Retention or Bust

How to get off the treadmill and start scaling your business (for real).

Author

Pietro Saccomani
February 19, 2026

A lot of founders are stressed right now.

On the surface, you can have a great business - solid brand, good product, growing, doing mid-7 figures (perhaps edging towards 8 figures).

But the situation under the hood looks like this:

  • CPMs keep climbing

  • Your Meta rep keeps telling you to spend more

  • ROAS used to be comfortable - now it’s getting tight

  • Revenue is scaling, but margins fluctuate

A common question is “how do I fix my acquisition?”

The answer: "You don't. You outgrow it."

Let me explain.

The Acquisition Ceiling

Acquisition is a starter engine, not a growth engine.

It gets you moving. Builds your initial customer base. Gives you the data and revenue to figure out who you are and what works. Every successful business is built - initially - on finding a way to acquire customers.

But you hit a ceiling with acquisition.

CAC has been climbing steadily for years - 40-60% up over the last few years, depending on which source you look at - driven by more advertisers competing for the same eyeballs, privacy changes making targeting less precise, and platforms extracting more from every impression.

Meta's average CPM climbed to $8.74 this year, up from $7.91 last year. And that's a global average. In competitive categories, it's much worse.

You can optimize your ads. You can improve your creative. You can test new channels. And you should do all of those things.

But there's a floor. You can only push CAC down so far before you hit the limits of what the market will give you. The auction doesn't care about your margins.

Even if you’re Coca Cola, with a TAM of everyone who drinks soda, you’re going to find your market of new customers tapped out eventually.

And even then, scaling through acquisition only matters if you’re making a consistent profit on your first sales.

Most ecommerce brands aren’t.

The LTV Unlock

People talk about LTV like it's a metric to track. It's not. It's the entire business model.

CAC has a floor. LTV has no ceiling.

You can only reduce what you pay to acquire a customer so far. But there's no upper limit on how much value that customer can generate over time.

And when I say value, it’s not just direct sales revenue from that customer.

Higher LTV customers generally contribute more referrals. There are lower support costs associated with these customers. Fewer returns.

On top of that, every additional purchase is almost pure margin because you already paid to acquire them.

And this is the critical part: LTV scales your profits, not just your revenue.

Revenue growth from acquisition is expensive growth. Every new customer comes with a cost attached. Revenue growth from retention is profitable growth. Bain & Company's research found that a 5% increase in customer retention can boost profits by 25% to 95%.

Not revenue - profit.

The math on this compounds in ways that are hard to overstate. Customers in months 31-36 of their relationship with a brand spend 67% more than in their first six months. Second-time customers spend 40% more than first-time buyers. By the tenth purchase, they're spending 80% more.

Bottom line is, purchase frequency compounds. It’s not linear. It’s an upwards curve.

This Isn't a Strategy Choice. It's an Inevitability.

Treating retention as just one part of your business is backwards.

Every brand, if it survives long enough, hits the same wall with an acquisition-centric strategy.

Acquisition gets you to a certain size. Then the economics force you to either figure out retention or watch your margins erode until there's nothing left.

It's not a question of if you need to shift your focus. It's when.

The brands that figure it out earlier have an enormous advantage. Because while competitors are burning cash trying to buy their way to growth, retention-focused brands are compounding value from a customer base that already exists.

Think about it this way. Two brands, same category, same size.

Brand A spends 80% of their budget on acquisition. They grow revenue 30% a year, but margins stay flat because every dollar of growth requires a dollar of ad spend to generate it. They're on a treadmill.

Brand B spends 50% of their budget on retention. They grow revenue 20% a year, but profits grow 40% because repeat customers convert at higher rates, spend more per order, and cost almost nothing to reach.

After three years, Brand B is more profitable. After five years, it's not even close.

This is what I mean by inevitable. The math always wins.

What Retention-First Actually Looks Like

I'm not going to give you a checklist of tactics. There are enough "10 retention strategies" posts out there. But I do want to talk about what the shift looks like at a strategic level, because I think that's where most brands get it wrong.

Not treating retention as a department

Retention isn't email marketing. It's not your loyalty program. It's not your CX team (although all of those matter).

Retention is what happens when the entire business is oriented around making customers want to come back. Product quality, post-purchase experience, how easy it is to reorder, how the brand shows up between purchases. All of it.

If retention is siloed as "the email team's job," you're missing the point.

Investing where you own your reach

Repeat customers make up only 21% of the average brand's customer base, but they drive 44% of revenue. Those are the customers you need to be in front of consistently, without paying for the privilege every time.

That means your app. Your email list. Your SMS. Channels where reaching a customer costs pennies, not dollars. Channels where you control the frequency, the message, and the timing.

Every dollar you invest in owned channels compounds. Every dollar you spend on paid acquisition resets to zero the moment you stop spending.

Measuring what matters

Most brands obsess over ROAS and CPA. Those metrics tell you how efficiently you're acquiring. They tell you almost nothing about how profitably you're growing.

