SMBs Devoting More Marketing Dollars to Customer Acquisition

Should a business allocate more of its marketing budget to acquiring new customers or retaining old ones? getrewardedDuring the recent recession, many enterprises reduced ad spending and focused heavily on retaining their current customers, believing the expense incurred in finding new customers far outweighed the incoming revenue. With the economy expanding, marketers are once again casting a wider net to find new customers.

About 42.3% of marketers in the recent CMOSurvey​.org report noted that they expect to see more customers coming into the market this year. And, 32.8% of these marketers plan to acquire new customers with increased advertising.

According to a BIA/​Kelsey study, the same is true of SMBs. Here's how they plan to allocate their marketing budgets with respect to customer types:

  • More than 50% on acquiring: 37.2%
  • More than 50% on retention: 5.7%
  • Split 50/​50 between retention/​acquisition: 28.0%
  • Hard to say/​not sure: 29.0%

In addition, SMBs are  shifting resources to loyalty and transaction programs, instead of just advertising, to win and keep customers. SMB spending on gift cards, loyalty rewards, coupons and deals should all increase this year according to BIA/​Kelsey. Peter Krasilovsky, vice president and senior analyst at the firm, notes that these programs “will increasingly gain parity with paid media advertising, such as display ads and contextual search ads.”

The interest in attracting new customers is strong evidence that marketers believe we’re in a period of economic expansion.

[Sources: CMO Survey​.org. Fuqua School of Business-​AMA. Feb. 2013. Web. 15 Mar. 2013; New Marketplaces. BIAKelsey​.com. 27 Feb. 2013. Web. 15 Mar. 2013] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.