Marketing for Mortgage Professionals: How to Determine the Right Budget for Your Business
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January 4, 2023 |
Marketing for Mortgage Professionals: How to Determine the Right Budget for Your Business
Want to maximize growth for your mortgage business in 2023? Check out our recent blog post on the power of OKRs for mortgage brokers.
As a mortgage professional, it is crucial to allocate a budget toward marketing to attract new clients, increase sales, and remain competitive in the industry. However, determining the amount to spend on marketing can take time and effort. The amount you should allocate towards marketing will depend on the size of your business, your revenue, and your target audience.
Determining Your Marketing Budget
According to Jessica Horvath, a business advisor at the Business Development Bank of Canada (BDC), the common rules of thumb for Business-to-Consumer (B2C) is between 5-10% of your revenue, e.g. $50-$100 per $1000 of commission earned.
Download - Marketing Budget Checklist
Setting Marketing Goals
In addition to considering the size of your business and your revenue, it is essential to set clear, specific, and measurable marketing goals, such as:
Increase website traffic by X% over the next quarter
Generate X number of leads through online advertising efforts
Close X number of loans from leads generated through social media marketing efforts
Attend X number of local events or conferences to network with potential clients and establish oneself as a thought leader in the industry
These goals should be tailored to your target audience and clearly outline the actions you hope to achieve through your marketing efforts. Once you have defined your budget and implemented your marketing plan, it is essential to review it regularly to assess whether your spending effectively achieves your desired goals. A great way to do this is by A/B testing which is a method of comparing two versions of a marketing campaign to determine which performs better.
Allocating Your Marketing Budget
When allocating your marketing budget, consider all potential costs, including website design and maintenance, social media advertising, online advertising, public relations, events and sponsorships, and offline marketing efforts such as print materials and advertising. Utilizing analytics tools can also help you track the effectiveness of your marketing investments and make informed decisions about where to allocate your budget. Some examples of marketing channels that mortgage professionals could consider include:
1. Website
A professional and user-friendly website is crucial for establishing credibility and providing information about your business to potential clients. Your website should include information about your services, your team, and any relevant resources or tools that you offer.
2. Social media
Utilizing social media platforms such as Facebook, LinkedIn, and Instagram can help you reach a wider audience and engage with potential clients. You can use social media to share updates about your business, industry news, and relevant resources and advertise your services.
3. Online advertising
Paid search engine advertising, such as Google Ads, can help increase visibility for your business by placing your ads at the top of search results for relevant keywords. You can also consider running paid ads on social media platforms or through targeted email campaigns.
4. Events and sponsorships
Participating in or sponsoring local events or conferences can help you network with potential clients and establish yourself as a thought leader in your industry.
5. Offline marketing
While much of marketing is digital these days, there are still many effective offline marketing channels to consider, such as print materials (such as brochures or business cards), advertising in local publications or on billboards, or direct mail campaigns.
By carefully planning and allocating your marketing budget and utilizing a variety of marketing channels, you can effectively reach your target audience and achieve your marketing goals as a mortgage professional. So, having a proper marketing budget enables you to make the most of limited resources.
Averaging Down Your Marketing Spend
Leveraging referrals can be a cost-effective way to stretch your marketing budget and reach new potential clients. You can get new potential clients by leveraging referrals from your existing customers without spending additional money on marketing efforts. This can help save on marketing costs and stretch your budget further.
Here's a comparison:
Without referrals: Spend $1000 on marketing efforts to a single customer. Average spend per customer: $1000.
With referrals: Spend $1000 on marketing efforts to reach the first customer, who refers a second customer. Total marketing spend: $1000. Average spend per customer: $1000/2 = $500.00.
In this scenario, leveraging referrals helped bring down the average spend per customer from $1000 to $500, saving $500 in marketing costs.
To illustrate the impact of asking for referrals, let's take a look at two mortgage professionals: Tom and Jerry.
The Power of Referrals: A Tale of Two Mortgage Professionals
Both Tom and Jerry were trying to find new customers for their businesses, and both were successful in their marketing efforts. However, they had different approaches to acquiring new customers.
Tom was comfortable with his marketing efforts and was happy to know that he could increase his number of customers by increasing the amount of money he spent. He was content with his marketing campaign and saw no need to prioritize asking for referrals. As a result, Tom continued to spend more money on marketing efforts to reach the same number of customers, never realizing the cost-saving potential of leveraging referrals.
Jerry, on the other hand, had a different idea. He thought that if he could acquire a customer through marketing and then get that customer to refer another, he could reduce the amount he spent on marketing. Jerry believed that word of mouth could be a powerful tool, so he decided to try his new approach.
He would call his customers after completing a deal and ask for referrals to anyone they knew who could benefit from his services. At first, Jerry felt awkward and nervous about making these calls, but eventually, it paid off. His first referral walked through the door.
By overcoming his reluctance to ask for referrals, Jerry had reached two new potential customers for a fraction of what Tom was spending. The best part was that because these customers had come to him through referrals, they trusted him more and became loyal customers.
From then on, Jerry made it a priority to leverage referrals whenever possible. By doing so, he was able to stretch his marketing budget and bring down the average cost per customer, ultimately saving his business money and helping it grow.
At the end of the year, Tom and Jerry closed 100 deals each, earning them each $200,000 in gross revenue. Tom had spent an average of $1000 per closed deal, whereas Jerry spent $500 per closed deal due to his referral strategy. Jerry's cost-saving strategy allowed him to net $50,000 more in profit than Tom, demonstrating the powerful impact that leveraging referrals can have on a business.
As a mortgage professional, it's crucial to allocate a budget towards marketing in order to attract new clients, increase sales, and remain competitive in the industry. But determining the right amount to spend on marketing can be tough. That's why it's important to carefully plan and allocate your marketing budget, and utilize a variety of marketing channels to effectively reach your target audience and achieve your marketing goals. And don't forget about the power of referrals! By leveraging referrals, you can bring down the average cost per customer and save on marketing costs, all while growing your business. It's okay to experiment and try new approaches - you never know what might work best for you. Just be patient, stay committed, and keep track of your progress. With a little perseverance, you'll be able to achieve your marketing goals and succeed.
Author Profile
Jared Stanley is the Senior Director of Originations at Neighbourhood Holdings. He has been in the industry for nearly 15 years. In 2015, Jared was awarded Underwriter of the Year by the Canadian Association of Accredited Mortgage Professionals. He is also a motorcyclist and dog lover.
