According to Optimove: Retail Marketing Executives Allocate Most of their 2022 Budget to Costly Acquisition Versus Retention as Recession Looms

Survey reveals 52% spend more than half their budget on acquisition, versus 15% who spend more than half on retention

A survey of 323 retail marketing executives revealed that 52% allocated more than half their marketing budget to new customer acquisition, versus 15% who allocated more than half their budget to customer retention. The remaining 33% of respondents said they split the acquisition/retention budget equally. The Optimove 2022 Retail Marketing Survey was designed by Optimove and fielded by Survey Monkey in the second quarter of 2022.

The survey further revealed that more than 23% of respondents allocated more than 80% of their budget to acquisition, versus almost 10% who allocated 80% or more of the budget to retention.

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The results are reported as a recession is looming. According to the July 13th Beige Book Report issued by the U.S. Federal Reserve, “Economic activity expanded at a modest pace, on balance, since mid-May; however, several Districts reported growing signs of a slowdown in demand, and contacts in five Districts noted concerns over an increased risk of a recession. Most Districts reported that consumer spending moderated as higher food and gas prices diminished households’ discretionary income.”

According to Pini Yakuel, CEO at Optimove, “Marketers need to quickly allocate more budget and tactics to retention versus acquisition marketing as consumers’ discretionary purchasing wanes. Acquiring a new customer can cost five times more than retaining an existing one. Consumers are clearly hitting the pause button on spending. Sophisticated marketers anticipated the current macro-economic trend and already make a sharp pivot from acquisition to retention marketing – not just now, but in perpetuity.”

Yakuel continued, “We expect that the recession will trigger a higher percentage of marketers’ budgets to acquisition, just like the pandemic moved consumers online and companies into the cloud. Customer retention delivers better marketing ROI in the short- and long-run.”

Underscoring Yakuel’s comment, it has been reported that finding a new customer can cost five times more than retaining an existing one. In addition, selling an existing customer has a 60-70% success rate versus a 5-20% of selling a new customer.

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Marketers were also asked to choose up to four activities that will drive the highest revenue impact/growth/improvement in the next 12 months. The choice chosen most was “creating and delivering personalized customer experiences,” noted by 45% of respondents. Second was “shifting resources towards customer marketing (retention/churn-prevention/activation/reactivation etc.)” at 42%. Other marketing activities, including “acquiring new customers” at 40%, were not far behind in priority. Marketers clearly feel pressed to do everything.

In addition, respondents noted that budgets for acquisition and retention were up in 2022, with about 60% saying they were up, 15% saying they decreased, and 25% remaining the same versus 2021.

Added Yakuel, “To deliver personalized experiences, a company must know the customer – down to their specific preferences. That really only happens with existing customers. Marketers know them, and consumers trust the known brand. Marketers clearly must double down on exceeding the expectations of their most loyal customers to grow profits in a recession,” he concluded.

Detailed survey results below:

Q: What percent of marketing budget is geared towards
Customer Acquisition vs. Customer Retention?

1. 100% Acquisition  –  11%

2. 80-99% Acquisition – 13%

3. 60-79% Acquisition –  29%

4. 50%/50% Acquisition/Customer Retention – 33%

5. 60-79% Customer Retention – 5%

6. 80-90% Customer Retention – 7%

7. 100% Customer Retention –  3%       

Q: What will drive the highest revenue impact/growth/improvement
for you in the next 12 months? (Choose up to 4)

1. Creating and delivering personalized customer experiences- 45%

2. Shifting resources towards customer marketing – 42%

(retention/churn-prevention/activation/reactivation etc.)

3. Investing/upgrading marketing tech/automation – 40%

4. Acquiring new customers – 40%

5. Prioritizing data-led over creative-led campaigns – 37%

6. Improving post-purchase loyalty/re-purchase – 37%

7. Automating more of my marketing campaigns – 36%

8. Improving lead quality – 35%

9. Increasing/shifting brand awareness/positioning – 34%

The Optimove 2022 Retail Marketing Survey queried 323 senior level marketing executives in the second quarter of 2022.  The survey was designed by Optimove and fielded by Survey Monkey.  Respondents included executives at companies with the following retail models: digital-first multi-brand, wholesale manufacturers, traditional multi-brands, digital-first direct to consumer, and traditional direct to consumer retailers with brick-and mortar outlets. Respondents included CEOs, CMOs and SVPs of marketing. Respondents were 54% male, 46% female.

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