How a digital transformation helped this CMO generate $6m in incremental business
- 28 November, 2018 11:19
Stratton Finance has secured $6 million in incremental loan financing business and opened up two new customer segments just one month after launching a complete end-to-end digital product offering.
The car financing company, which is part of the Carsales group, kicked off a holistic transformation effort two years ago, a move sparked by serious changes proposed by ASIC to the industry’s flex commission schemes to cap commissions and bring more transparency and fairness to customer financing.
Stratton CMO, Nathan McEwan, said the removal of such fees, which came into effect on 1 November, saw most car dealerships close down their in-house financing arms, paving the way for strong market share growth for Stratton. This, coupled with the push for transparency around financial services stemming from the Australian Royal Commission, led the group’s board and executive team to commit to a digital, data and customer transformation.
The second impetus for change was recalibrating under Carsales leadership. The group purchased a majority stake in Stratton Finance in 2014, and McEwan joined the business and its executive team 18 months ago.
“As a new leadership team, which I’m part of, we needed to articulate what the company’s purpose is,” McEwan told CMO. “So we centralised strategy function under marketing, and have worked to design an organisation that makes buying and financing cars as simple and transparent as possible.
“We see customer centricity as a competitive advantage. People have to actively choose to work with us.”
Having articulated its ambitions, the next step was working out the strategy required to achieve them. This flowed into a technology overhaul, which saw Stratton purchase Salesforce Marketing, Service and Community Clouds 12 months ago.
“We knew we weren’t going to be able to scale our existing business model, which was bums on seat, calling customers on the telephone and email-based responses,” McEwan said. “We knew we needed to articulate what a good digital experience is and how to deliver some of the value we do now but at scale.”
Convenience, transparency and control are Stratton’s key pillars, and McEwan said the leadership team spent months defining tension points for customers buying car assets within these pillars, working with Proximiti. The group is largely focused on the second-hand private car sales market.
“For example, we have mapped out and solved getting clear and transparent quoting online that is accurate, rather than ‘from $499’; based on wat you tell us we can give you a more closely priced offer,” McEwan explained. “It’s also around verifying the customer: Being a broker, there are legal and compliance obligations as well as consent and privacy to act on a customer’s behalf with lenders. We’ve now digitised and automated all of those.”
The next part was how the customer gets the right deal quicker. “Though the application process, now on Salesforce platforms, we connect directly into Equifax and the ID verification framework,” McEwan continued.
“No longer do customers have to go to the post office and get their driver’s licence stamped and scanned; it happens in real time on their devices.”
What was key was articulating the problem to solve before looking for technology solutions, “not buying solutions then finding a problem”, McEwan said.
This work culminated in the launch of ‘project roadster’ in October, an end-to-end digital experience for customers. Built after a four-month build and deployment process, and working with Salesforce integration partner, SaaSfocus, Stratton now offers customers the ability to self-serve through the financing process.
“In the background we’re verifying their income, assisting where we need to, and working with other tech platforms so we can verify information as you give it to us,” McEwan said.
Enabled by Salesforce technology, Stratton worked with Macquarie on the proof of concept. Key is the real-time decisioning engine, which provides customers with more control over things like where their credit file goes, as well as delivers more transparency.
Stratton is also working with another tech provider in the private car buying space on private vehicle verification using a mobile app. Previously, the process was highly manual and physical, and took days to complete. Now, it’s done in 3 minutes, with the whole digital process taking 30-40 minutes.
Within the first month, Stratton secured $6 million in loans in the pipeline. “Why that’s important is the customer profile is different,” McEwan said. “We are attracting and working with a bunch of new customer segments that didn’t like our old model, which was give us a lead online and we call you, and transact the whole thing over the phone.
“For example, more than half the applications are from millennials, who don’t normally want to talk on the phone. We’re also over indexing on females.”
Selling the idea
The key was pitching to the board as a proof of concept, sponsored by the CMO and run in parallel to the core business. “Initially our ambition was how to transform the business. But Stratton has been around for 20 years and transforming big legacy things and putting a business at risk is really hard,” McEwan continued. Incremental growth became the lead outcome.
“We pitched this idea to the board around starting at absolute purism and based on what’s the best CX and tech experience, as well as best commercial outcome. And we did it next to the business running day-to-day.
“When we pitched to the board, we articulated a couple of segments we weren’t doing well in. Now we can say 50 per cent of applications fit those gaps.”
While comparing ‘project roadster’ to other internal startup propositions, such as NAB’s Ubank digital bank and Qantas’ Jetstar, McEwan said he made the conscious decision to use existing staff supported by SaaSfocus. The digital project team, overseen by the CMO, was seconded to the project, supported by the head of lifecycle retention marketing and a business analyst.
“What we did have to do is map all the business processes in order to get the right solutions,” he said. “There was six-and-a-half months of digital product work done, mapping processes before we ran the tech process.
“We worked with sales leaders to understand which types of customers would go through this channel. Our proprietary lead management system, as old and clunky as it is, was something we were able to work around so we don’t have duplication of data sets and could allocate ownership to the right section.”
