Identifying Opportunities in Fintech, with Alyssa Atkins

How can non-fintech businesses use fintech to grow? And what opportunities are even fintech businesses missing?

Alyssa Atkins (@alyssaatkins) the Director of Marketing at CareGuide, where she was an early employee. Previously, she was an early marketing leader at Top Hat, which has raised nearly $41.9M from funds such as Union Square Ventures, iNovia, and Georgian Partners. Prior to that, she participated in The Next 36, a non-profit initiative that trains talented young Canadian entrepreneurs, where she was awarded the James Eaton Entrepreneur Award.

Here’s Alyssa:

If you are not in a fintech business, how can you capitalize on existing opportunities? And if you are in a fintech business, how can you use activities outside of the financial sphere to grow that business?

CareGuide runs vertical marketplaces where people looking for care and people willing to provide care can meet. We run that through different domains, like CanadianNanny.ca, Housekeeper.com, PetSitter.com, and so on.

A tertiary activity is that money changes hands. So, we have a payments element to our business which services these markets and their financial needs. This is a quick look at HeartPayroll’s traction since we launched: over 2 million payments processed monthly, and our revenue has enjoyed a handsome trajectory as well.

So, how do we capitalize on non-fintech initiatives to drive our fintech business?

Our primary market and service is matching people looking for care to people who can provide it. We do this across different domains, but primarily CanadianNanny.ca.

When a family and a nanny match, the family becomes a household employer, often for the first time. As a result, they have to follow all the same employment laws that any employer would. So, HeartPayroll is our solution to that problem for them.

It’s been helpful for us to have a distribution angle that nobody else does. If you can corner a market and access a distribution angle that is unique to you, it pays off. With matchmaking, we had this pool of families who we knew were looking for a nanny and who would become employers. We were able to leverage the non-fintech experience of finding a nanny and feed this pool of families into HeartPayroll.

The other thing about cornering a niche, especially for financial companies, is that it creates pricing power. In the payroll space, customer value is usually modestly cheap — three to ten dollars an employee. But because we have this niche market, we’re able to charge upwards of forty dollars a month. That’s only accomplished by finding something that’s really niche.

Another thing that we’ve done is leverage a non fintech product to drive our business.

An example is a payroll calculator. When families look to hire a nanny, they’re trying to figure out, “How much is my nanny actually going to cost me at the end of the day?” They’re trying to figure out the net and gross pay, and so we spun up a payroll calculator product.

This accomplishes a couple of things. One, you’re priming people: you’ve already done something for them that they liked, and they found you helpful. So, when they’re ready, they’re more likely to go with you. You’re also priming them to use your service.

Payroll is complicated and cumbersome. Allowing people to try and figure out the complicated calculations themselves actually leads them to our service. If you find an element that’s maybe just outside your core financial offering, it can actually help build your sales and company.

Another unique process we took was leveraging our competitors as customers.

There are a couple different ways that a family can find a nanny. Most families find a nanny on CanadianNanny, but you could also pay an agency thousands of dollars to find a nanny, or use a site like Craigslist. Until we launched this strategy, we were just capitalizing on the CanadianNanny pool. We partnered with the nanny agencies who match families and nannies. They still need help with payroll.

Because we spun HeartPayroll out as its own freestanding brand they’re now able to offer a financial product to their customers. It’s been fruitful for us to find complementary services to partner with people who might be considered competitors.

Something else we’ve tried is testing out different conversion tests.

When we first launched HeartPayroll, we thought the right approach would be to be to build out a sales team. We thought, the way to scale is add more people on the phones. A lot of companies take that approach and it’s worked just fine. But we’ve found ways to use our product and marketing to get people through the path on their own.

Our sales team is still small and mighty. But now, we use the sales team to catch people who are dropping out of the funnel or who need the extra push and motivation to use a product. In hindsight, it might seem obvious to test these conversion strategies, but I would be interested to see how many people do it on a regular basis. We deepened our funnel and pushed more people through than I think we would have otherwise.

There are also ways that you can identify fintech opportunities, whether or not you’re in one right now. Our core service is matchmaking, and we could have easily just stopped there. But we looked at the tertiary activities that were taking place: was there a financial component our core offering that we could complement with a service?

Canadian Nanny lent itself to this well. Families are paying nannies and there is an intermediary that would be fruitful there. But then we have these other domains — Housekeeper.com, Sitter.com, PetSitter.com — where money is changing hands. And so it makes sense that we would extend the HeartPayroll brand to those as well.

If you’re thinking of an opportunity like this, it’s important to consider the value of high value or large ticket transactions versus smaller ones. Spinning up an app just for babysitter payments isn’t as lucrative as something sticky like a payroll service, which we can apply to CanadianNanny.

When it comes to ways to build your business, when you’re reaching brand limits or market limits there are a couple of ways you can do it. You can either expand the market or increase the value of each customer. By thinking of where we could inject a financial component, we were able to expand the value of each customer.

For example, take someone on a matchmaking platform. Previously, they would stick around for a few months and their lifetime value would be around $40. Convert that person to a customer of Payroll, which is much stickier. They stay on for years at a higher price point and are much more lucrative. We don’t have to limit ourselves by pushing into the market boundaries: we can just increase how much value we get from each customer.

That’s how we expanded into fintech, and deepened our customer base and our customers’ value.

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Quotes edited for publication.