How does marketing prove its value? Banks exist in an increasing limbo where marketing and branding grow more obtuse while expense details and budget demands grow more exacting. Financial institutions are working to bring their new mobile services and online advantages to consumers, but are increasingly challenged to pinpoint the effect those efforts have.
The good news is that precise marketing ROI formulas do exist and can be utilized when evaluating the analytics of social media and online marketing campaigns coupled with sales results. If you are tracking your campaigns, ROI formula examples like these can help you prove the ROI on your efforts and be able to present them to upper management.
Simple ROI: New Customer Metrics
For banks, the "new customer" metric can be particularly useful because it can be measured in terms of final sale numbers: a customer opening their first account or applying for a loan. The formula is very easy to apply to various marketing statistics and sales results to measure and prove the success of your efforts.
For example, say that sales and marketing costs for the month’s campaigns are budgeted at $300,000. At the end of the month, the real budget is on target and the bank has opened 30 accounts for new customers. Using the Cost of Customer Acquisition (CAC) ROI formula Sales and Marketing Budget/New Customers = Cost of Customer Acquisition, it is costing the bank $10,000 to bring in each new customer for this month. Is this viable based on how much profit new customers generate? Further research is needed, but this is a valuable starting place. The CAC formula results can be used to evaluate the effectiveness of the sales and marketing efforts and whether they need to be optimized to produce greater results.
Marketing Percentage of Customer Acquisition Costs
This ROI formula example is more useful for tracking the marketing portion of customer acquisition costs. In other words, if you have multiple sales, lead generation, and advertising expenses that are responsible for bringing in customers, this can help narrow down the specific role that marketing plays in the budget.
For example, say that marketing costs for a quarter came to $150,000. This includes all expenses related to marketing, including wages, commissions, ad fees, overhead and everything else. Say also that total sales and marketing costs came to $300,000 for the quarter: This includes all customer acquisition costs in customer service, marketing, sales and any other expenses that lead to customer acquisition. Here Marketing Costs/Total Sales and Marketing Costs yields a simple value of 50%, showing that half of customer acquisition costs come from marketing.
If your company favors customer acquisition costs as a key metric, then an ROI formula example like this can shed like on the role of marketing in acquisition compared to other departments, which can prove especially valuable when defending a budget. For more ROI formula examples and tips on how to best prove the ROI on your financial marketing campaigns, download our free eBook now!