The 7% Solution: How the Right Marketing Budget Drives Revenue Growth for Financial Institutions

Bank Marketers: Discover Your Pathway to Growth 

As a community bank marketer, advocating for and managing the right strategic marketing budget is crucial for driving revenue growth. If you’re looking to grow market share and compete effectively in your local market, it all starts with understanding your marketing budget’s role. This insight is especially critical at the start of the year, when reflection and planning set the stage for success. 

A $25 billion asset institution may have more resources to discover, hypothesize, test, and learn, but a $1 million asset institution can start to level the playing field in the battle for customers andlocal market share by starting with this basic question—What is your marketing budget as a percent of your total assets? 

Since 2019, Princeton Partners has been researching this topic extensively, conducting three quantitative studies with various sample sizes and methodologies. What we found is something that Sherlock Holmes might dub the “Seven Percent Solution.” Our research indicates that a marketing budget of 7% of total assets is the key baseline level that positively correlates with revenue growth for financial institutions. 

Why a 7% Marketing Budget is Key to Revenue Growth for Financial Institutions 

The correlation between a 7% marketing budget and revenue growth for financial institutions is strong, and it can help community banks compete against both non-bank financial institutions and large, Too-Big-to-Fail (TBTF) banks. This magic number unlocks growth potential and ensures your marketing investments are aligned with your long-term financial goals.

At Princeton Partners, we are on a mission to empower bank marketers with the insights they need to advocate for the necessary investments that will fuel growth. Our research shows that consistently increasing your marketing budget, even in small increments, leads to much higher growth than inconsistent or declining marketing spend. In fact, we found that banks that invest strategically and consistently grow twice as fast as those with inconsistent investments.

Key Takeaways from Our Research: 

1. Benchmarking: Learn where your marketing budget stands compared to your peers and regional competitors in your asset class. 
2. Consistency is Critical: The research shows that year-over-year, incremental growth in marketing investments results in significantly higher revenue growth.  

Learn More with Our White Paper: The Relationship Between Marketing Investments and Revenue Growth 

To dive deeper into the findings and get actionable strategies for boosting your marketing budget and revenue growth, we encourage you to read and download our white paper,“The Relationship Between Marketing Investments and Revenue Growth.”

In this comprehensive resource, you’ll discover: 

• How to align your marketing investments with your institution’s growth goals. 

• How to find efficiencies within your organization to maximize ROI. 

• The importance of forecasting future marketing investments to achieve long-term financial success. 

The white paper will guide you as you evaluate the components of your marketing program and develop proforma scenarios for future growth. By planning your marketing investments strategically, you can achieve profitable customer acquisition and better product performance. 

Other Insightful Resources for Financial Institutions 

• Princeton Partners gathered industry experts to share research-based insights and best media practices to elevate deposit acquisition campaign results in a webinar hosted by The Financial Brand. Watch “The Power of Strategic, Predictive Media – Double or Triple Your Deposit Acquisition Campaign Results” 

• For valuable guidance on building a comprehensive marketing approach, read “The Missing Component Holding Back the Growth of Community Financial Institutions: A Balanced, Strategic Marketing Plan” 

We’re here to support you as you implement smarter, more strategic marketing decisions. Stay tuned for more insights and let’s make 2025 a year of growth and success for your community bank. 

Here’s to a brighter, more profitable future! 

Princeton Partners is dedicated to Community Bank Success. Learn more at our Financial Services page.