Leveraging LO Comp to Manage Marketing Expenses
But the administrative costs of supporting branch- and originator-level marketing efforts are substantial. Line items include software subscriptions and seat fees for point-of-sale, loan origination, CRM and marketing automation platforms; direct mail, newspaper and radio ads; targeted social media and Google AdWords campaigns; happy hours, luncheons, and of course swag — just to name a few. Equally as striking is the tremendous amount of work that each LO puts into developing the marketing strategy that works best for his or her market.
With margins as tight as they are in the current market, lenders must leave no stone unturned when it comes to managing costs — but it can be tricky to give LOs the freedom to operate in the way they see fit while simultaneously holding them accountable for marketing expenditures.
Allow LOs to Request a Marketing Budget
When using this approach, lenders should stipulate what happens if actual expenditures vary from the budget. For instance, if the entire marketing budget is not used, the remaining balance can be rolled over to the next quarter; or, if additional marketing resources are required, those expenses can be prorated across the following quarter.
Other ways lenders can manage marketing expenses include:
- Providing LOs with a fixed budget that is adjusted periodically. The LO’s will be responsible for any expense above the budget amount.
- Allow LOs to earn marketing dollars based on the amount of volume they produce. Higher originations will allow the LO to qualify for higher marketing dollars. Marketing dollars spent wisely will yield higher volumes, benefitting the lender and the LO.
- Have LOs to pay for their own marketing upfront but allow them to submit an expense report to request reimbursement.