Survey reveals 54% spend more than half their budget on acquisition, versus 13% who spend more than half on retention

For the second year in a row, marketers continue to allocate more of their budget for acquisition marketing versus retention marketing, despite consumer spending uncertainty, and that new customer acquisition can cost five times more than retaining an existing one. The results are from a survey of 221 business-to-consumer (B2C) marketing executives. It revealed that 54% allocated more than half their marketing budget to new customer acquisition, versus 13% 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 2023 Survey of B2C Marketers was designed by Optimove and fielded by Survey Monkey in the second quarter of 2023.

The 2023 results show little or no change from the results of an Optimove 2022 marketers survey fielded: 52% allocated more than half to customer acquisition, 15% allocated more than half to customer retention, and 33% said they split the budget equally.

The results are reported as consumer spending remains flat. According to the April 10th Beige Book Report issued by the U.S. Federal Reserve, “Consumer spending was generally seen as flat to down slightly amid continued reports of moderate price growth.”

Plus, trend results of three recent Optimove surveys show that consumers’ planned shopping budgets are unpredictable. In August 2022, nineteen percent (19%) of consumers planned on spending more, February 14%, and 22% in March 2023.

While respondents continue to allocate more to acquisition than retention, conversely, they say marketing tactics that deliver the best return on investment are 1) retention/churn prevention, and 2) increasing customer lifetime value (CLV). The greatest percent of respondents (28%) did note that shifting marketing resources towards retention, customer-led marketing, and increasing CLV will deliver the highest impact and growth to their companies. This compared to 13% of marketers who felt that acquiring new customers would have the most business impact.

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Said Pini Yakuel, CEO of Optimove, “This survey reveals that marketers know that retention marketing delivers a better ROI than acquisition marketing. But, there are issues that could hold marketers back from shifting more budget to customer-led retention marketing. Many have some difficulty adapting new technologies that drive deeper connections and personalization to their consumers. Of note is that many marketers still need a crucial core ingredient to highly effective retention marketing: optimizing first- and zero-party data to create highly personalized experiences for customers.”

The results also showed that almost half of marketers (49%) do not have a strategy for collecting zero-party data, while 42% do not have a strategy for first-party data.

Yakuel added, “For marketers, making a sharp pivot from acquisition to retention marketing – starts with deep, real-time analytics of first- and zero-party customer data. It is executed with real-time, personal communication with each customer. It is critical to rely on marketing to a known customer in the face of consumer spending uncertainty.”

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