Does your CEO love marketing? Does he or she recognize that marketing is the engine of the enterprise? And does he or she empower marketing to improve performance as measured by your company's key performance indicators (KPIs)—those vital measures for assessing progress toward business goals?

If you are like most marketers, you have to take the initiative to demonstrate and communicate to your CEO just how marketing creates business impact. That's exactly what was done by the senior vice-president of marketing at a large nationwide mortgage banking company. Here's how.

Case Study: The Challenge

Like many business-to-business marketers who are responsible for supporting the field sales function, the role of marketing at the mortgage banking company is to support the efforts of loan officers nationwide to sell mortgages.

Cash flow is a function of margins (the "spread" between the cost of capital and the mortgage interest rate) and velocity (the volume of mortgages sold). The firm targets the two "relationship-focused" customer segments. These include "advice seekers" (24% of the market) and people with "more money than time" (13%). Together, these two customer segments represent over one-third (37%) of the total mortgage market. Profit margins are highest in these segments, because end customers are willing to pay a bit extra for the service of a loan officer who cares about them and who ensures that the high-stakes transaction unfolds smoothly.

The more loans that an loan officer writes, the more money the bank makes. To build their own businesses, the loan officers want to sell; they don't want to spend time on marketing. They want to close deals, they don't want to develop communications that may or may not yield new business. The effort required to build a mortgage loan business leaves little time for communicating with existing and prospective customers.

So, the mortgage bank realized that it could increase its own cash flow (as well as help loan officers build their businesses) by assisting the officers in identifying high-margin customers and completing transactions more quickly. Toward this end, the SVP of marketing created an automated marketing system called the Media Center, which provided automated marketing services for loan officers. If the bank could do the marketing for the loan officers, he reasoned, the loan officers would be more productive, and both they and the bank would benefit.

Furthermore, the SVP contended that the system could also help the bank recruit and retain loan officers, because the service was unique to the bank's loan officers. Most of the mortgage bank's competitors offered signing bonuses to attract talented officers, but, unlike the automated marketing services, these bonuses (the SVP reasoned) were short lived and didn't help lenders build long-term connections with their best producers.

Understanding the company's business strategy as defined by the CEO, the SVP identified three cash-flow drivers:

  1. Loan officer acquisition
  2. Loan officer productivity (velocity)
  3. Loan officer retention

He had to demonstrate business impact in terms of these KPIs.

Marketing's Solution

Marketing's automated marketing function, called the Media Center, was designed to advance each of these drivers. However, the marketing group had never systematically tracked its impact on these drivers, and top management challenged the group to justify its investment in the new system. Until it received this call for action, marketing had focused so intently on its ever-growing list of activities that it hadn't concerned itself with key metrics associated with the firm's business success.

The marketing team had long relished the creative aspect of its work and produced brilliant programs to wow loan officers, and, in turn, top management. Its members had extensive experience in designing compelling communications programs, including newsletters, postcards, loan officer Web sites, and gift mailings. The senior marketing team also delivered loan officer orientation and training programs across the country.

Recognizing that customers in the bank's targeted market segments are generated largely by Realtor referrals, the marketing group created a "Realtor-in-a-Box" program that provided automated marketing services for Realtors in exchange for Realtors' promise to give referrals exclusively to bank's loan officers.

The Realtor-in-a-Box program generated impressive results in the form of growth in loan officer participation. And the marketing staff took great satisfaction in reporting these results to top management. They also enthusiastically shared the written testimonials and stories they received from many loan officers.

Yet, top management became increasingly uncertain of the marketing group's business impact. Executives wanted proof that innovative marketing programs were generating measurable financial results. That meant linking marketing activities and metrics to cash-flow drivers.

Marketing's Impact on Loan Officer Acquisition

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ABOUT THE AUTHOR

image of Roy Young
Roy Young is coauthor of Marketing Champions: Practical Strategies for Improving Marketing's Power, Influence and Business Impact.