Major household expenditures are being put on the backburner, leading to marketers having to decide who to target, new customers or existing customers. With marketing budgets also under pressure, the ratio of spend between the two groups is a key decision.
In hard times, the importance of customer retention makes it worth the investment and many companies and brands are funnelling more money into loyalty schemes and the technology necessitated by these.
“On average, 50 percent of a company’s sales come from the top 20 percent of its customers, not 80 percent,” according to Kevin O’Connell, a Grant Thornton Managing Director in Strategy and Transactions, so in his opinion, marketers should throw out the old 80:20 belief that 80 percent of sales comes from the top 20 percent of customers.
On that basis, marketers need to analyse their sector and their own brands to ensure funds are not wasted. Not all market sectors have the same behaviours, so knowing the returns on acquisition and retention decisions is imperative.
Businesses can’t grow effectively by simply focusing on their top customers. Often, there simply aren’t enough of them. To achieve true growth, companies need to
