Although customer acquisition is a laudable goal, retention of existing clients often pays bigger dividends for small businesses. More companies may be taking that approach, according to recent research.
A new report by Manta and BIA/Kelsey reveals that, for the first time, small businesses are investing more of their time, money and resources on strengthening relationships with existing customers versus acquiring new customers.
Of the nearly 1,000 small business owners (SBOs) surveyed, 61% report that more than half of their revenue comes from repeat customers, rather than new business. According to previous research, a repeat customer spends 67% more than a new customer. As a result, only 14% of SBOs now spend the majority of their annual marketing budget on acquisition.
This marks a dramatic change from just two years ago, when BIA/Kelsey’s Local Commerce Monitor survey highlighted that SBOs heavily prioritized customer acquisition over retention.
Even with this shift in small business behavior, business owners are not yet poised to take full advantage of their customer relationships. The study found that only 34% of SBOs have a loyalty program while the majority (66%) do not. Moreover, the majority of SBO loyalty programs are offline rather than online, failing to take advantage of technologies that enable seamless implementation and deeper customer insights.