Most marketers have a view of a lead or sales funnel, even if informally. Looking at the yield to specific tactics, ROI, ROAS, is a baseline for knowing what works and what doesn’t. However, thinking of your marketing and advertising spend only in terms of non-expense ratios misses the point and the bigger opportunity.
In addition to the acquisition/cross-sell outcomes, you’ve also started a relationship with these customers that, at the individual level, may result in future business and revenue. One way to look at your spend is in the resulting revenue/margin the customers you acquired/retained will contribute to the bank. Whether additional deposits, loan originations, credit card issuances, or other purchases from you/your partners, future revenues will result from past efforts.
This future spend is an asset as much as any investment and will grow the value of your FI. You’ve not only generated the current period transactions but also customer equity that will produce more revenue in the coming periods.
Taking the time to look at your operations this way helps from an overall performance standpoint and, when done correctly at the individual level, can yield valuable insights. A simple rank order of customers by LTV can help you understand where your future growth will come from and what type/characteristics of customers can drive that higher.
To the extent you have a reliable attribution model, you can look at how your efforts align with LTV. How much are you spending to attract/retain your top quartile of LTV customers? How much for the bottom quartile?
You’ll have to make some assumptions, particularly if you don’t have a clean view on money/time on acquisition vs. retention efforts (like overall brand marketing), so some level of fixed or allocation may work. The important part is having a process you can defend, explain/audit, and, most importantly, believe in. This shouldn’t be an exercise to pit one department or program against another or create a bludgeon to justify budget. Your goal should be to inform your point of view and add a layer of data-driven analysis to your activities.
A rearward looking approach, trailing 12/24/48 months, may be a good start. Looking at analytical models like Buy Till You Die would be a better, more representative approach to determine future value and assess things like allocation by segments.