The biggest shift has been from a sales-led mentality to a customer one. “With the industry changes, we had to have a lot of stakeholder work and engagement with the team,” McEwan said. Simultaneously, Stratton has updated internal data visualisation technology using Tableau, which meant the new digital offering could plug straight in.
“There is work to optimise, but now we have proven it, what we have is the opportunity to re-imagine this part of the business, where consultants can be more productive, help customers more successfully, and deliver better business outcomes.”
What project roadster has done is give Stratton a roadmap and path to the future. “Our old process was payslips, what we’re seeing in recent and testing was younger customers are more comfortable and have more often been asked to log into the bank account and have the data sucked out,” McEwan said by way of example.
“What we’ve built with Salesforce better positions us for the Open Banking protocol coming up. We can ingest and export data so much more easily.”
The ability to white-label its digital product is another opportunity and McEwan said it’s investigating this for Carsales. “We’ve also got large dealership groups talking about taking that tech and offering it to their customers,” he added. “It’s an asset for Stratton.”
Up next: The Marketing Cloud transformation behind it all
Marketing Cloud transformation
In advance of project roadster’s launch, and as part of wider marketing efforts, Stratton embarked on project with Datarati to roll out Salesforce Marketing Cloud. McEwan admitted the platform integration, which went live 12 months ago, was one of the hardest tasks to date.
“Integrating that into a legacy system is never in the brochures, and the thing I didn’t flesh out enough is integrating world-class tech with an old system,” he said.
Customer lifecycle management has been one major priority. Through data insights and tech integrations and using Marketing Cloud, Stratton has been able to better provide value in the customer lifecycle outside the moments of buying cars, implementing a full lifecycle program. To help, it’s leveraging industry insights and Carsales data points.
One successful initiative is based on the customer’s propensity to churn and sell a car. Using these insights, as well as the value of their car based on Redbook, Stratton has launched triggered customers communications.
“We also tap into the finance situation with the lender – so for example, your car is worth this much now and you only owe this much,” McEwan said. “At an enterprise level, we’re working with Carsales on closing the loop on customers transacting second-hand cars… building a better profile of customers for Carsales.”
Another tool thanks to Marketing Cloud again uses Carsales data to provide customers with advice on the average time it takes to sell your type of car, and the price it sells for.
“This allows the brokers who get alerts about these opportunities to have much higher quality conversations,” McEwan said.
These efforts have been a game-changer for marketing’s standing in the business.
“The legacy business had looked at us as generating leads, and then they did all the heavy lifting - which they did. Now we have changed that dynamic,” he said. “Marketing and digital now sits at the front of the organisation, championing tech advances but also why it’s good for customers and consultants.”
In addition, Stratton is using Marketing Cloud to deliver Net Promoter Score (NPS) processes and reporting key customer interaction moments in real time.
“We set benchmarks around fin services, and proposed moments in time where we would take NPS, and it rolled out as it should. Feedback from customers was positive,” McEwan said. “By June, state sales managers were such big advocates, they opted to integrate NPS into incentive payments. And we NPS people we can’t help too.”
What helps is a company mantra of ‘customers for life’. So another metric measured is repeat business, tracked daily.
Along the way, Stratton has learnt some hard lessons about its data capability. “One gap was that you could talk to us the whole time about a brand new Golf, then at the last minute decide to get the Polo. That info was only going into the lender’s application but not update ours,” McEwan said.
“We’ve run into a few brick walls there. We used to be highly personalised, now we’re 55-75 per cent personalised with type of asset you have, address, relevant content relating to what we know about you personally, some life stage stuff, and how often you’ve engaged with us in the past. Repeat is different to people in their first loan with us.”
Some of the biggest opportunities for personalisation have in fact been in Ad Studio within Marketing Cloud for acquisition.
“Our opportunity for acquisition as a sales business has been transformed,” McEwan said. “We used to almost be inbound marketing; we’d put the pool skimmer net in the water and whatever we caught, we’d work through. It’s still somewhat the case and we get a live quote on every car on Carsales. We can’t control the quality or fakes, so we get a lot of leads.
“But the rest of our marketing is more targeted outbound, transforming and building audiences based on the ones we actually want. Using custom audiences and look-a-likes in Ad Studio has allowed us to improve our efficiencies from a CPA perspective, and CPL.”
Supporting this, McEwan has led a migration of thinking about leads and opportunities to what does it cost to settle a customer. It’s another massive change for the business and one that’s elevated marketing’s standing.
“Giving the board and CFO visibility of what it costs to transact customers and showing a positive trajectory on that means we keep getting more investment,” he said.
Eighteen months after joining, McEwan has a team of 18 now, up from three, covering brand strategy, digital marketing and media, lifecycle retention and digital project. And marketing is now at the very front of business planning thanks to a clear dashboard and targets based on spend, performance and quality. Key measures include customer acquisition, amount of money funded and driving NPS.
“In last 18 months, we report monthly to the board, I suggested a marketing dashboard which tracks investment against our KPIs, which we set every six months,” McEwan said. “As a result, FY19 is the first year the marketing team drove the business planning process for the forecast. We had all the data and opportunity to do it.
“The leads we bring in the door purposely all transact at higher amounts. Conversations with brokers are significantly higher, as it’s a better credit quality customer. The dashboard has transformed credibility of the department.”
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