Prove Your Bank’s Marketing ROI with These ROI Formula Examples

Proving your bank’s marketing ROI is extremely important in showing the value of marketing in a bank’s overall business plan. Many metrics and analytics exist in today’s ever increasingly digital age, but these tools must be properly analyzed, evaluated and used in order to accurately measure ROI on marketing efforts. Here are some ROI formula examples bank marketing executives can use to prove the return on their marketing efforts.

Cost of Customer Acquisition

The new customer acquisition metric can be very useful because it is measured in terms of sales numbers for new customers opening an account or applying for a loan. The formula is easy to use and can give you a great starting point for determining ROI. For example, pretend that your bank’s marketing costs are at $200,000 and your bank has opened 20 new accounts or loans. The new customer cost of customer acquisition formula is the marketing budget divided by the number of new customers, or for our example, 200,000 divided by 20. In our example, this means that it is costing the bank $10,000 for each new customer it brings in. Is that a realistic cost for the profit you are making on new customers? You’ll need to do more research, but this formula will give you some good information to start with.

• Formula: Marketing Budget/Number of New Customers = Cost of Customer Acquisition
• Formula from Example: $200,000/20 new customers= $10,000 Cost of Customer Acquisition
  

Customer Lifetime Value Ratio

This important ROI metric shows the ratio of income for a customer to the cost of acquiring that customer. To borrow from the example above, you know that it costs $10,000 to acquire each customer. Let’s say that one of those customers generated $40,000 in income for the bank. The ratio would then be 40,000 to 10,000 or 4:1. The higher the ratio, the higher the ROI on your marketing efforts. However, you have to keep in mind that spending more on customer acquisition will lower the ratio, which is sometimes necessary to continue the bank’s growth.

• Formula: Income From New Customer: Cost of Customer Acquisition
• Formula from Example: $40,000 income / $10,000 Cost of Customer Acquisition=4:1 Customer Lifetime Value Ratio

As you can see from the above examples, the formulas for proving ROI on your marketing efforts are fairly simple, but very useful. An understanding of your marketing ROI can help you better understand your marketing strengths and weaknesses so that you can make the best marketing decisions for your bank. For more information about proving marketing ROI and for more ROI formula examples, download our eBook now!