How does your retention marketing strategy play into your overall marketing budget for the year? More importantly, does your organization have a donor retention budget?

For those organizations that do have a budget (those that don’t should seriously consider adopting one!), it can often be a struggle to determine the exact dollar figure that should be allocated. NewNorth, a digital marketing firm focused on consumer retention, believes that at least fifteen percent of an organization’s marketing budget should be dedicated to customer retention.

Why? Because attracting new donors can cost your organization approximately five times more than keeping an existing donor.

Let’s break down some numbers.

If you have a six to one ratio of spending to results, your budget should reflect this. For example, if you have a $1,000,000 marketing budget for the year, you should be spending a minimum of $150,000 directly on retention marketing efforts. Some organizations spend considerably more than fifteen percent (NewNorth suggests that subscriptions should be more – almost fifty percent).

One crucial point to keep in mind is making sure you never look at your consumer service budget as your retention budget. The two are distinctly different and should be kept completely separate. In a nutshell, consumer service is the program planned within your organization for how it will deliver goods and services to its donors. A retention budget, on the other hand, is the program planned within your organization for how to communicate with your donors and how you make them feel.

A second point to note is the distinction between consumer loyalty and consumer retention. The budget for your loyalty program, though bordering both the retention and acquisition departments, is different and should be contained to it own budget. A retention budget should be focused on win-back, churn reduction, or orientation rather than a loyalty program.

While it may seem like a lot to allocate fifteen percent of your marketing budget solely to donor/consumer retention, a fairly narrow aspect of consumer relations, it is most certainly a worthwhile investment. The time, money and resources you put into a donor retention budget (and of course an accompanied strategy) will serve your organization well in the long run.