by: Jay Kassing, President, MARQUIS
In marketing, if it isn’t measured, it didn’t happen.
Marketers cannot take credit for any marketing outcome, for any money they spend, unless they can prove the revenue/profit generated as a result. Some organizations simply manage differently – and prioritize work, so that – only that which is measured, gets done.
Unfortunately, many credit unions are continuing to manage marketing projects/events that offer no hope of a positive return…”because they have always done it this way.” Thankfully, this is becoming less the norm.
Let’s say your marketing budget is $200,000. Is it worthwhile (to your management/the Board) to spend $200,000 in marketing, if you don’t get at least $200,000 in profit in return? In other words, if you don’t at least make back the same value (in profit) as what you spent – why spend it? If the event/campaign/advertisement can’t be measured, or doesn’t look as if it will generate measureable, worthwhile profit – why are you doing it? This is why most every credit union is expanding their use of Direct Marketing – as it is completely measureable.
Many have asked me, “Is there a general thresh-hold or formula that can help marketers know if they have generated enough results/ROI?” Yes! So, how much revenue must you generate from marketing to assure you will deliver profit enough to cover the expense? Let’s do some simple math. We will start by using the same $200,000 marketing budget used earlier. We will assume for this discussion that your credit union’s average earning asset rate is 3%, although your CFO will know the real number. To understand how much loan revenue you need to generate to essentially pay for marketing, you divide the budget ($200,000) by the spread (3%) to get the revenue number marketing must deliver/prove, to break even on marketing expenses. So, $200,000 divided by 3% equals, $6.7 million dollars. If your $200,000 budget is providing more than $6.7 million in provable new loan production, then your marketing is utilizing marketing dollars effectively.
But you will only know that, if you measure what you do…because if it isn’t measured, it didn’t happen.
Jay Kassing is President of MARQUIS, a Texas based provider of marketing solutions including MCIF/CRM software, MCIF services, consulting and direct mail creative/fulfillment. He makes his latest book, “Change Your Marketing, Change Your Results,” available for free at his website. He can be reached at email@example.com. www.gomarquis.com