‘Customer Retention’ Drives Higher Operating Margin Than ‘Customer Acquisition’ During Economic Downturn, OneSignal Study Finds

OneSignal State of Customer Messaging in 2023: Companies Are Reducing Marketing and Product Spending and Focusing Too Heavily on Customer Acquisition

OneSignal, the world’s leading customer engagement platform, today announced the findings of its State of Customer Messaging in 2023 Report, a qualitative and quantitative look at messaging across the one million businesses that use OneSignal. The survey of more than 1,000 product and marketing professionals, engineers, and C-suite executives from small startups to international brands found that 88% of respondents have adapted their marketing and engagement strategy for 2023 in response to the economic downturn and 82% have reduced marketing and product spending in an effort to improve ROI.

While most respondents acknowledged the need to adjust their marketing and engagement strategies for 2023, the majority still allocated more resources toward customer acquisition than retention. This trend is particularly concerning – industry studies show that acquiring a new customer can cost five times more than retaining an existing one. Ignoring retention strategies is a missed opportunity for ROI and revenue growth.

“Companies need to resist the urge to make cuts in the wrong places – our survey shows that many are making decisions that can hurt retention in today’s economy. Customers expect highly relevant, timely, and personalized communication and engagement at every touchpoint – this should be your customer retention strategy for the market we’re in right now,” said George Deglin, CEO of OneSignal. “In a tight economy, increasing customer retention rates by just 5% can increase profits by 25% to 95%. Focusing on best practices like segmentation, personalization, multichannel engagement, and real-time, automated messaging will play a pivotal role in growth.”

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The Power of Customer Retention 
Customer retention was top of mind for most survey respondents – 95% said customer retention was very important or somewhat important to their business and 71% said customer retention will become more important in the next three to five years. According to industry estimates, the average success rate of selling to an existing customer is between 60 and 70%, whereas the rate of selling to a new one is between five and 20%.

This shift in focus is fundamental for subscription-driven industries such as the mobile app and SaaS industries, where user retention and engagement are critical to survival. This is true for more traditional industries as well, including finance and healthcare, where customers who feel valued and engaged with a brand are more likely to recommend it to others, leading to increased organic growth. By reducing customer acquisition spending a marginal amount and shifting savings into customer engagement, companies can significantly impact customer lifetime value (LTV) and improve profitability through leaner times.

Additional Key Findings from the OneSignal State of Messaging 2023 Report:

Driving Engagement and Boosting Long-Term Retention

• Personalized communication was identified as the most effective customer retention tactic by a majority of respondents.
• Personalizing messages based on customer behavior and preferences improves click-through rates (CTR) by up to 58%.
• User segmentation leads to 21% higher CTR.

The Role of Omnichannel Engagement

• Companies using an omnichannel engagement strategy see more than three times higher click-through rates than those using just one channel.
• In-app messages achieve click-through rates 25 to 30 times higher than average push notification rates.
• By leveraging multiple communication channels, businesses can cater to user preferences, enhance the user experience, and foster stronger brand loyalty.

OneSignal is used by 20% of all new apps. The customer engagement platform currently delivers more than 12 billion notifications a day.

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