Survey: Current Customers Get Renewed Corporate Focus

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Nearly twice as many companies are devoting more resources to customer retention over customer acquisition, according to a survey conducted with senior-level marketing executives in large and mid-sized companies by Grizzard Performance Group, Atlanta.


The results of a similar survey in 2002 found that companies were devoting more resources to acquisition over retention by a margin of almost two to one. Grizzard Performance Group is an enterprise within direct marketing firm Grizzard Communications Group.


The new survey, which was released yesterday, was commissioned in May and June. It found that companies are distinguishing customers by value and allocating marketing budgets to customers based on that value. Seventy percent of Fortune 1000 companies and 74 percent of mid-cap companies said they are doing this.


Of the companies that remain devoted to customer acquisition over retention, 67 percent said they are distinguishing customers by the value of the interaction they receive from the customers.


But, the findings also reveal that companies are inaccurately defining customer value, according to Grizzard. The No. 1 customer valuation criterion companies rely on is annualized gross sales, followed by number of unique orders. Customer profitability -- annualized or lifetime -- ranks third when it should be the primary focus.


"This misguided notion that greater sales equals greater value clearly shows that we're still struggling in the wake of corporate sale's takeover of the marketing function when the bottom fell out four years ago," said Michael King, group vice president of the Grizzard Performance Group. "But as our study revealed that the sales acquisition binge has subsided, these findings also prove that corporate marketing is gaining control, once again, and moving their companies in the right direction."


Other survey findings reveal that:


· Companies in the South and West are almost twice as likely to favor retention over acquisition as companies in the Northeast and Midwest.


· High-tech companies are almost three times as likely to devote more resources to retention, followed by manufacturing and service firms.


· When asked to define customer profitability, the majority of companies (39 percent) cited annualized profit, followed by an increasing profitability trend (24 percent). Lifetime value (historical or predictive) ranked a distant third at 16 percent.


· 76 percent said things are positive and going in the right direction in Corporate America.


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