The Most Effective ROI Formula Examples for Financial Institutions

Posted by Lindsay Borgen on March 10, 2017

Digital advertising – such as social media, email marketing, SEO, AdWords and banner ads – are a virtual requirement for today’s banks and financial institutions. And, tracking and proving ROI is essential to any digital marketing campaign. If you aren’t able to accurately quantify the results of your marketing, it is impossible to make good decision about future marketing expenditures. So the question is – how are successful bank and financial institution marketing executives proving ROI?

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Here are some ROI formula examples that are commonly used:

  • Sales Growth. Perhaps the simplest ROI formula is to measure sales growth relative to marketing costs. For instance, a basic sales growth ROI formula would be: (Sales Growth - Marketing Cost) / Marketing Cost = ROI. There are other factors that can impact sales growth to consider, but if a marketing campaign is failing miserably or succeeding greatly, this formula will reflect that.

  • Cost of Customer Acquisition. The cost of customer acquisition (CAC) is another simple metric that is important to consider. A CAC formula is simply: Marketing Budget/Number of New Customers=CAC. Once this is figured out, the next step is to determine whether new customers are on-average bringing in enough money to justify this expenditure.

  • Customer Lifetime Value Ratio. The most complete assessment of ROI will consider the lifetime value of new customers. The crucial ratio to consider is: Lifetime Value (Income) of Customers: Cost of Customer Acquisition. The goal of an efficient marketing campaign is of course to maximize this ratio; however, at times it may be worth raising the CAC to promote bank growth, even if it means getting less overall value from marketing efforts. 

Fully understanding your marketing ROI is crucial to making good marketing decisions. Following these ROI formula examples can help you develop an effective and cost-efficient marketing campaign.

For more ROI formula examples and tips on how to best prove the ROI on your financial marketing campaigns, download our free eBook now!

Marketing ROI for financial Institutions

Topics: Financial Marketing, Financial ROI, Proving Marketing ROI, Bank Digital Marketing

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