Return on investment (ROI). Every business person is familiar with this term and if you are a marketer, like me, it’s kind of a big deal. No matter the nature of your business, marketers spend money to make more money. It’s a pretty simple concept to grasp, but I’m not convinced that all of us really understand everything that needs to be involved to deliver firm numbers and report results. So, now that I’ve put my credit union hat on, let’s talk about some of the issues I’ve encountered personally and heard from other people over the years.
It’s astonishing to me how many times I hear that marketers do not have a strategy or plan for the year about what they will be advertising, why they will be doing so at a certain time and how much of their budget will be allocated to a specific campaign. If tracking is a big problem, this one is even bigger. If you don’t have a plan, it’s impossible to track. If you don’t have a plan, you become reactionary instead of proactive. If you don’t have a plan, your message has a greater chance of getting lost in all the other advertising that is going on around you and your members. There is certainly no shortage of financial institutions in any market, so, if you don’t know how you are going to deliver your message and why you’ve chosen a certain way, good luck standing out.
If you have a plan in place it is much easier to execute (no brainer, right?), but planning doesn’t mean you have to stay rigid. Rates change daily and financial marketers are constantly playing a balancing act of gaining deposits or lending money out. When you have a plan, you know what an ideal year would look like, but you also know where you can reallocate funds should you need to focus more on deposits or loan growth. I can’t stress enough how these things should be interrelated, but often they are not.
A lot of people aren’t tracking their total marketing spend! This blows me away, but it’s a bit more complicated than it sounds. The biggest here is that a lot of credit union folks don’t spend the time to calculate their allocations to each delivery channel and they don’t work close enough with their accounting teams to crunch the numbers before going live to determine what a “win” looks like. A win isn’t just making more money than you spend, but providing a real value to all of the people who take advantage of what you’re selling. Great product + significant income = win. I’m not saying that I am the world’s best “tracker”, but if we all don’t continue to try to improve, we are doing ourselves and our members a great disservice.
The above are only three key aspects of calculating ROI, but let’s get into the whole redefining idea. You need to generate a return. Regardless if you are not-for-profit, non-profit or for profit, we all need to make money. In the case of cooperatives (credit unions are cooperatives, btw), we need to make money so we can re-invest in our members and our communities. So, the standard ROI is a given. What I believe cooperative marketers need to really focus on in addition is Return on Involvement (ROI2). To me, ROI2 is a function of our obligation to practice the Cooperative Principles, manly Concern for Community (#7).
Consider this example:
A local high school submits a proposal for you to run an advertisement in their Fall Sports Program. You get to place your logo and a sentence or two about your business. The cost is $200.
Sure, supporting schools is a great thing to do, but when was the last time you (or anyone else) bought a sports program to peruse the advertisers? probably never. Where is the ROI2? You’ve done your part, but what did your institution or your members get in return? Could you not have been a little more creative and received better exposure for the same dollar amount and still supported the school(s)? Furthermore, if you sponsor one school in your field of membership then you probably have to do the same for everyone else. $200 can quickly turn into $1,000 or more. No good.
Don’t get me wrong, sometimes “feel good marketing” is a necessary evil, but it doesn’t have to stay that way. The key here is looking for opportunities to generate ROI and ROI2. Most of the time, you will have to have a presence at things that your sponsor or endorse. It’s as simple as having team members at the ready to thank current members for their loyalty or to tell your story in a compelling way that you could never do in a sentence or two in black and white ink. Use the Cooperative Principles as the filter in which all decisions are made. If a proposal for sponsorship doesn’t meet at least two requirements, you probably should pass.
The formula for calculating ROI is pretty straight froward and the same could be said for ROI2. For starters, we can figure out how many people will our marketing spend (sponsorship) reach or directly impact? Is it hundreds of people or thousands? What does the business get in return for our spend (how does it help them maintain a program or provide more programming?) How does this spend benefit the cooperative as a whole and not just our business needs (would our members be comfortable with us spending their money on this?)
So much more could or should be said, but you’ve spent enough of your time reading this far. What are you thoughts? Does ROI2 really exist? Is the idea too much or a purist ideal? What can we do to make sure we are creating ROI2 (assuming it exists)?