eMarketer, which provides research and analysis on digital marketing and media, published an interesting study this week on expenditure trends in the direct marketing industry.
Among lots of good information on spending growth and to what platforms dollars are flowing, was an interesting chart showing the percentage breakdown between how much money marketers spend on customer acquisition compared to customer retention. Amazingly, the percentage of marketers’ budgets spent on customer retention has hovered pretty much around 40% over the past few years.
One of the most important doctrines of military warfare is that you don’t want to fight to capture the same piece of land twice. Yet, here are marketers happily spending 40% of their precious marketing dollars to win consumers that theoretically they have already won.
The idea of customer acquisition is that you just want to get the consumer engaged with the brand. Once you do, they should be so delighted by the experience that they will come back. Now, granted, there are plenty of distractions to lure a customer away, but spending to this extent just to hold on to them would suggest that the initial experience is not delighting them the way it should.
Maybe marketers need to do more than say “here we are!” Maybe, they need to make sure that first interaction is a memorable one – for example through the provision of an outstanding value.
Discounts, promotions and coupons are prized for their effective customer acquisition abilities, but don’t overlook their impact on customer retention. They ensure that the first time a customer engages with a brand, it will be memorable – and they will come back.
Because customer acquisition is too challenging to let hard won consumers slip through your fingers, only to have to be won back again with equally challenging – and costly – customer retention programs.
image credit: theroy
A serial CEO and innovation speaker, Dean DeBiase is the Chairman and CEO of entertainment.com, co-founder of boardroominnovation.com and Innovation Excellence, and a co-author of The Big Moo.