It’s budgeting season and chances are you’re feeling overwhelmed. You’re not alone. Thanks to a worldwide pandemic, credit unions are at a crossroads. Oftentimes, marketing budgets are one of the first things to be cut when budgets are being cut. But, perhaps now more than ever, it’s time to stand out.
Every credit union approaches budgeting differently. For some, it's a rubber stamp process: “Add 5% to last year. Job done! Woohoo! Let’s go get martinis!” For others, it's a complicated process that’s all about sharpening pencils and cutting expenses to the bone. In a perfect world, your marketing plan goes hand-in-hand with your strategic plan and overall goals.
Get Your Hands on that Strategic Plan. If you don’t currently have the credit union’s strategic plan easily accessible at your fingertips, get up and go get it. Seriously...right this second. I’ll wait. OK, when you look at it, how many initiatives have brand impact? Chances are most, if not all, have some level of external or internal brand significance. Perhaps the credit union is planning for a core conversion or updating ATMs in the drive throughs. Maybe the focus is on increasing the profitability of your loan portfolio or finding new sources for non-interest income. Every one of these examples has major brand impact. You must build your plan for how you are going to support the goals and initiatives BEFORE you submit your budget so you can justify why you need the budget you’re recommending.
Keep in mind, due to the pandemic, goals may have shifted since your team built the strategic plan last year. Be proactive with your CEO (or to whomever you report) to ask questions about any potential updates to the plan since it was written. Let them know you’re basing your marketing budget recommendations on the overall strategic plan and that now it is the time to lean into new revenue opportunities, not pull back. Cutting marketing dollars now as a way to strengthen the bottom line is a short-sighted approach. Any good leader will appreciate your initiative.
While we can’t always plan for “unprecedented times,” proper planning will ensure you can recommend the appropriate budget to meet your goals and have a “just in case” fund ready for the unexpected. Your chances of success greatly increase by having a methodology for your budgeting process. Even if you don’t end up with the exact budget you request, your CEO will be impressed by the level of thoughtfulness you put into your plan.
For many marketers, building a budget can be a daunting task. But it doesn’t have to be! But how much should you allocate per goal?
In most cases, 5-10% of the goal should be invested up front to provide the necessary resources to reach a measurable result. It's important to break your goal down to the value it brings to the credit union.
Example: Let's say your goal is to increase auto loans by $5 million for the year.
First, ask yourself (or someone who would know) how much that increase will grow the bottom line. In other words, how much revenue will that increase generate for the credit union?
Here's a quick calculation to show the work: Let's say on average each auto loan amount is $15,000. You'd need to bring in 334 new loans to hit $5 million in one year. Then let's assume the average lifetime of those loans is 2.5 years at an average of 6% APR. That would roughly equate to $2,250 in revenue per loan (not including administrative costs). $2,250 x 334 = $751,500 in revenue.
So, if you follow the guideline to invest 5-10% of expected value (or revenue) into your production budget (to pay for creative elements, media buys, promotional items, incentives, etc.) then you should budget between $50,000 - $75,000 for this goal.
Need more help? The Pod can provide a marketing plan template with calculations built in. Simply reach out to us for a chat and we’ll share it with you at no charge!
The Pod Advertising is a credit union marketing agency with over 85 years of collective industry experience. We LOVE credit unions, and we KNOW credit unions. We've been in your shoes. We understand that you’re not just selling checking accounts and mortgages. You’re changing lives. That’s our secret sauce. It's why we've been able to help credit unions like yours identify and resolve marketing and operational challenges through insightful knowledge, experience, lots of coffee, and hard-work.