Retain or acquire? The numbers speak for themselves
Marketing budget allocation is a never-ending conundrum. Marketers find themselves faced with the ongoing challenge of ensuring demonstrable results within ever more challenging conditions, and it can be hard to know where to turn. One of the most fundamental questions is whether to retain or acquire, and here we outline some food for thought as to why one is infinitely preferable.
The numbers make sense
Adobe’s recent report on customer retention outlined that 78 per cent of European online retailers’ marketing budget is spent on search and display advertising, whereas existing customers make up around 41 per cent of revenue but only 8 per cent of visitors. In other words, it is necessary to recruit seven new customers to ensure the same revenue payback as a single existing customer. Of course, acquisition is expensive. You wouldn’t necessarily expect the spend ratio to be 50/50, but this begs the question of what would happen if these ratios were reversed. Why aren’t more savvy marketers taking note when business loyalty apps are so easy to implement?
It appears that this isn’t likely to happen any time soon. A recent survey by Econsultancy revealed that whilst 34 per cent of marketers think they will increase acquisition spending, only 18 per cent will do so on retention, leading Forrester to suggest that marketers “obsess” over acquisition rather than nurturing relationships.
The solution is out there
One reason for this could be a lack of understanding about how to implement loyalty programs. After all, if you’ve been focused on acquisition for so long, how do you suddenly switch fire? The answer is that there are many places you can turn. Certainly solutions, such as business loyalty apps through mynt-apps, can help you understand more about the universe of options available. This could be tracking customer behaviour more effectively or developing personalised apps to target specific demographics or requirements.
The truth is that many marketers are simply blind to the universe of possibility that awaits them in retention marketing. Removing the blindfold can pay significant dividends. After all, who wouldn’t want to maximise their budget and minimise their ineffective spending? This is the holy grail of most marketers, who would be wise to carefully consider the loyalty technology and options open to them and utilise them in full where appropriate.