Marketing’s (Only) Three Challenges

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My first job out of school was as an Asisstant Executive Director of a large hospital. My boss, a good ‘ol boy from Alabama told me:

“Your job is simple, son. There are only two things for you to do: Protect and grow the business.”

My boss had no experience in the financial services industry, but it looks like some bank CEOs could learn something from him.

Creative Brand, a marketing agency out of the Portland, OR area, conducted a survey of 120 CEOs from small banks (asset size ranged from $45m to $3.5b, median size of about $500m). When asked about their biggest marketing challenges, the top three answers were: 1) difficulty measuring marketing ROI; 2) figuring out social media; and 3) insufficient budget.

Source: Creative Brand survey of 120 bank CEOs, Q2 2012

My take: There are three — and only three — challenges that Marketing faces: 1) acquiring the right customers; 2) retaining the right customers; and 3) growing the relationship with the right customers.

In other words, protect (retain customers) and grow (acquire new customers and expand the relationship with existing ones). Everything else — and I mean everything — is related to one of these challenges.

“Difficulty measuring marketing ROI” is a red herring. If your organization’s rate of new customer acquisition, improvement in customer reteention, and growth in existing customer relationship was double what it was last year, and double the rates of your competitors, I’ll bet you $100 that your CEO doesn’t think the firm has a problem “measuring marketing ROI.”

Second, if a bank isn’t putting up strong new customer acqusition and existing customer growth numbers on the board, and its CEO thinks that “figuring out social media” is going to solve the firm’s marketing problems, then s/he should be fired.

And if marketing has an “insufficient” budget, then increase the budget, Bud(ette)! You’re the CEO! You can do that, you know.


For sure, the folks who prattle on about how the ROI of social media doesn’t need to be calculated (and compare it to the ROI of your mother or wearing pants) should shut up. But ROI is a tactical — not strategic — measure.

It’s possible that you can run 10 campaigns in a year, generate an average of 250% ROI, and still fall short of overall marketing success if the investments were too small to generate significant growth in customers or profits.

ROI tells you how successful your investments were. But it doesn’t tell you if those investments were the right investments to make, or if you invested enough. I’ll take a 25% ROI on a $10m investment over a 50% ROI on a $100k investment anyday.


Before the surveyed CEOs worry about the ROI of the marketing investments, they should be worried about the quantity and  allocation of those investments. The research I’ve done at Aite Group suggests that community banks and credit unions are: 1) under-investing in marketing, and 2)  not optimizing the allocation of what they do invest.

According to the research, 34% of consumers who consider a community bank their primary FI referred thst community bank to their friends/family. That’s two percentage points  than large banks turned in, but 13 points less than credit unions. If — as many people believe — referrals are an important driver of new business, this is a warning sign.

Both community banks and CUs have a lower percentage of customers who expanded their relationships than large bank customers in 2011. This suggests that community banks and CUs are less effective at marketing to existing customers.


Improving the measurement of marketing ROI isn’t going to fix these challenges for community banks and credit unions. “Figuring out social media” would have to produce miracles in order to close the gap in customer relationship growth when you consider that the percentage of consumers who follow their FI on Twitter is in the single digit percentages and barely in double digits for Facebook. And throwing more money at marketing won’t help if that money isn’t put to productive use.

Bottom line: Bank marketers need to begin marketing-related discussions with the senior management team focusing on the three challenges. Any discussion of tactics and strategies should be put in the context of how potential investments and initiatives address the challenges.

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