Banking on Digital Growth
Banking on Digital Growth

Episode · 2 months ago

141) #ClarityCalls: Why Cost of Acquisition Per Loan Is the Most Critical Metric

ABOUT THIS EPISODE

How does your financial brand measure cost per acquisition?

If it isn’t per funded loan…

Well, it’s not telling you what you need to know.

In this Clarity Calls episode, I discuss why with Carlo Cardilli, CEO at Alpharank, an organization helping financial brands remove the unnecessary friction driving their would-be customers away.

We cover:

- Why measuring per funded loan is the only true way to gain insights into your marketing costs

- The easily-avoidable friction driving customers away from financial brands

- Why compliance isn’t an excuse for poor customer experience

You can find this interview and many more by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

Listening on a desktop & can’t see the links? Just search for Banking on Digital Growth in your favorite podcast player.

Carlo asked do financial brands measurethe cost of acquisition per account or per loan funded, that cost ofacquisition per click. That cost of acquisition per started or completedapp. But cost of acquisition per funded loan. This is a fantastic questionCarlo and one that I look forward to talking through together with you ontoday's episode of Banking on Digital growth. You're listening to banking on digitalgrowth. With James Robert lay a podcast that empowers financial brand marketing,sales and leadership teams to maximize their digital growth potential bygenerating 10 times more loans and deposits. Today's episode is part ofthe clarity calls series where James Robert sits down for a conversationwith someone in the digital growth community to provide clarity into thebiggest digital marketing sales and leadership questions others have. Ifyou'd like to join James robert for a future conversation, text your questionright now, 283254957 and 92. And remember the only bad question is thequestion that goes unasked. Let's get into today's clarity calls,conversation greetings and hello, I am James robert. Ley and welcome to the141st episode of the banking on digital growth podcast. Today's episode is partof the clarity call series and I'm excited to welcome Carlo Card ily tothe show. Carlo is the Ceo of alpha rank on a mission to help bankingcredit and executives make decisions with confidence on products, marketingand growth. Welcome to the show Carlo. It is so good to have you on today man.I'm thrilled to be here. Thanks for having me before we get into yourquestion and it's a really good one. I always want to start off on a positivenote, what are you excited about right now personally, professionally? It isalways your pick professionally. You know these banks and creating as wework with have pretty much an open...

...field. They, there's so much demand fortheir products alone, demand is exploding. So this is a time to reallycrank up the numbers. It really is. And that brings us to your question righthere, which was in your frame this here. Do financial brands measure the cost ofacquisition, per account or per loan funded And, and I want to provide someclarity because it really doubled down on this. You even said not measuringacquisition on a per click basis, not measuring acquisition on an applicationcompleted or started, but measuring acquisition on a funded account fundedloan basis. And I greatly appreciate both the question and the additionalclarity perspective because we're not seeing that's the case on our side andwe'll get into that here in a moment. But I want, I'm curious why ask thisquestion. It's an important one. Let's get into the why of your question forfor some perspective, Why is this important to ask? Well, first of all,uh, it is the day true metric by which you want to measure growth at afinancial institution. Absolutely. So if we think about how does thefinancial institution work, they take in deposits, they lend out thesedeposits on a longer duration they earn a difference in interest, which is netincome. And but that is driven by the volume of loans that you're making,You're not making any loans, you're not earning any income and you're notmaking any money, you're not returning value to the shareholders. If you're abank, you're not returning values the members if you're crediting. So uhthose balances are the driver of the business. So, exactly. I mean, this islike bottom line all the way down. It is essentially kind of a do or die. AndI think digitally that's where there's maybe some false confidence that comesinto play because at this point our...

