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3 Things Marketers NEED to Know About Budgeting

Penne VanderBush
Nov 19, 2018 3:59:37 PM

As the marketing discipline continues to evolve, your Credit Union or Community Bank's approach to budgeting for marketing initiatives should too. It's more important than ever that marketers recognize their efforts are far more than "just expenses" and are able to appropriately communicate that within their institutions.

Here are 3 things every Credit Union or Community Bank marketer should know about budgeting:

1. Know Your Assets From Your Liabilities
2. Marketing Generates Growth Not Revenue. Know the Difference
3. Create a Dynamic Budget Structure

 

Know Your Assets From Your Liabilities

This is one of the areas most credit union and community bank marketers struggle with. Typically labeled as an "expense department," many marketers view budgeting season as a time to prepare for battle as they fight for the "expenses" they'll be "costing" the organization.

Any good financial professional will tell you that an asset produces income while a liability creates expenses. Since you're surrounded by financial professionals, change your approach to budgeting to property align your assets and liabilities.

Assets (generate income) Liabilities (create expenses)
  • Website
  • CRM
  • Email Automation Tool
  • Etc.
  • Online Advertising
  • Direct Mailings
  • Tabling at Events
  • Etc.

 

Online advertising, direct mailings, tabling at events etc. generates leads at a cost. Those costs are expenses. It's the tools you use to manage those leads that are the assets. This is where many marketers fail to leverage the value they bring to the institution.

Take your website for example. It's open more hours than a brick-and-mortar branch, and similarly it provides access for people to become new members/customers and open new deposit accounts, loans, and services.

Your website does all of this with no property taxes to pay, no utility bills, no fire or flood insurance, and no maintenance fees for mowing the lawn, removing snow, and landscaping. For a nominal annual hosting charge it produces a higher income percentage than every one of your branches. It's an asset, not a liability or expense item.

Modern Workplace with Laptop Showing Landing Page in Doodle Design Style with Text Business Innovation. Toned Image with Selective Focus. 3d Render.Your CRM and email automation tools work tirelessly around the clock providing service to more members and potential members than any staff or team your credit union or community bank could afford to employ 24/7.

The software charges to own these tools are far less than staff salaries and benefits (not to mention an increase in branch expenses to house them), and they provide services to people who prefer the digital experience. Automation tools are assets to any organization that can't afford a 24/7 staffing solution to manually provide a digital experience.

Be sure to present your assets and liabilities accurately when budgeting.

Related Content: 12 Decisive Steps to Grow Your Business

 Hand drawing results graph with white chalk on blackboard

Marketing Generates Growth Not Revenue. Know the Difference.

Marketing is responsible for brand awareness and generating leads. These efforts generate growth, and revenue is a by-product of healthy growth.

Lets break that down.

Marketing can generate the highest quality leads available in your marketplace but if your online applications, loan underwriting procedures, and approval processes are not meeting consumer expectations with regards to experience and timeliness, those leads won't convert to revenue.

Marketing could also inadvertently generate unqualified leads which will move the needle on membership goals, but that's unhealthy growth if those members are subsequently going to result in a net revenue losses over time.

golden wheat field and sunny dayMarketing grows awareness, leads, and membership, but saying that directly correlates to revenue is like saying planting seeds results in a harvest, with no consideration for water conditions, sun exposure, and other factors that influence growing conditions and crop yields.

That's why there's no magic number for calculating a marketing budget based on revenue growth goals. It depends on the efficacy of your credit union or community bank is to generate healthy growth from qualified leads.

 Related Content: 12 Decisive Steps to Grow Your Business

Create a Dynamic Budget Structure

Have you ever found yourself in a conversation with your peers debating if the Paid Social Media Ad line item in your budget should be $15,000 or $10,000 when you're the only person in the room that understands how paid social ads work and the quality of leads you can garner from the channel?

Funny how everyone becomes an expert in what marketing needs to spend in each channel during budgeting season, huh?

Happy young lady holding social icon balloonBetter position yourself for success by grouping budget into dynamic categories like "Digital Ad Spend," with an amount that represents the sum of the channels it will be used on. Then explain to your budgeting counterparts that marketing will use the funds differently each quarter and each campaign depending on the results you're seeing from each channel.

A prime example to support adopting this budgeting structure is the continuous changes in social media ads. While organic posts once performed well with enough engagement, it's now a pay-to-play environment. Every algorithm change makes that more true. The extent to which the next algorithm change is going to impact your budget for campaigns you're going to be running Q4 of next year certainly can't be hypothesized 14 months in advance just because it's "budgeting season."

Likewise, Google is currently beta testing Artificial Intelligence (AI) "learning" algorithms that will build Pay-Per-Click (PPC) ads based on how other user's have responded to similar ads. This AI approach can also change ad headlines based landing page content and the keywords the user entered into the search bar. If successful, the impact this could have on your AdWords spend in the upcoming year are completely unknown. 

In Conclusion...

Piggy bank broken with money inside on white backgroundAt FI GROW Solutions we often hear clients say "use it so we don't lose it," which roughly translates to "spend this money on anything possible so I can keep the same amount on this line item for next years' budget."

Likewise we also hear "that would be perfect for us, we just don't have money left on that line item to do it." If this sounds familiar to you, your budgeting strategy is broken.

To avoid these types of budget failures, you need to revamp the way you budget. You can't operate efficiently in a dynamic environment with a static budget structure. The skill sets, tools, and platforms required to be successful in marketing are continuously evolving and your budget strategy must also adapt.

If you need help with your digital marketing spending, contact us here at FI GROW Solutions for help!

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