Are bankers really thinking like retailers??

A very good friend of mine is a former car dealer and now leads the Greater Dayton Automobile Dealers Association....I share this to provide a frame of reference for Tom's words of wisdom.

He always says, when times are tough or challenges lurk ahead, that we have to "retail our way out of this..." I have heard it many times and I stopped to think about it just yesterday.

What Tom means is that we have to put energy, focus and many times financial resources toward overcoming problems...that means when sales are slow, you ADD more advertising, promotion and marketing. Traffic generation is critical to a car dealers success. Now think about banking...and more specifically, your bank. When margins are squeezed, loan volume dips, or competition is extra tough...does your marketing investment increase to compensate or are you on the sidelines trying to save the investment?

I certainly hope you are making the case for increasing the investment to support and overcome the challenges. However, IF we have not built the case that, 1st, marketing IS an investment vs. expense...that conversation is going to be a tough one.

So, how do I build the case for marketing being an investment vs. expense? Three magical letters... R - O - I !!!

You should be tracking EVERY marketing dollar spent and categorizing them into one of three categories....(1) ROI Trackable (2) Community Involvement/Donations (3) Cost of Doing Business.

ROI Trackable
These are ALL marketing, advertising and promotional investments. Home equity promotion back in April...Yep. Summer loan promotion...Yep. The pending fall checking push...Yep. We need to track the results, make assumptions and quantify the impact and match it against the investment required to make it happen. I firmly believe you should have a "floor" that protects your investments...say 150%. That floor is the lowest projected ROI that you will move forward with a program. Imagine being able to go to your CEO and say, with heart and passion, that every program is generating 150% or more....and the ones that do not...we analyze and make better!

Community Involvement
This category is for the "must do's" and "we have done it for XXX years" categories of expenses that simply cannot be measured or the measurement does not apply because you will be required/urged to do it anyway.

Cost of Doing Business
These are expenses...yellow pages, online hold, etc. that are simply required for doing business as a bank and should not be help as accountable for ROI measurements. However, diligence in managing these items will certainly win you big points!

Once you categorize your activities...you have clear guidance on what to track and what to monitor...we overlook nothing! So...how do I calculate the ROI...a discussion for another day...or simply give me a call!

Cheers!

Bruce