While marketing decision makers in the UK channelled a great deal of their budgets into customer retention during the recession, their focus is beginning to shift toward a more even balance between acquisition and retention, according to a study by customer insight specialist KDB.
The study found that more companies are returning to balanced marketing spending now that the global economy is beginning to recover. At the height of the recession, 22% of the 500 marketing decision makers surveyed said that their firms were spending more on customer retention than acquisition, while only 8% were focused on prospecting for new business, and 52% said their companies had maintained an even balance between the two approaches.
With the economic outlook improving, however, the firms that had focused on customer retention have begun shifting spending to customer acquisition again. Only 9% of companies said they planned to remain focused on keeping existing customers, while the percentage maintaining a balance between retention and acquisition increased to 62%.
This difference is the result of marketing managers shifting extra expenditure away from retention activities as the focus on nurturing customer relationships decreased from 22% mid-recession to 9% post-recession.
A sector-by-sector analysis showed that all industries are moving toward a more balanced marketing budget, with the exception of the media and marketing segment, which instead boosted its spend on prospecting, with 14% of marketing decision makers saying they were bolstering customer acquisition budgets as the economic outlook improved.
Out of all the sectors studied, the banking industry reported the most balanced approach to marketing spending, with 82% aiming for balance now that the economy appears to be coming out of recession.
The hospitality sector, on the other hand, seems to be far more concerned with nurturing existing customer relationships, as 17% of finance directors are still emphasising retention (the highest percentage out of all the industries studied).
According to Matt Boot, chief analyst for KDB, "Customer prospecting is clearly a major focus in post-recession marketing, and firms failing to shift budget from retention back into finding new business as the economy emerges from recession will be left behind. While firms did well during the recession to nurture their existing customer relationships in order to prevent mass defection, it is essential that businesses seize the post-recession window of opportunity to seek new customers."