By Donna Kreutz

Sep2016__EI_mug_info boxMichael Fredricks is undoubtedly a wiz at mathematics yet is ‘very people-centric’, an odd combination indeed. “I am enamored with the entire sales and marketing world. For me it’s fun to do the math—but to have a passion about the math when talking to a client, that’s what I find fascinating and enjoyable in the role I’m in right now,” said the Senior Vice President of Business Development for Fortiva Retail Credit.

After attending Penn State University (majoring in mechanical engineering), his first job was in the water treatment industry in a small town near Gettysburg, PA. “There was a RainSoft dealer located there. I was selling water softeners and drinking water systems in well-water country, rural America.” Fredricks learned a lot about the importance of believing in your products and customer-centricity. “This was a very large farming region that had a lot of fertilizer and pesticides leaking into the residential well-water supply, as well as other pollutants that impacted the health of fetuses, newborns and seniors. We all had well water.”

From 2006 to 2010, Fredricks was an executive sales leader at Culligan International. “That was the most rewarding time period of my adult career. We were assisting Haiti when the earthquake hit and delivered tons of water treatment equipment to that country during their time of great need. Within months, the US Midwest flooded and polluted the majority of the wells in Indiana and Ohio. We sent semi after semi across the country to deliver drinking water to the affected population. We also designed and delivered equipment to the Middle East for our US military vehicles, to produce clean drinking water for the soldiers on the frontlines.”

Fredricks eventually became a customer of Fortiva Retail Credit before joining their executive team last year. “I was Vice President of Residential Sales at Empire Today, a national flooring sales and installations company with 82 locations and more than 1,000 sales reps. We did several hundred-million dollars in primary finance funding but had no alternative for when a customer was turned down for a loan. The reps needed to make more sales to better support their families. Turnover and rep retention was a massive expense. We identified several venders and Fortiva eventually came out on top in all six key attributes that were important to our strategic partner identification process. It was a simple shift of business. We gave tablets to all our reps, automated the approval process and increased sales dramatically. As a result, we substantially reduced turnover within the first year.”

Fredricks then referred Fortiva to his former colleagues at Sears Home Improvements and they had “a very similar and tremendously positive outcome.” He was so impressed with Fortiva’s value-add to the industry that he decided to accept a senior position on Fortiva’s executive team. He has been targeting mega-regional and national home improvement corporations as phase one of his overall strategy.

Fredricks’ 25 years of experience in the industry gives him a unique perspective on what in-the-home sales companies need and expect from their retail finance partners. “Bringing me on board with my experience in the water treatment and home improvement industries basically lit a fire for us. We anticipate this will be one of the fastest-growing segments that we have.”

Providing dealers with loan approval in 10 seconds
Fortiva Retail Credit serves all US markets including Puerto Rico and the US Virgin Islands. Its parent company (publically traded Atlanticus Holdings Corporation) also operates two other lines of business: Fortiva Credit Card and Fortiva Personal Loans.

Fortiva Retail Credit is the leading second-look finance provider in the nation. Over the past 20 years (through three economic downturns) the company has funded more than $25 billion in less-than-prime loans for more than 17 million consumers. “Fortiva has mastered the art of mathematically managing risk and can provide dealers with loan approval in 10 seconds,” according to Fredericks.

“One of the advantages of being around 20 years is the amount of data accumulated over time. We were into big data long before big data became popular. Just the applicant’s name, address, phone number, household income and social security number can yield 300 attributes of that customer. It works that fast. We immediately know if that’s a good credit risk for us.”

The market for these loans is vast. Since the Great Recession of 2008 more than half the US population has sub-prime credit scores. That’s had a major impact on consumer borrowing and spending. Fifty-six percent of consumers today have sub-prime credit scores, according to a report by the Corporation for Enterprise Development, a nonprofit that advocates for low- and moderate-income households. After 2008 there were few options. The consumer no longer had access to general-purpose credit. “Because Fortiva had already successfully navigated several macroeconomic shocks, we were perfectly poised to fill this void and helped clients optimize their sales.

“Dealers spend a great deal of money to attract customers. The last thing they want is to say no to a less-than-prime consumer who has chosen to purchase their product or to offer a financing program that does not appeal to this consumer. Fortiva has become the benchmark in second-look financing for the home improvement industry because of its approach to exceeding the dealers’ expectations,” Fredricks said. “We have the ability to use the phone, the tablet, the smartphone, the call center, the website, any channel you want to use to get your customer’s credit approved instantly. And we’re doing all this without the dealer incurring any additional marketing expense. Rather than having to walk away, today they leave with that sale and a potential for referral business.”

Tremendous opportunities ahead
Fortiva sees planet conservation and home automation as two tremendous opportunities for the residential water treatment industry. Fredricks says, “The elimination of non-biodegradable plastic bottle waste filling our landfills, reducing the consumption of petroleum in making those products, eliminating carcinogenic chemical leaching into the soil from the discarded waste littering our landscapes, as well as ruining our coral reefs and oceanic habitats should all be major concerns of our generation. By producing quality drinking water in our homes, carrying it with us in reusable containers, eliminating hardness, which leads to early appliance and plumbing failure, and filtering out harmful chemicals, we can improve our environment, personal health and the security of future generations.

“New technology will give people the freedom and ability to control their entire home. We are on the cutting edge. My home was used to test these technologies. Neighbors come over just to drink the water, with crystal-clear ice cubes. Home automation will give us the ability to be notified when salt must be added to the softener, filters changed, media cleaned or replaced, appliances sanitized or that it’s time for regular maintenance. This intelligence can be tied to the same system controlling HVAC equipment, security systems, lights and appliances. All of these systems will eventually be controlled by a remote device giving the homeowner power over household efficiency, safety, energy conservation and time management. This is the wave of the future.

“Bundling drinking water with softening and filtration, as well as tying these systems into smart home technologies, will drive up the price of quality water. Therefore, people will need financing more than ever to get the system with the features, function and benefits that they want for their home and families. I’m very optimistic about what I’m seeing. Good water is good business.”


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