...focus is really around the qualitativeside. I know the work that you're doing is on the quantitative side. So we'reworking with real human beings, guiding them through secret shopping studies.Um Let's say we take them from an ad or an email or a google search to thewebsite specific product and following them through the process and reallyasking, how does it feel? What works? Well, where does it hurt? What could beeven better? But then you're you're taking this even down to a deeper level.And it's not looking at a click on a c to or click on an application, but itreally comes down to the funded side funded deposits, funded loans. And Andthat's where we see a couple of problems. There's number one, like ifyou're only measuring more of higher up in the funnel. Uh, one of the problemsis around no instant approval. We got such an abandonment there because whatis it? Less than 50% are actually funding accounts um, instantly. Sothat's creating friction and that's where things go and die on the vine andthe number two, then you know, we got to get the consumer to get money intoif it's a deposit account and get money into that account that creates morefriction and a possibility to fall off and not fund and same thing we got toget them to use the loan on the flip side. So I want to flip this back overto you because we're seeing some problems here and we've talked withconsumers about why there are problems in this through the testing that we'redoing and some of the studies. But I want to flip this back over to you. Youmeasure down to a very granular level specific product lines. So what aresome of the challenges that you're seeing on your end here when it comesto measuring acquisition funded acquisition cost of acquisition down tothe front of the account where some of those challenges there? Well from ourperspective, I mean we've built this technology to solve that problem. Sowith the right feed from the website, from the account opening or loanorigination system and the data from the system of record, we can put alltogether and give the institution, you...

...know, the complete X ray. So hey,you've originated 500 funded loans. Congratulations. Let's say it's vehicleloans. You know, that's maybe out of 800 completed applications and you know,out of all those people that came into the final, so we can put that together.If I were to wave my magic wand, we would have more origination systemsthat would be open to running a third party essentially tracking system. Andthere's some, some of them are closed. You could speculate about why they'reclosed. Maybe maybe don't feel very comfortable about the stability oftheir technology. Uh, maybe they don't like the fact that there's a thirdparty auditing what's happening inside their system or maybe they have someother strategic reason, but there are a few that are closed. And what I wouldtell everyone whether it's my family, whether it's, uh, people that work atall frank or clients is, look, the person running the race cannot be theone holding the stopwatch. You need somebody else holding the stopwatchwhere the stopwatch holders and the measures of record. All right. So I'lltake an add on that thought I'm a big believer in transparency, telling thetruth because that's one of the three rules that we have when it comes tomaximizing digital growth all growth begins by telling the truth about whereyou've been, where you're at where you can go next, getting the trainingeducation to provide a path forward. And then taking time to literally justthink think about those, those next steps. And, and I want to dive deeperinto some of the challenges that we're seeing around here, particularly whenworking with financial brands, banks and credit unions. They're doing someof this quantitatively if you will using google analytics in some measureclicks, some measure starts, some measure completed apps. But the gapalways comes down to fund it. It comes down to what are we actually gettingand what's the cost of acquisition? Not per start or per click completed, butper funded loan. And some are starting...

...to bridge that gap with marketingautomation. And they're able to run some regression with that. But eventhen, 60 to 80% of financial brands don't have marketing automation.There's a, an easier quicker way I would say to do this and I want to comeback to this point here with what you're doing it all for rank becauseyou're, you're showing value sometimes 25% growth In 30 days upwards of 31%growth in 90 days growth being fully funded accounts simply by tracking andand measuring what they're already doing. Not adding new complexity, butliterally saying, hey, you're doing this right now. Let's not centersparables all things being equal. Let's figure out what's working, Let's domore of that over here and let's stop doing what's not working over here,down to the bottom line. How are you doing this? Well, it's through data. Soour mantra internally is we let the data speak. So the first thing we do islike Are there any hand brakes that you have inadvertently left on? So what isyour abandonment at every step? And is it within the sort of reasonablebenchmarks? So you might have, you know, 45% abandonment at a page where you'reasking your prospect to select the product and 45% of batman at that page,I'll tell you right now that is uh two standard deviations away from the, fromthe, from the media. So you got a problem there and then you can examinethe flow of the data and have that tell you exactly why people are giving up.So I'll give you give you a real example. I'll make it, I'll make youvery real bank. We're working with, you know, we have this abandonment problemthat we've identified on the product page. What is going on. What isactually going on? Is they have three checkboxes for disclosures. So you haveto accept the privacy policies there, uh general statement on terms andconditions and then the specific disclosures around the product thatyou're about to get. So three...

