Marketing is a critical component of your financial institution’s business strategy. It drives customer acquisition and retention, promotes high-margin products, builds brand equity, facilitates cross-selling and up-selling, improves customer experience, expands market reach, enables data-driven decisions, and mitigates risk. All these factors contribute to generating revenue and ensuring the long-term profitability of the institution.
Thus, rather than being a cost, marketing is an investment that pays substantial dividends by making money for your bank or credit union. However, as a bank marketing professional, it could be up to you to prove that your initiatives make money — or face being the first department to lose funds when budgets are cut.
In our survey of C-suite executives, only a little over half called marketing an essential part of their financial institution’s growth.
That leaves a big minority of decision-makers and budget-approvers who either don’t believe that marketing benefits the bottom line, or don’t think the results of marketing efforts can be quantified. And it puts your ability to do your job effectively at risk when budget cuts hit your financial institution.
It falls on you to set the record straight. The key? Learning which tools and what data you need to prove that your efforts do in fact generate ROI (Return on Investment) and significantly contribute to the profitability of your bank. With the right mindset, and the right data and metrics, you can understand — and articulate — how every product line generates income.
Where to Go Next
To advocate for your department, it’s important to get input from the CFO so you have the metrics you need. Then you need to know how to talk about them, so you can discuss the profitability of marketing by calculating ROI in advance.
The surprising sizzle of deposit accounts — if you know where to look.
A checking or other deposit account campaign might not sound like a great investment when you pitch it to the c-suite. With an average annual revenue of $250 to $350 for each checking account, they’re often perceived as low value—so why are many banks offering big incentives to bring in checking accounts?
Because over time, it pays off!
Say you offer a $500 incentive to customers who open a checking account and sign up for Direct Deposit, with all the various disclosures. That may seem extravagant, but the point to emphasize when you make your case is that a checking account isn’t a one-time producer of revenue. Per a recent survey, most checking accounts (80 to 90%) stay at the bank for 15 years. An account that’s generating $300 a year for 15 years is generating around $4,500 in revenue over its lifespan. And if you run a promotion that brings just 50 new incremental checking accounts into the bank, that adds up to $225,000 of potential revenue!
Depending upon the cost of the incentive and the marketing of this promotion, your marketing department would be responsible for triple-digit ROI!
(For example: 50 new accounts @ $500 opening bonus = $25,000 in one-time cost). Let’s say your marketing costs were another $25,000. That’s a total of a $50,000 “marketing investment” for this campaign. Once you calculate the estimated revenue generated ($225,000 – $50,000) your marketing team generated $175,000 in lifetime revenue for your financial institution, or an ROI of 350% ($175,000/$50,000 = $350%) for this one promotion.
These calculations can be done for any financial institution’s product or service — you just need the data required to calculate the marketing ROI. If that’s difficult to acquire at your bank or credit union, let us know and we’d be pleased to offer some benchmarks that could assist you.
Over time, the goal is to ensure your marketing budget is looked upon as a revenue generating investment for your financial institution, not a line item on the expense side of an income statement that invites scrutiny and potential reduction.
The X Factor
Marketing carries less quantifiable but equally important magic — with any on-brand, cohesive marketing effort, you get high exposure in your area for the duration of campaign. You’re increasing recognition of your financial institution and staying top-of-mind with potential customers/members, today and into the future.
These efforts go beyond products and services, delving into the essence of your institution’s identity and values. It’s the thread that weaves together your history, mission, and vision, and has the power to create an emotional connection with your audience. By understanding the importance of crafting this secret sauce and embracing it as a strategic imperative, institutions can forge deeper connections with customers, inspire loyalty, and thrive in an increasingly competitive landscape.
“I know 50% of our marketing works, the problem is I don’t know which 50% it is.”
— C suite executive, long ago in the days before martech
Marketing mysteries are a thing of the past. With state-of-the art martech (marketing technology) tools in place, you’ll have the data you need to show how well your efforts are working.
A well-built martech “stack” can include analytics that help you make nimble decisions and adjustments in-market, provide actionable customer insights, and more. With SEO tools, your marketing can keep up with search trends and user behaviors. Other technologies include Customer Relationship Management Systems, Social Media Management, and Marketing Automation. The right martech stack can help you get better — and highly measurable — results.
Read more and see if your martech stack stacks up. For analytics in action, read about How Results Can Shift from Good to Great Mid-Campaign.
The economy is no excuse — tough environments can showcase the power of marketing.
Sometimes changing your mindset — with the go-ahead from the c-suite — can help shift customer mindset as well. When one of our clients wanted to run a lending-focused campaign in a high interest environment, we took the emphasis off rates, and focused on customer needs — moving on with their dreams, making investments in their homes, etc.
With an umbrella campaign that included print and digital elements which drove to a landing page that served as a hub for the new initiative, the bank grabbed attention and had significant market presence throughout.
And the numbers do the talking:
The results didn’t stop there; With the campaign in full swing, and over a period of 5 months from November 2023 to April of 2024, 42 new HELOC accounts and 24 new equity loans were opened totaling $6.5 million dollars and $1.3 million respectively. Compare these results with the same period in 2022, before the bank invested in this campaign: just 20 HELOC accounts and 41 equity loans, with a total dollar amount of approximately $6.7 million for both products combined. That’s an additional $1.1 million in loans year over year.
Don’t forget, that additional $1.1 million generates revenue for your FI every year, those loans remain open at a 3% NIM, that’s $33,000 of net revenue annually.
Read the case study to find out more.
The Bottom Line
Proving the ROI of your financial institution’s marketing budget is not merely about financial metrics; it’s about optimizing performance, enhancing strategic decision-making, and driving sustainable growth. By quantifying the impact of marketing activities in terms of revenue generation, customer engagement, and competitive positioning, institutions can foster a culture of accountability, innovation, and continuous improvement. This data-driven approach not only strengthens the institution’s market position but also ensures that every marketing dollar contributes effectively to its overall success.
Need more back-up? Visit our website to view case studies, sample analyses, blog posts, and other resources that can help equip you with the information you need.
Pannos Marketing creates cutting-edge, customized websites and fully integrated creative campaigns for financial institutions. From articulating or reimagining your FI’s brand to developing data-driven, technology-forward digital media strategies, we have the financial industry know-how to build customized solutions that drive growth and keep you in front of change.