MidState Bank: A Three-Goal Plan That Cannot Be Funded
MidState Bank is a $1.4 billion-asset community bank with 18 branches and roughly 40,000 households. Its three-year plan, approved in March, sets three goals at once: grow households 12%, lift commercial loan volume 25%, and reduce the marketing expense ratio from 0.19% to 0.14% of assets. The marketing budget is $2.1 million. Historically 68% of it has gone to high school sponsorships, billboard, and print. The bank has no marketing analytics staff, no CRM segmentation, and no documented customer acquisition cost. Deposit balances are flat, median customer age is 58, and the commercial lending team has never received a marketing brief. The new CMO has one planning cycle before the board reviews progress, and the CEO wants a single plan document by quarter end.
1. What is the central strategic problem with the plan as approved, and how should the CMO handle it before writing the marketing plan?
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The plan is internally inconsistent, and no planning document can repair an unfundable mandate. Three tests expose it:
- Arithmetic. At ~40,000 households, +12% means roughly 4,800 new households over three years. At a conservative $250 fully loaded acquisition cost, that is about $1.2M - 57% of the entire $2.1M annual budget - before any commercial support or brand work.
- Direction. Cutting the expense ratio to 0.14% of $1.4B removes roughly $700K while the other two goals require more spend. Two goals pull the budget in opposite directions.
- Capability. With no segmentation and no acquisition-cost history, the bank cannot target 4,800 households tightly enough to hold $250 CAC. Mass media aimed at a base with a median age of 58 will cost more per acquired household.
The real decision is sequencing, not selection. Commercial growth is the cheapest near-term win - the relationships already exist inside the loan portfolio - so it should lead, funded by reallocating sponsorship dollars, not by new money. Retail household growth should be re-scoped to a named segment with a stated CAC ceiling, and the expense-ratio goal should be reframed as an efficiency target achieved through reallocation. The CMO's job is to take this back to the CEO and board before drafting, with the arithmetic on one page. Writing a plan that promises all three buys twelve months of goodwill and guarantees a failed review.
2. The CEO insists the household growth goal stays at 12%. How should the CMO restructure the budget and defend it to the board?
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Accept the goal and change the inputs, using marginal analysis rather than percentages of last year.
Build the budget bottom-up: 4,800 households ÷ three years = 1,600/year. Assume a blended CAC of $300 for a defined target segment (younger mass-market, digitally active), giving $480K/year of direct acquisition. Add $150K for retention and cross-sell, since retention economics usually beat acquisition in a low-growth base. That is $630K - about 30% of budget - leaving $1.47M for everything else.
Fund it from the 68% legacy block. Sponsorships and billboard are not zero-value, but they are unmeasured. Propose keeping two or three sponsorships with the strongest community-relations rationale and exiting or renegotiating the rest, noting contract exit costs explicitly rather than hiding them.
Defend with a board-ready frame: cost per household acquired versus lifetime value, not cost per impression. Show the test plan - one segment, one geography, one quarter, with a control group - and commit to a go/no-go review. Boards approve measured pilots far more readily than they approve conviction. Also flag what the bank must build (segmentation, source tracking at account opening) as a plan dependency, not an IT afterthought.
3. What would you put in the plan's measurement section, given no analytics staff and no acquisition-cost history?
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Keep it deliberately small enough to actually run with the current team.
Tier 1 - must work from day one. Require every account-opening record to carry a source code (branch, campaign, digital, referral). This is a form and process change, not a technology project, and without it every later number is guesswork. Add a monthly dashboard of new households by source, cost per source, and 90-day balance and attrition for new accounts.
Tier 2 - one pilot. Run the segment test with a matched control geography so the bank learns incrementality, not just response.
Tier 3 - annual. A short member survey on awareness and consideration, understood as directional only.
Two cautions worth writing into the document. First, do not report marketing ROI in year one; with no baseline, any ROI figure will be a ratio of attribution guesswork. Report cost per acquired household and payback period instead. Second, define retention before the campaign launches - an account that closes in 120 days should not count as growth, or the plan will hit its number and miss its purpose.