CMOs in the U.S. are growing more optimistic about the prospects of increasing their number of new customers this year, with 79% expecting to see an increase in new customers over the next 12 months, compared to 72% feeling that way last year. But it’s not just customer acquisition that marketers are optimistic about; they also expect to see increased customer retention in the coming year, per the most recent report from The CMO Survey.
More than two-thirds (67.7%) of the 265 senior US marketers at for-profit companies surveyed say they expect to see increased customer retention in the next year. This represents a significant uptick in the proportion of CMOs who expect to retain more of their customer base than witnessed in the February 2019 (52.2%) and February 2018 (52.7%) reports.
B2C Product companies, in particular, expect to see a higher rate of customer retention, with 82.6% of CMOs from this sector saying they expect to see an increase. This compares to 65% of respondents from B2C Services companies, 68.4% from B2B Services firms, and 60.9% from B2B Product companies.
Although a lot of emphasis is still placed on winning new customers, research shows that marketers are also focusing on retaining the ones they have. This is particularly important to subscription-based businesses: indeed, a recent survey from Brightback found that a full 97% of B2B and B2C subscription companies had made customer retention a top priority. Many have put a variety of tactics in place – such as testing discount offers and offering special deals to at-risk customers – as a way to reduce customer churn.
Additionally, not only is customer retention one of the key motivators for companies to achieve a single customer view, but it is also being used by a majority of businesses as a way to measure customer experience improvements.
With businesses narrowing their focus onto the customer, The CMO Survey also reveals that while the expected growth in spending on brand and product and service innovations has decreased, the growth of CRM spending has remained relatively steady in recent years. As of this latest survey, CMOs project a 9% increase in CRM spending over the coming year, as opposed to an expected 7.1% hike in brand spending, a 6.1% increase in new product introduction spending, and a 3.7% lift in new service introduction spending.
In tandem with those budget expectations are improving results for customer retention. CMOs reported a 2.3% year-over-year increase in customer retention performance, continuing a steady rise from a 1.5% gain reported in the February 2017 study. And although the improvement in customer retention has not been as great as in customer acquisition (3.8% reported as of this latest survey) or brand value (3.1%), the trends for acquisition and brand value have been less favorable of late.
- For CMOs across all industry sectors, as well as revenue levels and levels of internet sales, year-over-year growth is a more important KPI than ROI.
- CMOs expect to boost their share of budget dedicated to customer experience (CX) by more than 35% over the next three years, at which point CX spending will account for about one-fifth (20.6%) of marketing budgets.
- Although top-notch sales coaching programs can be beneficial when it comes to improving communication skills and increasing product or service knowledge, businesses are dedicating less of their budget towards training and development now (4.7%) than they did six months ago (5.8%). Training and development appears to be a higher priority for B2B (5% budget share) companies than to B2C companies (B2C Product: 3.6% share; B2C Services: 4.4% share).
The full report can be found here.
About the Data: Report findings are based on a survey of 265 top US marketers, 98% holding the position of VP or above. The survey was fielded in January 2020.
Interested in learning more about V12’s marketing and technology solutions? Click here for more information.