Why CMOs are shifting their focus from customer acquisition to retention

CMOs are shifting their focus and budgets from acquiring new customers to keeping them engaged throughout the customer journey, according to a new study.

The research, conducted by The CMO Club in partnership with IBM, found that among the 100 CMOs surveyed there has been a significant change in how budgets are allocated. 

Instead of spending money on raising awareness and the top of the purchase funnel, CMOs are more focused on investing their money across the entire customer journey.

Drastically changing customer journeys

There is a general understanding among CMOs that customer journeys have drastically changed.

“This spending shift comes at a time when consumers have begun engaging businesses from multiple channels, researching products on their mobile device, purchasing from their tablet and then picking them up in the store,” the report states.

As customers shop using multiple devices, CMOs can no longer dedicate a majority of their budget to customer acquisition. Instead, they prefer to focus on retention and driving customer advocacy across each interaction point.

On average, marketing budgets are being invested evenly across the buyer journey, with the highest investment at the “buy” stage (21%), followed by discover (20%), learn (16%), try (16%), advocate (14%) and use (13%).

The shift in budget from acquisition to retention is something that Andrew Davies, CMO and co-founder of software company idio, recognises.

“Previously, marketers have focused on the top of the funnel, on acquisition metrics, and have spent budgets on channels separately. This has been most easily measured,” he says.

“As digital adoption and new analytics technology allow a more holistic and granular view of the customer journey, senior marketers have shifted focus and budget onto areas that were not previously under the spotlight.”

As retention investments can be strategically evaluated on more dimensions than acquisition, it is unsurprising they are gaining favour.

“The more you know about the customers you have the better you can evaluate the impact of how you invest in them,” says Naomi Kasolowsky, Dunnhumby’s global capability MD of customer strategy and engagement.

Budgets are up, so are expectations

As budgets have increased, so has the expectation to deliver results.

“Scrutiny of ROI has never been higher due to the number of and maturity of channels, devices and propositions,” says Kasolowsky.

As a result, experimenting across tactics and buyer stages seems more prevalent within many organisations.

Of the CMOs who were surveyed, 53% said the reason for experimenting was to generate higher revenue.

Another 20% of CMOs said that they are experimenting with different allocations because better data and technology allow them to measure the success of every experiment, so they can quickly identify winning approaches and move away from ineffective ones.

As they are doing this, marketers indicated that they are growing less interested in traditional tactics like TV and print and prefer using digital methods.

The research strongly shows this shifting interest with a 52% traditional and 48% digital spending split.

Future plans

Going forward, CMOs are planning to increase their spend across every stage of the buyer journey over the next two years by an average of 50%.

Over half of respondents (57%) indicated their budgets would increase over the next two to three years, with 13% investing their money in content marketing, 11% in digital advertising, 11% in traditional and 11% in physical activities.

The research was conducted among 100 US based CMOs, split across B2B (54%) and B2C (46%) enterprises.


Marketing text books show that it’s far easier to retain an existing customer than it is to recruit a prospect and that the cost of recruiting versus retaining is anywhere from three to six times more. O2 also knows that having a customer who trusts the brand and believes in us has a lower cost to serve, recommends more products and services to their friends and family, buys more and stays much longer.

Data is the new battleground and in a world of big data where understanding more and more about customers is key to commercial success having people on your side first so you have a baseline is key.

O2 saw this a number of years ago and turned the mobile industry on its head. Instead of ignoring our customer base and investing all the money into new recruits, we introduced ‘Fair Deal’ where existing O2 customers got as good a deal or better than our new recruits. This created a club type feel and drove more recruits than ever…non O2 customers wanted to join the club.

I am not sure that budgets are actually increasing (well mine certainly aren’t!) and so in a world of increased choice, where barriers to entry are at an all time low, where it’s easier to cross-sell more products and services to your existing base than recruit new then a retention first strategy certainly make sense.

If you do look after your own customers and nurture the data and insights you glean, then future product development and fixing the hotspots in terms of customer experience should all flow.



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