...checkboxes seems very innocuous. Right?You know what's happened? Three checkboxes possibly go wrong jake. All right. Well this is how it goeswrong when you click on the checkbox is nothing happens. They remain unchecked.The only way you can get those check boxes to check themselves is byclicking on a hyperlink. Uh in this paragraph, it's not the whole paragraph.Just a specific point of the parent. You're gonna click on the hyperlink,reading the disclosure, I would assume. Yes. And what happens when you click onthe hyperlink? Well on a on a on a wide screen device, like a Mac, which isprobably how this thing was designed and tested on a white screen device. Itjust fires up a new tab in your browser and opens up this document, you look atit, you have to close the tab and when you go back to that product page, thatbart is magically checked in. Okay, so on a widescreen device annoying becauseit's got another tab that fires up if you have a pop up blocker, good luckthat tab will never fire. So you'll never be able to complete the check boxon a mobile device though. And that's where two thirds of the action is allsorts of strange stuff house on a mobile device. So for example, uh on aniphone, you'll just get a warning. Do you want to download this file? So Idon't know warning. I'm trying to get alone here. This sounds bad. A lot ofpeople just say forget it. I'm done. You might open up that file in a pdfviewer. Fantastic. Now you're going to go back Through the browser to gocomplete your application now, you gotta do this two more times. So so youcan see now where 67% abandonment comes from. Technology has transformed ourworld and digital has changed the way consumers shop for and buy financialservices forever. Now consumers make purchase decisions long before theywalk into a branch. If they walk into a...

...branch at all, but your financial brandstill wants to grow loans and deposits, we get it. Digital growth can feelconfusing, frustrating and overwhelming for any financial brand marketing andsales leader, but it doesn't have to because James robert wrote the bookthat guides you every step of the way along your digital growth journey,visit www dot digital growth dot com to get a preview of his best selling bookbanking on digital growth Or order a copy right now for you and your teamfrom Amazon inside, you'll find a strategic marketing manifesto that waswritten to transform financial brands and it is packed full of practical andproven insights you can start using today to confidently generate 10 timesmore loans and deposits now back to the show. I feel the pain because you know,we've done the same thing qualitatively with real human beings and you get tothese, these stop points there breaks in this that they seem logical, I guesswhen you go into production, but once you put it out into the real world,it's like, huh? Like for example, a credit union field of membershipquestion creates a lot of confusion, particularly with one instance we sawhow it was being deployed and they had some quantitative data. But forwhatever reason, working with the lending department internally did notmake any of the proper transformations fine. If the data doesn't speak loudenough, let's bring the people to the table and you get 10 people who aresaying the exact same thing that are not internal. These are people in thelocal community. And you're just asking some very open ended questions of likethis experience and it's like you can measure and marry the two differentdata points together and I think but but it can't just be a one and doneprocess, right? This has to be something that is continuouslyabsolutely discontinuous. And also...

...there's this interplay between changesin regulation which, you know, things do change and you have to um keep upyour disclosures and your regulatory compliance with the regulatory climateand the fact that often the compliance team is not part of this conversationaround how well the systems are proving they kind of like over there and I'mgoing to send you this design and then they're going to come back with redlines and I would literally have seen screenshots printed out that were No,no. Yeah, scrawled on pds. I mean, you know, designed by design by committeeand that's part of the problem. So from a qualitative perspective, you have tohave these teams part of the conversation. From a quantitativeperspective, you have to have the conversations, look asking this set ofquestions in this order in this way is going to lead to, you know, maybe a fewpercentage points of abandonment and then some downstream effects on loanquality. I really want to talk about that in just a second. So we gotta, wegotta trade this off. And uh, you know, if you insist on asking somebody abouta wire transfer when they really are just trying to get a car loan, well,this is what happens. This is the data tells you this is what happened now asan organization, we want, we want that or do we want a different outcome. Youknow, it's, it's, it's great. You, you bring compliance into this conversationand I can think of some financial brands who are in the banking ondigital growth program right now and they're going through the universityand compliance is a part of this discussion. Some have 30 or 40 peoplein the university. And when you hear someone over compliance getting excitedabout building a website that sells and their understanding how people makedecisions and how like, you know, it's high level introductory, like UI UX,not getting too, but now they have a basic understanding, they are able totake some of that perspective when they're going in and making thesedecisions that's not going to hopefully make a negative impact like it wouldhave before if they didn't have that.

