I recently saw a pie chart that indicated companies were spending 50% of their direct marketing dollars on Customer Retention and the 50% on Customer Acquisition. Last year, Customer Acquisition accounted for 60% of spending and only 40% on Retention.
Assuming that these numbers were true, in the sense that they were an accurate barometer of what’s happening in the direct marketing world (whatever that means) the implication would be very disturbing. While there is nothing wrong per se about spending on customer retention, you can’t grow a business that way – certainly not in terms of the number of customers, and almost certainly not in terms of revenues and eventually not in terms of bottom line profits.
A related finding was that 60% of the respondents reported that they would be spending more (across all channels) on direct marketing activities next year while the balance would be spending about the same.