We’ve long argued that customer retention is undervalued and should be prioritised over customer acquisition. Thanks to a new report, we have the statistics to back up our beliefs.
econsultancy have published a preview of their Cross-channel Marketing Report 2013 today. Their post included some compelling statistics for those (like us) who believe that customer retention is undervalued and that, especially in a social media environment, can deliver a higher ROI than acquisition marketing.
Most companies don’t seem to value their existing customers anywhere near as much as new customers. The headline statistics give an indication of the scale of the problem:
- 30% of companies say they are ‘very committed’ to relationship marketing
- 46% say they are committed ‘to a certain extent’
- 22% say they don’t do any relationship marketing
Helpfully, they also provide a list of the top reasons why companies don’t engage in relationship marketing. These are fairly typical of the reasons why companies don’t do many things: 22% cite “lack of resources”, 19% “not clearly defined strategy”, 13% “technology limitations” and 10% “lack of single customer view“. It seems amazing that lots of companies still don’t have the know-how to create a single view of each customer – but it’s a fact.
Perhaps the most fascinating statistics (see graph below) relate to the apparent understanding among companies that customer retention is both cheaper than customer acquisition and can deliver a higher ROI. Apparently, 70% of companies say it’s cheaper to retain a customer than acquire one and 49% say that, pound for pound, they achieve better ROI by investing in relationship marketing over acquisition marketing.
This is a pretty astonishing finding when you look at the figures for marketing spend vs customer retention (customer service and CRM). There seems to be a collective ignoring of common sense that is driving companies away from their existing customers and, instead, focusing their time, energy and budget on acquiring expensive new customers – even when they know that costs will be higher and ROI lower.
I’d love to hear from any organisations that have taken the opposite view and backed it up with a budget and strategy to match. Referrals and suggestions welcome.