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

Surveys of loan officers had shown that a leading reason for joining the mortgage bank was the Media Center. Loan officers saw the automated marketing system as a way to gain an advantage in the competitive marketplace, because the system freed them to focus on closing deals.

However, the marketing group had to express this competitive advantage in financial terms. For example, how much less did the bank pay to recruit new loan officers, compared with what rival companies paid? The marketing team quantified the advantage in two ways: First, it determined that rival companies paid an average signing bonus of $10,000 per officer; second, it calculated the Center's cost savings in executive recruiter fees, which came to roughly one-third of the officer's average annual compensation.

Marketing's Impact on Loan Officer Productivity

Were the loan officers who used the Media Center more productive than officers who didn't? That is, did they sell more mortgages?

An analysis of production by Media Center usage confirmed that the answer was "yes." In fact, loan officers using the Media Center closed, on average, one loan per month, or 12 per year, more than non-members. By taking the average profit of an average loan officer, the marketing group was able to express its impact on loan officer productivity.

The higher productivity of Media Center members generated another benefit as well: increased end-customer satisfaction (a marketing metric). But increased end-customer satisfaction alone did not express the impact in financial terms. Marketing had to link the marketing metric to a financial metric.

The marketing group maintained that this increased satisfaction in turn led to increases in referrals and repeat end customers. The team easily translated the additional referrals and repeat customers into profits. Even Wall Street, the marketing group knew, takes notice when a mortgage company's loan officer production (or velocity) is higher than the industry average.

Marketing's Impact on Loan Officer Retention

The retention rate for loan officers who were Media Center members was 25% higher than that of non-members. Clearly, marketing had exerted a significant impact on this key metric. Once again, however, the marketing team still needed to articulate the impact of the higher retention rate in financial terms.

To that end, the SVP expressed the Media Center's cash-flow value as 25% written over the course of the year by members, multiplied by a 10% margin on each loan. That's the revenue contribution from increased loan officer retention.

He then applied the retention rate over several years to derive the lifetime value of a loan officer. Of course, this analysis assumed that the Media Center caused retention rates to improve. An alternative theory could hold that more ambitious loan officers were drawn to the Center, and were more likely than less ambitious loan officers to stay with the company.

If this were the case, top management might reasonably have discounted some of the financial impact the marketing group had calculated. Nevertheless, the SVP's analysis went a long way toward establishing one significant element of the financial value that the marketing team had generated.


By totaling up all the new cash flow generated by marketing's impact on loan officer acquisition, productivity, and retention, the bank's marketing team demonstrated the financial value it had created. To calculate their net financial impact, the staff subtracted all the costs of producing the new cash flow (staff, materials, overhead, and so forth) from the extra cash flow.

The bottom-line result of this marketing initiative: The CEO and others understand how marketing contributes financial value to the business.

The Valentine's Day Take-Away

Just as you strive to understand the needs of the customers who buy your company's products or services, you must understand your CEO's needs and priorities.

Otherwise, your chief executive may continue to look to functions that are clearly defined by their output—sales, R&D, finance, accounting, and so forth—for information with which to set the company's direction. And, next year, you won't likely receive a seat at the strategy table—not to mention a Valentine's Day card.

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