Small firms are shying away from putting more resources into prospecting for new business at the expense of nurturing existing customers during the current downturn - unlike their big corporate counterparts, according to new research.
Data solutions firm Lloyd James Group surveyed UK finance directors and senior financial managers and found that only 42% of respondents from businesses with 1-10 employees and 49% of those from companies with 11-50 employees supported the idea of boosting investment in prospecting while cutting spend on CRM activities.
But the study also revealed that 79% of respondents from companies with 250-1,000 employees and 70% of those at businesses with more than 1,000 employees backed the idea of shifting spending into customer acquisition during the current economic downturn.
In between were mid-sized businesses, with 57% of respondents from firms with 51-249 employees agreeing that their marketing should lean towards prospecting for new business. Overall, only 49% all financial directors and mangers surveyed nationally favoured putting more resources into prospecting and fewer into CRM.
In terms of industry sector, the weakest support for putting new business prospecting ahead of CRM came from respondents in retail, education, business services, healthcare, and IT, communications and high-tech, with fewer that 40% of those surveyed backing the idea in each of those five industries. Support was highest in media and marketing (73%), hospitality and catering (67%) travel and transport (65%), and utilities and telcoms (64%).
"Smaller businesses risk losing out to bigger competitors if they don’t keep marketing to new customers, despite the economic situation – just hanging onto the current clients is not going to be enough," said Darrel Linehan, client services director at Lloyd James Group.
"Companies of all sizes need to realise that enticing new customers to switch to their products and services is just as important as ensuring that existing customers remain. With both consumers and businesses looking to tighten their belts, every company stands to lose at least some of their current customers, so finding new ones is vital to surviving the recession."