What Banks Should (and Shouldn’t) Put Into Next Year’s Marketing Budget

Facing end-of-year deadlines, and an uncertain environment, it's crucial that bank and credit union marketers approach the budget process differently this time around. Instead of focusing on the projects that can — and should — be another department's responsibility, marketing execs need to re-evaluate their metrics and priorities.

Just as most practices in the banking industry are rapidly evolving, financial marketing budgets are fluctuating from year-to-year — not just in terms of dollar amounts but also which projects are allocated money. What worked in the last budgeting season is not going to work this time around.

“We used to have a relatively simple way of predicting what our next year is going to look like,” says Sarah Bacehowski, President of Mills Marketing. “We have to approach things a little differently now.”

During a webinar hosted by The Financial Brand Bacehowski spoke about what’s proverbially “in” and “out” in marketing trends. She outlines the key steps that every bank or credit union should be using to design their upcoming budgets as well as what marketing teams should leave out of their estimated expenses altogether.

What To Be Aware Of Beforehand

For starters, Bacehowski says that most of the institutions she talks to aren’t even planning the next 12 months out anymore — they’re actually plotting only the next six months at a time.

“Six months is doable and tactical,” she maintains. “Heaven forbid, another pandemic or something else happens. We need some flexibility and the ability to be nimble.”

Thinking Ahead:

Financial institutions should stop planning out marketing budgets for a full year in advance. Six months might be just as effective and less likely to get broadsided by external forces.

As part of that, Bacehowski recommends looking at what should be left out of the marketing budget altogether — starting with various channel development and upgrades.

“Those are things that are not marketing expenses anymore,” she insists. In other words, marketing teams should no longer be allotting monetary resources to building up different digital channels such as seamless online loan application solutions.

Items that financial marketers should leave out of their budget:

  • Online loan apps
  • Enhanced chat
  • Donations
  • E-Sign
  • Mergers and acquisitions
  • Website

Read More:

One of the biggest budget chunks Bacehowski has been helping her clients remove is donations, which she says should never have been part of marketing allocations.

“We have been working with our clients on that forever,” she emphasizes. “As long as I can remember, sponsorships and donations have been tucked into the marketing budget, which frankly has never made a lot of sense to me.”

This isn’t to say that financial institutions can’t earmark funds from another budget for donations, she continues. However, the ROI of these programs (which she says she’s found to be zero) doesn’t make sense for a marketing department.

The factors Bacehowski cites above shouldn’t be in a financial marketing budget at all, but there are projects which can be shared with other departments to ultimately maximize the efficiency of an institution’s cash flow. Surveys are a perfect example, she says, noting that these routine studies can benefit multiple departments of a bank or credit union — not just Marketing.

Dig Deeper: Building a Data Culture that Supports Digital Banking Transformation

Budget items that can be shared between Marketing and other departments:

  • Surveys
  • Sales training
  • Fraud initiatives
  • Customer journey

“The shared costs allow marketers to do some bigger, bolder things,” she maintains.

To truly evaluate the return on experience (ROX) for consumers — a top industry metric Bacehowski argues banks and credit unions should use more frequently — there are several related characteristics that can no longer be ignored.

New measures that should be included in financial marketing budgets:

  • Referral rewards
  • Media
  • Content/creative
  • Branding
  • Strategy (BI)
  • Sales programs
  • Share of wallet growth
  • Market share growth

Referral rewards didn’t used to be on this list at all, Bacehowski notes, let alone used to be that high. Yet, she explains marketing budgets which center on media-orientated campaigns should be incorporating referral reward programs.

Additionally, sales programs might not be on the list for every marketing team, but Bacehowski suggests that they should be “in the back of your head,” especially for any financial institution who wants to “go strong in media.”

Read More: Best in Class: How Banks Are Mastering the Social Media Game

4 Steps to Build a Flexible Budget

Many banks and credit unions may already take some of the steps outlined below. However, Bacehowski feels it’s important that they take all the steps. For instance, while just about every financial institution might be gathering certain data to inform their marketing campaigns (as outlined in the second step), they could be undermining the entire budget by failing to get input from the rest of the institution, thinking instead they can rely on historical data or opinions to inform their plans.

To avoid these potential roadblocks, the Mills Marketing president has a step-by-step process she recommends financial marketers build into their existing process.

1: Identify and Rank Key Performance Indicators

To start, every financial institution must start with these five universal mandates:

  • Low-cost deposit growth
  • Core relationship growth
  • Asset quality improvement
  • Non-interest income generation
  • Sale price enhancement/brand equity

These five elements aren’t flashy, nor are they unique, but Mills Marketing identifies them as core factors that should be driving all marketing campaigns. Banks and credit unions may of course add to the list or put them in a different order.

2: Gather Baseline Data to Support Decision-Making

“We have to pay more attention to our data,” Bacehowski insists. “We have to let it guide us to be better, more strategic marketers.”

The data comes in multiple varieties and financial institutions ultimately must decide what kinds of macro and micro data they want to pull. However, it should be a balanced set of data points including (but not limited to):

  • Market and industry shares
  • Disruptor activity and impact
  • Profitable customer profiles
  • Product and balance trends
  • Local and market landscapes

Learn More: Banks, Credit Unions Better Buckle Up for These Big Data Trends

3: Ask and Align

Step three is where the “rubber meet the road” for most bank marketing teams, Bacehowski states.

“If I were to say there was a stumbling block for a lot of our clients before we start going through the budgeting process, this is it,” she confides. “They try to create a marketing plan based on history or assumption or just a very small sampling of what those in the marketing team might know to be true.”

It might be difficult, and time-consuming, but it’s imperative to bring senior leadership and heads of line of business into the fold, interview them and ask them questions about what they think, she continues. That not only ensures everyone is on the same page and every department’s needs are met, but it also introduces different ideas.

“There’s not been a single time that I’ve gone through this process that every person comes up with the same answers,” Bacehowski says, “which means there’s probably either some miscommunication or misunderstanding.”

Open Up The Discussion:

Marketers might dread bringing in senior executives, but taking this step in the planning process is crucial to getting the budget approved.

4: Develop an Efficient Calendar

Ultimately, once all the data is collected and the team is on board, the last thing to do in the planning process is design a calendar. But, how the calendar rolls out boils down to finding that “ideal budget,” which is a struggle, Bacehowski admits. And it comes back to that first point — financial marketers can no longer budget based on history.

To put it into perspective, she explains that she just got an estimate to have the windows of her house cleaned — and it was six pages long.

“The contractor basically said, ‘I’m going to give you everything I could do to make your house look amazing and you can start stripping the things out that you don’t want.'” Bacehowski says this is how bank and credit union marketing teams should approach their budgetary plan.

Maybe the department won’t get approval for all their campaigns from senior leadership, but it can help teams establish a strategic plan of what’s necessary versus what they can cut out completely.

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