Magazine article American Banker

How to Transform Direct Marketing from a Cost Center to a Profit Center

Magazine article American Banker

How to Transform Direct Marketing from a Cost Center to a Profit Center

Article excerpt

Bank marketers can get out of the "Don't Ask, Don't Tell" Club by using MCIFs to track marketing campaigns, return on investment, and revenue generation.

What if your CEO gave you 24 hours to produce figures proving this year's direct marketing programs were profitable? If the thought of this causes you to break into a cold sweat, you're not alone. Millions of marketers sweat with you; they belong to a sort of marketing "Don't Ask, Don't Tell" Club. If you qualify for this group because you don't track results, then read on. Because we're going to try to dissolve your club membership by making your direct marketing a profit center, rather than a cost center.

As a direct marketing user, you're in an enviable position. Unlike advertising and public relations specialists, direct marketing can consistently demonstrate success through return on investment (ROI).

Over the past decade, ROI has become a vital management device with the increased emphasis on shareholder return and measurable results. Yet most marketers continue to conduct direct marketing campaigns without tracking ROI. My company asked database marketing users at our recent marketing conference about their tracking habits. Nearly half of the 340 respondents said they track fewer than 25 percent of their campaigns; two-thirds track fewer than 50 percent.

Why is it essential to track campaigns and measure ROI? Three reasons: tracking demonstrates results, allows you to compare one marketing effort with another, and demonstrated results provide your department with further funding.

avoid marketing roadblocks

Zions Bank, located throughout the western United States, exemplifies the power of tracking. Harland produced a tax-time home equity loan campaign for Zions earlier this year. The promotion generated a 419 percent ROI-$300,000 for the institution. These compelling results motivated management to sanction two additional direct marketing campaigns. Documented results were also the great convincer used by Nancy Dreisinger, vice president of marketing at Central Bank, based in Jefferson City, MO. She had spent years trying to coax colleagues into supporting her direct marketing efforts. Tracking several campaigns finally gave her the sponsorship she'd unsuccessfully sought for more than a decade. If ROI measurement is so meaningful, why aren't more financial marketers doing it? Three primary reasons.

n Insufficient time. Marketers often don't take the time to measure ROI because of deficient resources (i.e., adequate staff), or they are overwhelmed by seemingly more pressing responsibilities.

n Lack of knowledge. Marketers don't understand how to track campaign ROI.

n Inadequate technology. Many marketers still don't have a marketing customer information file (MCIF). If you're not tracking ROI because you don't have a MCIF, my advice is to make the purchase. These systems quickly pay for themselves by helping institutions make revenue-generating decisions.

By allowing the ROI calculation, MCIFs were made for tracking. A MCIF can accurately track results in minutes, while manually tracking may take days or even months, depending on the campaign's complexity. …

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