Businessmodel of Sallie Mae

Customer Segments

Sallie Mae has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at students and families seeking financial assistance.

Value Proposition

Sallie Mae offers five primary value propositions: accessibility, convenience, cost reduction, pricing, and brand/status.

The company creates accessibility by providing a wide variety of options. It offers a broad range of loan options, including undergraduate student loans, graduate student loans, parent loans, career training student loans, medical residency student loans, and dental residency student loans.

The company offers convenience by making life simpler for customers. It provides access to an extensive, free online scholarship database, which features information about over five million scholarships with an aggregate value of more than $24 billion.

The company reduces costs through various options. Through its bank, it provides traditional savings products such as high-yield savings accounts, money market accounts, and certificates of deposit (CDs). Additionally, its Upromise by Sallie Mae save-for-college rewards program offers financial rewards on everyday purchases made at participating merchants.

The company offers a pricing value proposition. It provides competitively-priced Private Education Loan products to help customers bridge the gap between the cost of a college education and existing finances such as family resources, federal loans, grants, student aid, and scholarships.

The company has established a powerful brand due to its success. It bills itself as the leading financial services company specializing in education in the United States. It has helped over 34 million Americans pay for college.

Channels

Sallie Mae’s main channel is its website. The company promotes its offering through its social media pages, advertising, contests/sweepstakes, and participation in conferences.

Customer Relationships

Sallie Mae’s customer relationship is primarily of a self-service nature. Customers utilize its services while having limited interaction with employees. The company’s website provides useful resources such as tips from past customers, answers to frequently asked questions, and online planning and paying tools such as calculators.

That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Sallie Mae’s business model entails designing, developing, and delivering its financial products and services for its customers.

Key Partners

Sallie Mae maintains the Sallie Mae Partner Referral Program. Through the program, it works with other financial services providers to deliver its solutions to their customers and members. The partnerships serve to promote its brand and extend its reach. Benefits of the program include:

• The co-branded Smart Option Student Loan product, featuring competitive interest rates and flexible payment options
• Marketing tools and customer support, including web assets and social media posts, email campaigns, and printed materials
• Product training for partners‘ employees ### Key Resources

Sallie Mae’s main resources are its human resources, who include the loan specialists that assist customers in obtaining services and the customer service employees that provide general support.

Cost Structure

Sallie Mae has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is operating expenses. Other major drivers are in the areas of sales and marketing and administration, both fixed costs.

Revenue Streams

Sallie Mae has one revenue stream:  revenues it generates from sales of private education loans to third parties.