lynch on our team, the number of loan applications started in Leads markets (where we have a dedicated Kiva Lead on the ground) has more than doubled in the first few months of 2017, and these markets are accounting for an increasingly large share of our nationwide pipeline. Furthermore, just as with Repeat Loans, loan applications from these Leads markets have significantly higher funnel conversion rates than the national average, because the local Lead can help hold borrowers’ hands through the Kiva process.


  • Human hand-holding over faceless automation. At Kiva, we are caught in a quandary. We are a technology company, based in Silicon Valley. But we are also a non-profit that dreams of re-imagining a finance system based on people. And we have been around the block long enough to know that the entrepreneurs that we get most excited about lifting up, sometimes need a helping hand to navigate setting up a PayPal account, or making it through our Private Fundraising Period. And so we’re trying to strike a delicate balance. On one hand, we’re constantly striving to improve our website, and improve our automated notifications to the small business owners we serve. But on the other hand, we provide dedicated, genuine human customer service to any small business owner that we post to the Kiva U.S. website. Reading through some of the comments in our borrowers’ NPS survey responses, it is not difficult to see that our customers truly value this service and support — as well as the community-oriented nature of our Kiva U.S. program more broadly.

    As these comments imply, one of the most exciting aspects of the Kiva model is that our crowdlending approach connects our small business owners with hundreds of individual lenders, who are now microinvestors in their businesses, and would love to see these businesses succeed. In the long term, our hope is that the personal touch, relationship-orientation and “humanity” of the Kiva experience for a small business owner, comes not just from our Kiva team, but also from the millions of Kiva lenders from around the world, cheerleading for the entrepreneurs they are investing in.


When we talk about community focused growth on the Kiva U.S. team, these eight examples — (1) engagement of our Trustee partners, (2) a focus on building relationships with existing customers, (3) borrower-to-borrower viral growth, (4) repeat loans, (5) content marketing to niche audiences, (6) social media marketing, (7) our “boots-on-the-ground” Kiva Leads program, and (8) human hand-holding and support — are some specific initiatives that we are focusing on, in order to try and deliver on it.

Our turf

As mentioned above, the “lifetime value” of a customer (small business owner borrower) for our Kiva U.S. team is about $300. But for an online lender (like OnDeck, FundingCircle or Able) that makes very large loans (e.g. $200,000) and charges an (often quite high) interest rate (e.g. 15%), the lifetime value of a customer is much higher — perhaps $20,000. This means that, while the marketing playing field is one of advertising spend, our Kiva U.S. team is always going to lose. Small business loan keywords on Google are about the most expensive keywords out there, and we are going to be outbid and outspent every time.

But if we change the marketing playing field to be one of community, then Kiva can win there. We have 1.7 million generous lenders, from all around the world, looking to support Kiva entrepreneurs with 0% interest loans, $25 at a time. Those lenders are becoming customers, brand ambassadors and business advisors of the borrowers they are funding, and writing them encouraging messages of support on their loan pages. Whereas delinquencies on conventional loans are met with stern threats and debt-spiral-inducing fees and penalties, hardships in Kiva borrowers’ lives and businesses are almost invariably met with grace and understanding, as long as the borrower meets their own commitments to the Kiva community by demonstrating strong communication and good faith. As a 501(c)(3) non-profit, our mission and brand are beautifully aligned with a marketing strategy that’s focused not on cold, mass outreach, but on established relationships and community trust.

Community focused marketing is our turf.

Quality over quantity

So for our Kiva U.S. team, a community focused marketing strategy is a more cost-effective way for us to reach more small business owners, and increase the quantity of loan applications coming into the top of our funnel. But perhaps even more powerfully, we see community focused growth as the best way of ensuring the quality of these leads.

On our team, we define loan “quality” along four dimensions — (1) depth of social impact (e.g. we would rather lend to highly financially excluded entrepreneurs operating businesses with deep social missions), (2) risk (i.e. we need our borrowers to pay their loans back!), (3) popularity with Kiva’s lender base (i.e. as a crowdlending platform, we want to be posting loans that our community are excited to support), and (4) cost-to-serve (i.e. the less time it takes us to review, post and service a loan, the more scalable our model becomes, and the more entrepreneurs we can empower). Of course, these dimensions of quality are often in conflict with each other — a loan to a more moderate income borrower might be lower risk and lower cost-to-serve, but the depth of impact is also lower. A loan to a pre-revenue startup being launched by someone who is currently homeless is incredibly impactful, and will probably be very popular with Kiva’s lender base, but might be much higher risk.

But the beautiful thing about community focused growth is that it can improve quality along each of these four dimensions! On the depth-of-impact front, many of Kiva’s Trustees are non-profits with incredible, deeply impactful missions. La Cocina catalyze immigrant women food entrepreneurs in San Francisco. Defy Ventures provide technical assistance to formerly incarcerated entrepreneurs. Urban Innovation 21 support the development of small businesses in some of the lowest-income neighborhoods in Pittsburgh. From a risk perspective, loans sourced from our existing community (whether a repeat loan to a former borrower who has now fully repaid their previous loan, an endorsement from a Trustee, or a referral from another Kiva borrower) tend to have a much stronger repayment rate. And because Trustees can help us handhold their borrowers through the Kiva process, they tend to have higher quality loan profiles (business descriptions, personal stories, photos, etc.), and require less time investment from our Kiva team.

Whatever industry you operate in, the quality of your customer is critically important. But in lending, where your entire model is dependent on your customer repaying their loan over the next two to three years, quality is of paramount importance. A growth strategy focused on community delivers it.


The Kiva U.S. team’s focus on community led growth only began in earnest as we entered 2017, and so it’s still too early to say whether our belief in the promise and potential of this approach is well-founded or misplaced. But having led this team since its inception in late 2011, I’m pretty convinced by the logic of the strategy here. Community focused growth is a cost-effective alternative for a non-profit that can’t compete on advertising spend; it’s perfectly aligned with Kiva’s mission, brand and generous lender base; and it can cultivate high quality leads at the top of our funnel. As a team, we’re aligned behind this strategy, and working hard to execute on specific initiatives that embody it.

The only remaining question is whether it will work or not — from a quantity and quality perspective — over the coming months and years.

Watch this space.


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