Retention or Acquisition? Maximizing your ROI.

In recent years, Canadian businesses and consumers have faced an unprecedented increase in costs, and the financial outlook for many is challenging. Despite this, Canadian retail sales (excluding autos) are rising, and restaurant spending is up, possibly due to higher dining costs. Canadians continue to make discretionary purchases.

With peak spending and giving seasons upon us, businesses and charities need to make decisions now, if they haven’t already, about the investments they will make this fall and winter to maintain their revenue base. The cost of retaining, recruiting, and training workers has increased along with the costs of operating a business. Specifically related to acquisition and retention campaigns, paper costs have faced double-digit increases over the last two years, and print costs are also rising. Advertising costs, for some, have increased as high-quality digital advertising channels are less affordable now. For others, costs have grown as advertisers do their best to remain visible by “sprinkling” their message across many channels frequented by their audience.

What this means is that what was true almost 30 years ago when I started this work remains true – and critical – to this day. It is more cost-effective to retain your customers and donors than it is to find new ones. The stats are clear – focused retention efforts will net you ten or more times the engagement than acquisition campaigns.

What advice do I have for charities and businesses heading into the fall and winter seasons?
You will not retain 100% of your customers or donors and cannot rely on organic growth alone for stable revenue replacement. You need to invest in acquisition. However, you need to invest more in retention efforts than in acquisition. Create and implement a retention strategy and process, and get your team members (including your executives and board) knowledgeable about how you will retain your revenue base. A comprehensive retention strategy will include understanding your audience through research and actively soliciting feedback, meaningfully demonstrating appreciation, keeping people informed, and inviting them to return. Spend two to three times as much on retention this season as you do on acquisition, and then use the excess revenue earned from retained customers/donors to fund a second acquisition campaign in the spring. Be present and visible on the channels that your customers are using, and speak directly to them using their preferred method. There is no one-size-fits all message that will inspire the same enthusiasm in all audience members, so remember to tailor and personalize communications as much as possible.

If I can say only one thing that will stick with you this season, please let it be this: