Measuring Your Marketing Investment

2/2/2012

By Lauren O’Connell, President
     O’Connell Consulting Group, Inc.

How do you measure the success of your bank’s marketing investment? If you’re like many community bank CFOs you don’t always know what your marketing investment is doing for your bottom line. Here are a few simple approaches to getting your arms around this age old question.

Set the foundation: Clearly define what will be treated as a marketing expense for your bank. Many banks lose sight of their true investment in marketing by spreading expenses across different GL accounts. For example, a letter to customers promoting a product may be in your printing line, your advertising line, or somewhere else. Define what is and is not included in your marketing GL and adhere to it.

Make sure only one person is responsible for the entire marketing GL line. If multiple people can approve invoices then you lose control and accountability, and just identifying what you spent becomes much more difficult.

Let’s assume the budget has been set for the year. You now need to establish a pre-determined limit your marketing leader can spend without your input. When an expense exceeds that amount, make sure you’re part of the team that evaluates and understands:

• What the marketing team is planning to do
• What they expect to accomplish
• How they will measure success

Typically this is done in your marketing plan. Every bank should have one and it should include all three steps. You’ll also need this same disciplined approach for large marketing campaigns to help you define what the bank would consider a successful marketing initiative – in essence how happy will you be when you measure your return on investment.

Measuring success is sometimes very straightforward. You do a campaign and have set a goal of XX new accounts or loans or balances, and you’re spending YY. Make sure your system is set up to track this information and if not, make plans to manually track or outsource this important component of your marketing program. For other initiatives, it’s not so easy – and you have to measure impact in softer approaches. This can, however, be as simple as asking, did the initiative leave a positive lasting impression relevant to my brand? Did you learn what you set out to learn to support your next initiative? Refine questions like that and agree on how the answers will be measured.

The key to measuring success in marketing is developing the thought process and projecting results in advance. By doing that, you know if you’re happy at the end of a given project because you’ve defined what success looks like. The worst place to be at the end of an expensive initiative is not knowing if you’re happy with the results. Expectations need to be set up front.

So – partner with your marketing team and agree on expectations and how to measure results during the budget process. Having a marketing plan is a great foundation. Take the same steps before a major project launches.

Do this so you’ll know how to respond when someone asks you how effective your marketing efforts are – and why. Now isn’t that a better approach?

Editor’s Note: O’Connell Consulting Group, Inc., is a professional marketing firm that specializes in developing customized and measurable marketing solutions for financial institutions to help them acquire new profitable customers, retain and cross sell existing customers, and build critical communications during mergers and regulatory situations.