How to Make Marketing Investments Pay Off


Customers are your source of revenue so it makes sense to invest money into attracting, converting and retaining them. But as you plan your efforts, here are a few things to consider to make your customer investments pay off.

# 1 – Look Beyond Satisfaction

Customer satisfaction is certainly an indicator of customer repurchase intentions. Improvements can reduce churn and create new business through referrals. But even satisfied customers are not created equal when it comes to profitability. Understand why customers are satisfied. Some factors that impact both satisfaction and profitability include brands, products / services, buying experience, differentiation – and of course, price.

Satisfaction and profitability are not mutually exclusive. Some customers simply can not be profitably satisfied. So why make the investment in them? Invest resources in your profitable customers.

# 2 – Focus on the Lifetime Value of the Customer

How much you invest to acquire a new customer or retain them will vary. But you need to think beyond the most recent or first transaction. Consider instead what you expect to earn from customers on an ongoing basis.

This long-term view considers what products or services they buy, how often and for how long. Seek to understand your customers' value. When you do, you can look for ways to improve it and decide how much you will spend to acquire and retain customers.

# 3 – Budget and Plan for Retention Too

When it comes to marketing, think beyond new customer lead generation. While important, a portion of your marketing budget should be allocated towards nurturing and retaining customers. When you consider lifetime value, it's a good decision. Plus, it's a lot cheaper to retain a customer than to acquire a new one!

# 4 – Track Retention Rate Over Time

What we measure we can celebrate or improve! Do you want to know if your customer investments are paying off? Your customer retention rate, over time, will tell you that.

You can calculate the retention rate for any period you choose: weekly, monthly, quarterly or something else that is relevant to you. Pay attention to the trends over time! To calculate, you need to know the following:

Retention Rate Formula: (CE-CN) / CS)) X 100

  • CS – number of customers at the start of period
  • CN – number of new customers during the period
  • CE – number of customers at the end of period

Let's do the math with a simple example.

  • You started the first quarter (January 1) with 200 customers [CS]
  • You ended the first quarter (March 31) with 250 customers [CE]
  • During the first quarter (Jan 1 – Mar 31) you acquired 65 new customers [CN]

Let's plug them into the formula: ((CE-CN) / CS)) X 100

250 – 65 = 185; 185/200 = 925; 925 x 100 = 92.5

Your retention rate for the period is 92.5%

# 5 – Monitor Satisfaction

If you spend money to acquire and keep customers, it makes sense to get feedback and monitor customer satisfaction. Surveys allow you to do this. When done right, they help you quantify the quality of your business – and support your investments.


When done by phone, they allow you to stay in contact with customers, identify and fix mistakes, identify possible problems (before they become major issues) and request testimonials, reviews, and referrals. Remember to apply item # 1 above when you consider changes or improvements in your business – rely on feedback from ideal, profitable customers!

Customer acquisition and retention are important for any business. Planning how you will do both will save you time and money. Incorporating the five items above will help you make better decisions.

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Joan Nowak


Author: admin

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