• AMi Direct

AMiable Solution #446: Should Your Priorities Change?


The past two years have likely changed the way you approach marketing. Is it time to make another change?

The last two years have brought incredible changes. Some businesses struggled to stay open. Some got by. Some businesses succumbed to circumstances. Some reinvented themselves and grew. And some may have had both highs and lows.


How did your business fare? How did it change? More importantly, what are your plans now? Are you spending more on customer retention or customer acquisition? Which one is better?


Most marketers know that it costs up to 7x more to acquire a new customer than it does to retain an existing one. But did you know that—according to Hoover’s, a Dun and Bradstreet company—“Increasing customer retention 5% can boost profitability by 75%”?


Furthermore, online sales expert, Marius Kiniulus, reported the following:


  • The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%.

  • 65% of a company’s business comes from existing customers.

  • For most industries, the average customer retention rate is below 20%.

  • Loyal customers spend 67% more than new ones.


But that doesn’t mean you should throw your entire marketing budget into your house list. In fact, Kiniulus also reported that “for most industries, the average customer retention rate is below 20%.” You need to grow, after all, and you need new customers to help you do that. Deciding on how much of your budget to allocate to keeping current customers and how much to spend on prospects can be tricky. While no single formula will work for every business, identifying your answers to the following questions will help you determine your priorities and your strategy:

  • How saturated is your market?

  • Are your products in their early, established, or outgoing stages?

  • Has your house list (confirmed buyers) grown, shrunk, or stayed the same over the last five years?

  • Has your product or service line changed in the past five years? Has your profit?

  • Who are your closest competitors? How are they doing?

  • How frequently do your current customers make a purchase? Could it be more often

  • Is your industry growing, shrinking, or staying the same?

  • What is your customer retention rate? I.e., how long do customers remain active customers? Years? Or do they tend to make one or two purchases and that’s it?

  • What is the average amount each customer spends in a year? Is it enough to sustain the business? If not, how much more do you need to sell (via new customers) to clear the books or make a desired profit?


All marketing decisions, particularly budget-based ones, require testing and careful evaluation. But with the right research and planning, you’re sure to strike the right balance between marketing to new and old customers.

5 views0 comments