By Mark Gibson
Marketing planning will be kicking into high gear in coming weeks. For many marketing directors, that means facing the annual struggle with competing objectives—and wondering how to accomplish every priority with the people and dollars they have.
Meanwhile, many CEOs and line-of-business executives don’t see the connection between marketing activities and business results. The conclusion is to treat marketing as an expense to be managed, or worse yet, minimized.
Most marketing directors have experienced this dilemma at some point in their careers. Internal clients are asking for more and more support, and yet executive management does not fund the resources to provide that support. Some of us have even experienced the dilemma of a zero-sum budget—having to justify every single dollar, not just the incremental budget increase.
How does a marketing director or CMO resolve this seemingly intractable problem?
Let’s begin with an actual quote from a bank CEO of my acquaintance: “I’m not that excited about the creativity of the agency or our marketing team and I’m not seeing the results. There is a disconnect. Account openings need to go up. Commercial business is increasing, but that is not from marketing. I’m just not confident we’re doing the right things to drive business.”
This window into the CEO’s thought process offers three important insights:
- A misperception that marketing is primarily a “creative” discipline
- Lack of perceived business results from marketing
- Lack of measurement and attribution of results generated from marketing
Let’s briefly explore each of these.
What is marketing?
The marketing discipline has transformed itself over the past several years, from primarily a communications function to a value-creation and revenue-generation function. This has been driven by changes in consumer behavior, media, technology and data analytics.
Even for marketing departments that have been adept at navigating this sea change, bank senior management can still perceive the function as primarily a creative communications services organization. This calls for a re-education process within the entire organization, but particularly with executive management.
Directly related to this redefinition of the marketing function is the integration of marketing and sales generation. Leading organizations have realized that using data analytics to understand their existing customer base—and the prospects around their branches—can help target cross-selling and new household acquisition efforts. Enlightened line-of-business executives now expect this type of marketing support to help them reach their product and customer growth goals.
Additionally, those same executives know that the activities of their front line staff should be coordinated with the campaigns being run by marketing in order to maximize the impact of those campaigns.
It comes down to measurement.
Above and beyond data analytics, marketing also needs to understand enough finance to be able to measure and correlate sales results with marketing activities (think Excel spreadsheet). This attribution is seldom precise, but it needs to be measured and reported to senior management. For instance, if the bank decides to spend $100,000 on an activity, it needs to have some degree of confidence that business results were generated by that activity. And ideally, a “cost per acquisition” of new product or household is being measured and related to revenue. More on that in a minute.
At the starting gate for a marketing budget increase…
So, what does a marketing director need to do to get the resources necessary to successfully support the organization?
High performers have five things in common:
- They align the marketing plan with the business objectives of the organization. For instance, if the number-one priority is growth in small business clients, align the majority of your marketing resources and attention to this objective.
Nearly all marketing departments are guilty of trying to accomplish too many things. As a result, they risk siphoning resources away from the one or two major objectives they should be focused on. Tough decisions need to be made here in order to have the right focus and dollars for what’s really important. As part of your plan, talk about which of your activities directly support revenue generation, and which ones don’t. And be direct about some of the non-revenue producing activities your team might not have money or time to work on. Remember, tough decisions are necessary. Marketing can’t do everything!
- They are proactive. Don’t wait for line-of-business executives to come to you. Make sure you know what the priorities are for the coming year, or what decisions are coming out of ALCO. Meet with your team and agency to brainstorm solutions, then proactively bring ideas to your internal clients to help them with their deposit, loan and customer growth challenges. Have an annual plan that has been approved, so you can minimize ad hoc changes in direction when an executive returns from the conference of the month with a new idea.
- They partner with sales and the lines of business. Make sure you know what the sales and line-of-business priorities are. Then coordinate your campaigns and activities to support them. For instance, if the retail bank has large home equity goals in the spring, you should have a plan to drive customers and prospects to them.
Also, meet with your sales partners frequently before, during and after the campaign is launched. Find out what is working and not working and make course corrections.
- They quantify their impact. If you are going to spend $100,000, what are you going to deliver? Try to avoid “vanity metrics” like clicks and views. Focus on metrics the sales team understands—like “warm leads delivered” or better yet, applications and booked products. If you haven’t measured the correlation between marketing activities and sales before, that’s okay. There’s no time like the present.
Set up a test with the line of business and finance department something like this: “Last year we spent $X and we got Y units of sales. This year we are going to spend X% more, and at the same cost per acquisition as last year, we expect to see a growth of Y number of units.”
- They measure, report and effectively communicate. It’s one thing for you to tie your marketing activities to business results. It’s another for the executive management team to know you are doing it. Remember, it can take a while to change old perceptions about marketing. Build it into your plan and provide regular updates and reminders. Executives need to be constantly reminded that there is a positive correlation between marketing spend and sales results.
The bank marketing discipline is rapidly evolving.
The good news is that most senior executives understand how important marketing is to the success of the organization and want it to succeed. While it’s no cake walk, the door is wide open for enlightened proactive marketers to demonstrate the value of marketing as a true revenue producing part of the organization, and command the resources to do the job properly.
Mark Gibson is senior consultant at Capital Performance Group, a strategic consulting firm that provides advisory, planning, analytic and project management services to the financial services industry. Email: [email protected]. LinkedIn.