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No doubt you’ve heard, “It costs less to keep customer than it does to create a new one.” Assuming this is true, it would seem logical that companies should spend more on acquisition than retention, which is exactly how the data play out. According to a recent report from Econsultancy, 65% of marketing budgets are allocated to acquisition compared to only 35% that are spend on retention marketing.
This represents old world thinking. The logic of spending more on acquisition than retention in fundamentally flawed — it merely perpetuates the problem. Let me explain.
I recently cancelled my account with the premium television provider I have subscribed to for seven years. They wouldn’t replace my receiver. My point was simple. Each month I paid a “rental fee” for the equipment, the equipment wasn’t functioning properly, and so I believed they should replace it at no cost.
They didn’t see it that way. The rep on the other end of that call was simply following the “rules,” which said that I was responsible for shipping and installation fees.
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