Win more of your leads · Every business
What Small Businesses Spend on Marketing, and Which Channels Bring Customers Back
Companies in the best-known survey of marketing leaders put about 9% of revenue into marketing and most of it into winning new customers, while the research on referrals and retention suggests that a small service business gets more from each dollar spent on the customers it already has.
At a glance
- The marketing share of revenue stood at 9.0% in the Spring 2026 CMO Survey of 308 senior marketing leaders, a benchmark drawn mostly from larger companies; the "SBA recommends 7% to 8%" figure repeated online does not appear in the SBA's current marketing guidance.
- The same survey found that 82% of marketing leaders spend more on acquiring customers than on keeping them, although a summary of retention research in Harvard Business Review puts the cost of winning a new customer at five to 25 times the cost of keeping one.
- For an illustrative business with $400,000 in revenue, keeping five more of every 100 customers is worth $20,000 a year, more than half of what a 9% marketing budget would cost.
Where the 9% comes from
One of the most careful public figures on marketing budgets comes from The CMO Survey, run by Duke University's Fuqua School of Business with Deloitte and the American Marketing Association, which polled 2,111 marketing leaders in January 2026 and received 308 responses. They reported marketing budgets equal to 9.0% of company revenue, and the survey notes that smaller companies tend to devote a larger share of their budgets to marketing, though its respondents are mostly firms large enough to employ a senior marketing leader.
A widely shared rule of thumb says the SBA recommends spending 7% to 8% of revenue on marketing; the SBA's current guide to marketing and sales gives no percentage, advising instead that owners budget the full cost of their marketing plan and compare it with the revenue it brings in. That advice is the more useful one for a small service business, since a percentage borrowed from large firms says nothing about whether the dollars are going to the right customers.
What the research says about bringing customers back
For the question in this article's title, the strongest evidence concerns two channels a small business already owns, its current customers and the people those customers refer. A study in the Journal of Marketing tracked about 10,000 customers of a German bank for almost three years and found that customers who came through referrals were worth at least 16% more than other customers with similar characteristics, and that their higher retention rate persisted over time.
| Marketing budget as a share of company revenue (CMO Survey, Spring 2026, 308 marketing leaders) | 9.0% |
|---|---|
| Marketing leaders who spend more on acquisition than retention (CMO Survey, Spring 2026) | 82% |
| Cost of winning a new customer compared with keeping one (Harvard Business Review summary, 2014) | 5 to 25 times |
| Profit increase from a 5% rise in customer retention (Bain & Company research, cited in Harvard Business Review, 2014) | 25% to 95% |
| Value of a referred customer compared with a similar non-referred one (Journal of Marketing, 2011, about 10,000 bank customers) | at least 16% higher |
Sources listed below.
None of these studies measured salons, dental practices or plumbing companies, and the research comparing individual channels such as email, texting and social media for small service businesses is thin, so the exhibit points to a direction rather than a ranking. In practice, the channels that reach existing customers are the rebooking conversation at the end of a visit, a follow-up message to customers who haven't returned on their usual schedule and a direct, specific ask for a referral, each of which costs little beyond staff time.
A worked calculation
| Annual revenue (Assumption) | $400,000 |
|---|---|
| Marketing budget at the CMO Survey share (Calculated ($400,000 × 9.0%)) | $36,000 |
| Active customers (Assumption) | 400 |
| Average revenue per customer per year (Calculated ($400,000 ÷ 400)) | $1,000 |
| Retention improvement (Assumption) | 5 percentage points |
| Additional customers kept (Calculated (400 × 5%)) | 20 |
| Revenue kept per year (Calculated (20 × $1,000)) | $20,000 |
| Revenue kept as a share of the 9% budget (Calculated ($20,000 ÷ $36,000)) | about 56% |
Illustrative example; replace every assumption with your own figures. Revenue kept counts one year only.
Widget note for the site: a lean calculator with three sliders (active customers, average revenue per customer per year and retention improvement in points) and one result, "revenue kept per year."
How you compare
- Your budget: add up last year's marketing spend, including ads, agency fees, software and printed materials, and divide by revenue; the CMO Survey's 9.0% is a reference point from larger firms, not a target.
- Your split: sort the same spend into money aimed at new customers and money aimed at current ones; if almost all of it goes to new customers, you look like the 82% in the CMO Survey.
- Your own baseline: count how many of last year's customers came back at least once this year, which is the retention rate the calculation above starts from.
Total last year's marketing spend, split it between new and returning customers, and run the calculation above with your own customer count before setting next year's budget.
About this research: This article draws on the Spring 2026 CMO Survey of 308 marketing leaders, the SBA's current marketing guidance, a Harvard Business Review summary of retention research and a Journal of Marketing study of about 10,000 bank customers. The worked example is illustrative.
Sources
- Moorman, C. The CMO Survey: Highlights and Insights Report. Duke University Fuqua School of Business, Deloitte and the American Marketing Association, Spring 2026. 308 respondents of 2,111 contacted.
- U.S. Small Business Administration. Marketing and sales. Business guide.
- Gallo, A. The Value of Keeping the Right Customers. Harvard Business Review, 2014.
- Schmitt, P., Skiera, B. and Van den Bulte, C. Referral Programs and Customer Value. Journal of Marketing 75(1), 2011. About 10,000 customers.
Related reading: Marketing Agency or Consultant? What a Small Business Should Fix Before Hiring One · Where Small Service Businesses Actually Get Their Customers · What a Referred Customer Is Worth Compared With One From an Ad · Email List or Social Followers: Which One Brings Customers Back? · Why Customers Don't Come Back (and How to Find Out Which Ones Left)
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