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How Much Should a Finance Broker Spend on Marketing?

7 min read  ·  The Digital Brokers

Every generic answer to this question is wrong, because none of them know your conversion rate.

"Spend 5–10% of revenue" is the standard advice. It's useless for a broker, because two brokerages with identical revenue can have wildly different conversion rates — and the one converting better can profitably spend twice as much per lead.

Here's how to work it out properly: backwards from the outcome you want.

Key Takeaways

• Percentage-of-revenue rules ignore the only variable that matters — your conversion rate.
• Work backwards: settlement target → leads needed → spend required.
• You cannot budget properly without knowing your conversion rate at each pipeline stage.
• Improving conversion is usually cheaper than increasing spend, and it raises what you can afford to pay per lead.

The calculation

Four numbers, in this order.

Step 1 — How many extra settlements do you want per month? Be specific. "More" isn't a number. Say five.

Step 2 — What's your average commission per settlement? Your own figure, across your actual mix of consumer and commercial deals. Say $2,200.

Step 3 — What's your real lead-to-settlement conversion rate? This is where most brokers guess, and where the whole calculation lives or dies. If 100 leads produce 8 settlements, it's 8%.

Step 4 — Do the arithmetic.

Leads needed  = settlements wanted ÷ conversion rate
              = 5 ÷ 0.08
              = 63 leads per month

Max sustainable cost per lead = commission × acceptable acquisition %
                              = $2,200 × 25%
                              = $550 per settled deal
                              = $44 per lead at 8% conversion

Monthly budget = 63 leads × $44 = ~$2,750

That's a defensible budget. It's derived from your economics, not a rule of thumb.

Why conversion rate changes everything

Run the same brokerage at a different conversion rate and watch the budget move:

The broker converting at 16% can pay four times more per lead than the broker at 4% — for the same result.

That's the whole game. In competitive channels, the broker who can afford the higher cost per lead wins the auction, gets the better placement, and gets the volume. Conversion rate isn't just a sales metric; it determines what marketing you can afford to buy.

Which leads to the uncomfortable but useful conclusion: if your conversion rate is weak, fixing it is a cheaper path to growth than increasing spend. More on why that is.

What "acceptable acquisition cost" should be

In the example above I used 25% of commission. That's a reasonable starting point, but the right number depends on:

• Repeat and referral value. If a settled client typically produces one referral or a refinance in three years, their lifetime value is well above the first commission — and you can justify spending more to acquire them.
• Your fixed costs. A sole operator with low overhead can allocate more of a commission to acquisition than a brokerage carrying staff and premises.
• Your growth stage. Deliberately accepting a thinner margin per deal to build volume and brand is a legitimate choice, provided it's a decision rather than an accident.

What to do if you don't know your conversion rate

Most brokers don't, precisely. Start here:

1. Count leads properly for one month. Every enquiry from every source, logged.
2. Track them to outcome — contacted, application, approved, settled.
3. Split it by source. A blended average hides everything useful. Dealer referrals and cold online leads convert nothing like each other — and shouldn't be handled the same way.

One month of honest tracking gives you a budget you can defend and a baseline to improve against. Guessing gives you neither.

Two ways brokers get this wrong

Setting the budget first. "I'll try $1,000 a month and see." Without knowing your conversion rate, you can't tell whether $1,000 was too little to produce a meaningful test or whether the channel simply doesn't work for you. You learn nothing either way.

Judging too early. Paid campaigns typically need 4–8 weeks to optimise, and organic search needs months. Pulling spend at week three because it "isn't working" guarantees the outcome you were worried about.

A reasonable starting position

If you genuinely have no data yet:

• Start with one channel, not three. You'll actually learn something.
• Budget enough for statistical significance — roughly 30+ leads before drawing conclusions.
• Commit to a minimum 90 days before judging.
• Track everything from day one, so at the end you have real numbers instead of another guess.

For the full picture of which channels are available and what each realistically costs, see how to get car finance leads in Australia.

The Bottom Line

There's no correct percentage. There's only your settlement target, your commission, and your conversion rate — and those three numbers give you a budget you can actually defend. If you don't know your conversion rate, that's the first thing to fix, because it determines both what you can afford and how far the money goes.

Want help building this calculation on your real numbers? Book a free strategy session with The Digital Brokers.