A client shared their total marketing budget with me last month, and I found that they spend over 90% of it on new customer acquisition. I asked them why they don’t have more balance investing in their existing customers equal to new ones.

Their response – “Dunno, I guess we always did it that way. I always feel like I need more and more customers year over year. And once someone buys from us, we move on to the next customer.”

Often, businesses will keep investing their marketing budget the way they have been doing it year after year, without a rigorous review of why. If you are mostly focusing on new business, it is like a leaky bucket, you are always filling.

Marketing Spending is No Place for Autopilot

This makes no sense to me. Why not go back to existing customers to get more value from your original investment? It cost you time and money to acquire them as a customer – are there ways to continue to sell to them? Even if they don’t buy from you again this year, maybe if they are satisfied customers, they can refer new business to you that lowers your CAC – customer acqusition cost.

What are you doing?

How is your marketing budget structured to reach current versus new customers?

It isn’t easy to acquire a new customer. Once you have them buying from you, your investment in retaining them can provide a greater return than the higher cost for recent customer acquisition.

 Why not continue to work with the existing customers and grow their lifetime value before seeking new clients? Or, at least invest in helping them refer new business to you.

I’m not arguing that this is an either-or proposition. But like most things, it needs some strategic thinking and careful balancing.

Services companies are notorious for moving on to the next “logo” instead of going back to an existing client to see if there is more they can provide to them. We are so quick to turn the page that we forget how much we have invested in that existing customer.

What’s your approach to balancing your marketing spending? How much time are you spending with satisfied customers to see if they can help you generate new business through referrals?

You can set up a time to chat with me about your marketing challenges using my calendar. Email me jeffslater@themarketingsage.com Call me. 919 720 0995. The conversation is free, and we can explore if working together makes sense. Watch a short video about working with me.

Photo by Laura Cordido on Unsplash