Marketing investments are allocated in a way that helps a business achieve the highest ROI and maximize value for your brand.
Pretty obvious, right?
But you could be wrong!
A recent report from Salesforce explored the value of customer lifecycle marketing and shared some interesting insights below;
- Only 20% of organization used marketing across the entire customer lifecycle
- An average of 88% of the budget for customer lifecycle marketing goes to awareness (top-funnel) strategies
- Companies spend 2x as much on marketing to a new customer than to existing ones
Almost every marketer would agree that nothing turns them on more than acquiring a new customer.
This is evident in the way marketing budgets are utilized.
It’s both shocking and surprising to note that less than 9% of marketing budgets are allocated for marketing to existing customers (Percentage of budget spent on Email Marketing in the above graph)
The growth of Facebook and Google over the past decade clearly shows how obsessed marketers are with the acquisition.
After all, these are the big daddy channels for acquiring new customers or for generating leads.
Similarly, the usage of campaign management platforms clearly reveals where the focus is on 61% of marketers use it for lead generation.
Another example – as marketers, we all use analytics. But how many of us use analytics in our transaction portals vis-à-vis marketing portals and use the insights to market to our existing customers?
Maybe just a few.
This clearly shows that a majority of marketers are obsessed only with acquisition and very little attention goes into marketing to existing customers.
However, marketing does not equal acquisition.
So, what should businesses do? Should they not focus on acquiring new customers?
Well, we do not recommend avoiding investing in acquiring new customers, however, we simply suggest investing more in existing customers to get more returns.
The next question you may ask is,
“Who offers more value to your business? Is it your existing customer or a potential prospect?”
Let us understand this in detail.
Benefits of investing in your existing customers
While there is no doubt that customer acquisition is the lifeblood for any organization, you shouldn’t forget that your existing customers are a gold mine.
The survey says,
- You have a 60% to 70% chance of selling to an existing customer, whereas you only have a 5% to 20% chance of selling to a new customer (Marketing Metrics)
- 25% to 40%of the total revenues of the most stable businesses come from returning customers
- And repeat customers drive 3x-7xthe revenue per visit as one-time buyers (Source)
Kissmetrics shared an infographic on the lifetime value of a Starbucks customer. If the average weekly value of a customer is $24 per week, then a loyal customer could be worth almost $15,000 on average over 20 years.
This data helped the coffee chain understand how much they should invest in their customers. From the acquisition process to building loyalty and recruiting brand ambassadors, Starbucks can plan its long-term marketing efforts to maximize profits.
Another example – as marketers, we all use analytics. But how many of us use analytics in our transaction portals vis-à-vis marketing portals and use the insights to market to our existing customers?
Engaging with your customers requires diligent planning, timely execution, and a ton of knowledge and insight into the audience you’re reaching out to.
Furthermore, the research says;
- It can cost anywhere between five to 25 times more to acquire a new customer than to retain an existing customer (Harvard Business Review)
- You have a 60% to 70% chance of selling to an existing customer, whereas you only have a 5% to 20% chance of selling to a new customer (Marketing Metrics)
- Repeat customers spend an average of 67% more than new customers (Bain)
It is, therefore, quite evident that the businesses need to focus more on deriving revenue from the existing customer rather than solely focusing on customer acquisition. The benefits of implementing this strategy in your campaign management practices are manyfold.
Now we know how most of the businesses are losing their valuable marketing spends by focusing more on customer acquisition. We can, however, turn the tables and get more returns by investing in your existing customers instead.
Engaging with your customers requires diligent planning, timely execution, and a ton of knowledge and insight into the audience you’re reaching out to.
It requires a team of marketers, depending on how big the size of your customer audience is.
You will also need to segment your customers on the basis of their demography, behavior, geography, and so on, depending on your campaign requirement.
And most of all, engaging with your customers is not a one-time activity.
You will need to be in touch with them by sending relevant communications across channels throughout their lifecycle stages.
But,
“Why do I have to worry so much about someone who already is a customer?”
“Why do I have to continue to engage with them throughout their lifecycle?”
Let’s find that out in our next article.
