Bottom-line marketing: You're not accomplishing your mission unless your eye is fixed firmly on the revenue and profit side of your bank's income statement.

• Author: Diesel, Paul M.
• Position: Feature

What is the purpose of marketing? Consult as many textbooks as you wish, and I'd wager none says, "It's to make money." But it is. Once you view it that way, marketing decisions become easier. And, marketers who practice this approach are seen in a new and better light, especially by higher management--as these people must dwell on making money.

As the business money-making scorecard is called the income statement, with its most important line being the bottom one, I've labeled the practices that I advocate "bottom-line marketing." I can best explain how it works through a series of questions and answers.

1. What is the bottom-line approach?

   This approach focuses on three lines of the income statement.

   * The top line.

   * The marketing expense line.

   * The bottom line.

   Customers provide the top line. Marketers' function is to ensure that customers buy more and more, in larger and larger numbers throughout their lifetimes. Customers pay for all expenses--including marketers' compensation and benefits--and provide all profit.

   The marketing expense line must be minimized, not absolutely, but relative to the top line achieved. This is accomplished by ensuring that each dollar spent delivers maximum revenue. The result, of course, is improved short- and long-term profits--bottom line--for the owners. And while this may seem basic, too many marketers don't take this approach.

   Even though the income statement contains revenue, expense, and profit sections, marketers often are viewed only as "expense." Most marketers don't try to fight this perception. Under my approach, marketers concentrate on revenue and profit both in planning and execution. (See my article, "How to Marketing Marketing," ABA Bank Marketing, October 2002).

   My approach employs a research-based decision process to ensure that every expense will produce more revenue dollars and thus, a healthy profit.

2. What is the justification for the approach?

   Management's chief responsibility (marketing is a management function) is to generate ever-increasing profits for owners. In the absence of profit, owners find new management. Witness in just the last few years the replacements of CEOs at Procter & Gamble, Xerox, Compaq, Coca-Cola, General Motors, Gillette, Ford and even IBM, not to mention many banks.

   Let's look at some of the good things that derive from profit.

   * Management and employee job security The absence of profits, if sustained, results in takeover or failure. On the way, people are let go, and those who aren't, worry about the possibility of losing their jobs. In general, the organization loses its ability to serve and acquire customers (who are key to revenue and profit).

   * Less vulnerability to acquisition: As implied above, losses instead of profits mean that the organization loses value and can be bought more easily. This will result in layoffs, probably branch closings and much angst among employees, their families and the community. Of course if you want to be bought, greater profits mean greater acquisition price -- so all owners, including employees and customers, as applicable, benefit from greater profits.

   * More capability to be an acquirer. Profits lead to worth, which means more ability to acquire, be it with cash or stock. This and the previous point make the organization the master of its fate, and thus better able to serve its employees, customers and the market.

   * Greater ability to serve the community. A bank, or any company in trouble or not growing enough, cant be much help to its community. It has to lay off workers rather...