Objectively Speaking, Rethink the Formula
If there’s anything a bank marketing professional can say with absolute certainty these days, it’s that nothing is certain. Quite simply, the tried and true rules of the past don’t apply anymore. In this transformative age, the rules have changed.
That’s certainly true when it comes to establishing a marketing budget for the year. With thoughts of social media campaigns, cross-platform initiatives, and customer lifetime value metrics dancing in your head, it might be very tempting to fall back on the default American Bankers Association .01 percent-of-assets method. A few taps of the calculator and mission accomplished.
But is it? You probably know that a percentage-based budget is based on your bank’s past performance, not future objectives. Like an Indy car driver chasing the checkered flag, you want to be laser focused on what’s in front of you, not what’s in the rearview mirror. To maintain that focus, you want to have a clearly defined objective – or two or ten.
Keep the Focus on Objectives
That’s why objective based marketing, is, in our minds, the best way to define real goals and formulate a real budget that will help your bank achieve real results. That’s a lot of real for one sentence, but let’s not forget that real is the root of reality. When it comes to establishing a strategic, results-driven budget, you don’t want pie in the sky, do you?
“There’s nothing wrong with using the standard percentage of assets budget formula as a rule of thumb,” Stackpole President, Pete Stackpole, points out. “But as a forward-looking strategy, that’s really not an effective way of achieving objectives. Banks should really be focusing on first defining those objectives, and then budgeting in a strategic way to accomplish them.”
Bank CMO’s don’t need to be reminded that there are as many factors impacting the size of a bank marketing budget as there are boats in China – or at least it can seem that way. Is there a new competitor threat? Are you introducing a new product? Are you trying to boost the performance of an underperforming product? New technology adoption? Are you undergoing a rebranding campaign?
And if you’re building a new website, it should be supporting digital banking transactions as much as it serves as a marketing tool. So where does this cost get recognized? Build a case for splitting between marketing and operations and build a site that creates some market differentiation.
For the Best Results, Choose Quality Over Quantity
All of this can make your ‘To Do’ list longer than the epic Tolstoy novel, War and Peace. Unless you have an unlimited budget, you can’t do it all. But you and your team can identify the objectives that are most crucial to your bank’s success and focus your resources and energy on them.
“In some cases, a bank might find itself outspent by a bigger competitor. But that’s OK. It just has to be smarter, more strategic, more focused,” explains Stackpole. “We tell our clients, if you don’t have the budget, pare down your list from say, top 10, to top 7 and concentrate on them. It’s really a question of scaling down your objectives or scaling up your budget. They key is staying focused and not skim coating over the whole list.”
Not only is that approach more effective in achieving results, he points out, it’s also more cost effective. Too many agencies work on an annual budget basis, essentially reverse-engineering a plan, and timing campaigns around how the bank has historically invested its annual or quarterly budgets. That formula is a bit myopic as it doesn’t account for new market opportunities or threats.
“That kind of amortized investment approach is structured to benefit the agency through a fixed and predictable income, but doesn’t serve the strategic needs of the client,” cautions Stackpole. “We consider ourselves advisors to our clients. We help them identify their specific marketing objectives and focus on achieving those objectives— rather than just applying a broad-brush approach across all of our clients.”
Don’t Lose Sight of the Big Picture
The only downside to maintaining a razor-sharp focus on your bank marketing budget and specific objectives is that it’s easy to develop tunnel vision. It’s important to take a step away sometimes and look at the big picture. Neatly framed in that picture should be your brand.
As you know, developing that brand and enhancing awareness is key to achieving overall success. Without that, all these focused initiatives will likely die on the vine. Brand awareness might be harder to measure than a specifically targeted campaign, but if it’s treated like the linchpin it is in an integrated approach, you’ll know whether it is increasing.
“I think that banks – specifically bank marketing executives – are coming to understand that their brand is a reflection of who they are,” Stackpole adds. “There’s a lot of product parity in the banking industry. It’s hard to stand on product alone. Establishing and refining a sense of personality is key. The importance of building the brand – and making sure to budget for that – can’t be stressed enough.”