The importance of having your products suited to the needs of customers is often understated. A good product is one which fits/ addresses specific needs of the market. It’s almost impossible to gain market share or domination without tailoring one’s offerings to the needs of customers.
Achieving customer-centric product design requires an intimate understanding of your customers needs. In most cases, borrowers are often unable to properly express their needs, often stating the symptoms of the needs as against the actual need. It’s the responsibility of lenders to tease out these specific needs and convert to product offerings.
To establish detailed understanding of your borrowers, lenders need to invest in market insight and feedback channels such as voice of customer surveys, focus group sessions, market research. Most of which, with the available technology can be done online at little to no cost. All customer-facing teams must realize the importance of customer feedback in providing value to their clients, and see it as a tool for establishing market differentiation and dominance.
How should you design your lending product?
When building your digital lending application (mobile app or web app), it’s important that the product design team has a strong-grip on the concept of customer segmentation. Each lender can design its own segmentation framework and priority segments. Whatever is adopted must, however, be utilized consistently across all customer engagement and product development efforts.
Lenders must be adept at analyzing feedback received from customers and translating these into solutions and offerings. In designing the features and benefits of a product, as a lender, you must ensure that they address actual pain points of customers.
Through series of engagement with target customers lenders should seek answers to the following questions (amongst others):
- What are the financial needs of my target borrowers?
- What are their motivations and life goals?
- What do borrowers find frustrating in my existing products and services?
- What do borrowers like most about my offerings?
- What do target borrowers consider a rate for the loans and credit facilities I offer?
The first two questions above are most important for a lender to figure out the kind of products to design. Borrowers’ affinity with lending products are highest when they are linked to their financial needs and personal motivations. For instance, on one hand, young adults are in need of financing for assets they desire. This is a strong case for adopting a device financing model. On the other hand, students and parents in need of financing for education. These borrower segments are more likely to respond to loan products that speak directly to their needs and don’t leave room for ambiguity.
Additionally, lending products must also be packaged in a manner that speaks to the preferences of the target borrower segment. For example, it might be easier to engage working professionals through their employers or corporate associations; while Gen Z might prefer to be marketed to through social media channels. However, a few customer segments which share similar attributes and can be serviced together. This way, lenders avoid duplicating resources or spending excess time designing for too many borrower segments which may not be necessary.
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