Banks and credit unions want to see their marketing efforts pay off, but many marketing teams struggle with calculating their programs’ return on investment (ROI). In a recent study1, 84% of marketing executive respondents felt the pressure to prove ROI, but four in 10 respondents said that their organization lacks alignment when it comes to defining it.
Although marketing ROI is a powerful reflection of your institution’s success and longevity, there are challenges along the way to accurately quantifying campaigns’ returns. In this article, we dive into the modern definition of ROI, the obstacles to calculating it, and some potential solutions for your financial institution.
Modern Marketing ROI
Return on investment is a measurement of an investment’s performance. Businesses aim for a positive ROI percentage to signify a profitable investment that’s working in their favor. A standard formula for ROI divides the net profit by the cost of investment and multiplies that number by 100.
Organizations have different marketing goals, and they use a mix of tactics to accomplish them and capture consumers’ attention. The definition of a “good” return on investment can vary from institution to institution, and a good ROI for one bank could be growing brand awareness or website traffic, but for a credit union, it could be an increase in loans. For example, if a credit union spends $10,000 on an auto loan campaign and gains $100,000 from new loan applications, the campaign’s ROI is 900%.
Difficult to Calculate
Plugging in numbers is simple in theory, but the marketing ROI for a bank or credit union can be hard to measure. In addition, noticeable impacts on an FI’s profit margin or consumer base may happen over a prolonged period of time. One of the main reasons that it’s difficult to determine marketing ROI for your FI is that there are generally multiple marketing programs such as email campaigns, active social media profiles, display ads, etc. happening at the same time.
Calculating the full time and costs spent on one campaign, and then trying to pinpoint which marketing tactic (or combination of tactics) attracted a conversion or account opening is hard to do. Many institutions look for the financial value gained from a certain marketing program, but that’s challenging to calculate because it can often be a group effort.
Potential Solutions for FIs
ROI analysis may seem tedious and challenging to compute, but it’s worthwhile in the long run. One of the first steps in making this job easier is to invest in the right tracking and marketing automation tools. By implementing these tools, your FI can reduce spending waste and target consumers more precisely.
When aiming to calculate ROI, we suggest taking an in-depth look at how people are moving through your sales funnel. In a previous article, we walk you through the different areas to focus on, including metrics associated with generating traffic, generating leads, and converting new consumers.
Solutions like Prisma help measure ROI by managing campaigns across multiple channels at the same time. For example, let’s say your institution starts a HELOC campaign via email, text, social media and online banking banners. Normally, institutions have to find different ways to measure engagement for each channel and make these measurements compatible. With Prisma, you have a core campaign with multiple channels delivering to it, so it’s easy to see the returns for each campaign channel, including the reach, engagement and conversions — no matter how many channels you use.
Your financial marketing strategy is personal to your institution, but there are ways to shape your budget for next year. Some best practices to think about include measuring the full production process and its cost – time spent, promotional costs, page analytics, and any positive non-financial returns such as increased website visitors or engagement with your LinkedIn page.
Marketing automation helps your institution create measurable returns for your marketing efforts, and Prisma’s marketing automation software can work with your financial institution to implement high-performing campaigns. For more helpful marketing tips and strategies, visit Prisma’s blog posts.
(1) How Today’s CMO Can Leverage ROI to Prove Growth
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