Start tracking contribution margin by cohort. How much profit does a customer from Q1 2025 generate by Q1 2026? How does that compare to Q1 2024 cohorts? That's the number that tells you whether your business is actually getting stronger or just getting bigger.

The Bottom Line

I keep coming back to a simple framing.

Acquisition builds your business. Retention is your business.

If you're early and growing fast, lean into acquisition. That's the right move. But start building the retention infrastructure now, because the wall is coming.

And if you're already at scale and your margins are flat or shrinking despite growing revenue? You're at the wall. The answer isn't more ad spend. It's making the customers you already have more valuable.

There's a floor to how low you can push CAC. There's no ceiling on LTV.

That's the whole game.

Brought to You by MobiLoud

We've been talking about the channels you own and the value of reaching your customers without paying the ad tax every time.

A mobile app is one of the highest-leverage retention assets you can build. It puts your brand on the one device your customers check constantly. Push notifications that actually get opened. A home screen icon that keeps you top of mind between purchases. A frictionless reorder experience that makes buying from you easier than searching for an alternative.

And unlike paid channels, every push notification, every repeat session, every saved login compounds. The app gets more valuable the longer a customer has it.

MobiLoud builds native apps on top of your existing site, so you don't have to rebuild anything. Your full experience, in a native app, live in weeks.

Quick Hits

Shopify just reported Q4 revenue of $3.7 billion, beating estimates. The interesting detail: growth was driven by newer merchant cohorts that are retaining better and generating more revenue over time than older cohorts. Even at the platform level, retention is the growth engine. It's not just a brand-level insight; it's an infrastructure-level one.

eMarketer's take on DTC profitability is blunt: the math of buying customers no longer works for most brands. Their recommendation? Shift investment toward retention, subscriptions, and omnichannel strategies. U.S. DTC ecommerce is expected to hit $240 billion this year, but the winners will be the brands that figure out how to keep customers, not just acquire them.

Starting February 25, TikTok Shop is forcing all sellers into its centralized fulfillment model. Brands can no longer ship orders themselves. It's the Amazon playbook: control the logistics, control the platform. If you're selling on TikTok Shop, you now need to store inventory in their warehouses, ship within 24-48 hours on their terms, and accept their packaging standards. One founder described repeated issues with damaged products. Another pointed out the real cost: "It doesn't matter if it's Nars or Drunk Elephant... it's just another order." The more you build on rented land, the more someone else decides how your brand shows up.

Modern Retail makes the case that payment infrastructure is an underrated growth lever. If you're on Shopify, you probably already have this covered. Shop Pay converts at rates most legacy checkouts can't touch. But if you're on an older platform with a clunky checkout flow, you're leaving real money on the table. Not in some abstract "optimize your funnel" way. In a literal "customers are abandoning carts because your payment experience is bad" way. Worth reading if you're not on a modern commerce stack.

AppLovin, the ad platform that dominates mobile gaming, is making a serious push into ecommerce advertising. They just posted $1.7 billion in quarterly revenue and are projecting $1.45 billion in ecommerce ad revenue for 2026. Their ecommerce conversion rates are still low compared to gaming, but they're climbing. Another platform entering the auction means more competition for impressions, which means higher CPMs for everyone. If you needed another reason to invest in channels you own rather than channels you rent, here it is.

Google is embedding ads directly into AI-powered search results and rolling out what they're calling "Unified Commerce Protocol," letting AI agents handle transactions from discovery to checkout. Etsy and Wayfair are already on it. Shopify, Target, and Walmart are next. The pitch is that brands can now reach customers during research, not just at the point of purchase intent. The reality is that Google is rebuilding the entire ad layer around AI, and the brands that understand this shift early will have a real advantage. More on this as it develops.

OpenAI's ChatGPT shopping feature has a fundamental problem: they haven't sorted out sales tax compliance across U.S. states. Dozens of states have marketplace facilitator laws that could require OpenAI to collect and remit sales tax on transactions. They're also moving away from Stripe to build their own payment infrastructure, which only deepens their operational exposure. It's a good reminder that the "AI is going to replace ecommerce" narrative runs into boring, hard problems fast. Building a shopping platform isn't just about recommendations. It's about tax, logistics, returns, and trust. The incumbents have a bigger moat than the hype cycle suggests.

On the Pod

Our most recent pod welcomed Kira Waite, Director of Operations and CX at Artifact Uprising.

Kira had some great insights to share on how to engineer CX to drive revenue; not just have it be a cost center you’re always trying to cut down.

Check it out below, and subscribe via YouTube or Spotify to get notified about new episodes as soon as they come out.

That’s all for today.

I’ll be back in touch next week, with more on how successful brands are doing CX and retention right.

If there’s any topic you’d like to see us dive into, for either the newsletter or the podcast, just shoot me a message here.

Until next time,

Pietro and The Retention Edge Team

PS: want to boost retention, revenue and profitability? If so, launching your own app could be the best move you make this year.

See how: go to our website to get a preview of your app for free, or shoot me a DM on LinkedIn to talk about it.