Clearly they didn't have that awareness.You bring up another great point about loan quality here because you're rightlike like if we're just getting like it could have the perception if we'rerunning digital ads and we're getting all of these conversions for ourapplications, but it's not the right type of loan and they're getting deniedrejection. Right. Right. Well um a great example was one of our clientsand large credit union and there were any of these campaigns and they weretargeting better quality borrowers. So the average credit score going into thetop of the funnel People that are marking do with 700 plus, They lookedat the loans that we're getting approved and they were uniformly onaverage 650 and below these are averages of these populations. So wheredid all my good prospects? Because I'm sending this out to high quality andI'm getting a low quality borrowers back out. And what the data told uswhen we mixed in the credit ratings of the population in and the populationout very simply the better borrowers had higher abandonment, which meansthey have low tolerance for bad process and they have choices, they will justgo elsewhere. So you are left if you have bad process, you are left with thefolks that don't have a whole lot of options. And you know, they have beenturned down here. They've been turned down there. Maybe I can get a loan fromthis credit union. I will, you know, go through these complicated steps becauseI am hyper, hyper motivated. You know, and to, I'm going to share anexperience. I think that might be interesting for the folks in compliance.The challenges not compliance. The challenge is compliance with adelightful process. And I just came back in from overseas to the countryinto the country. And uh, I signed up for a global entry. What a delightfulexperience I'm in full compliance of...

...border control laws. I show up at thisterminal literally just take a selfie using this uh, this machine andeverything happens automatically stamps out a receipt with my name with mypassport number. I hand it to a border control post and I am in it was amazing.And I came back and I was like telling everybody because it was a delightfulexperience in full compliance of the rules. And that's the challenge forbanking today. Let's give him a delightful experience in fullcompliance with the rules and what his experience experience is well definedsystems and processes that have been number one strategically thought out.Number two applied. And then I think the key here is what you and I aretalking about today, continuously optimize learning from what is workingwell. What could be even better and stopping or cutting and letting go ofall of that friction and frustration that's creating chaos in the mind ofthe consumer global entry is a great example. You know, back in the day itwas t S a pre check, but now pre check is kind of, you know, you've got a lotof people doing pre check. So the pre check lines are getting longer andlonger and now. So here's my personal travel hack for anyone listening whenyou take your pre check and you double that up with clear it really then getsyou to the front of the line, dump it. It's a catapult to get you to the frontline of the front of the line and and it makes an otherwise cumbersome,complex, frustrating experience, as pleasant as positive as possible. Carlo.Great conversation, really great question. Um, always appreciate them.If you're listening, what's the best way to connect with you, Carlo? Just goto our website alfa rank dot ai. And uh there's a contact form right there,connect with Carlo. If you have a digital marketing sales or leadershipquestion like Carlo. Text me that question 28325495792. And I lookforward to talking it through together...

...with you on a future clarity callsepisode. Carlo, thank you so much for joining me today. This has been a greatconversation. It's been a pleasure Wonderful until next time and as alwaysbe well. Do good and make your bed. Thank you for listening to anotherepisode of banking on digital growth With James robert. Ley. Like what youhear, tell a friend about the podcast and leave us a review on apple podcast,google podcasts or Spotify and subscribe while you're there to geteven more practical improvement insights visit www dot digital growthdot com to grab a preview of James roberts, bestselling book banking ondigital growth or order a copy right now for you and your team from amazoninside you'll find a strategic marketing and sales blueprint framedaround 12 key areas of focus that empower you to confidently generate 10times more loans and deposits until next time. Be well and do good. Mhm.

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