The best customer service professionals know that it is important to build relationships with customers so they will continue to use their services.
This is done in order to more effectively market to customers, keep track of sales, and improve customer service so that one-time buyers become lifelong customers.
In this article, we will explain what a customer lifecycle is, how to analyse it, what the best tools are for managing it, and provide some top marketing strategies for increasing customer retention rates.
Let’s get started.
What is the Customer Lifecycle?
The process that a consumer goes through when they become aware of a product, purchase it, and then hopefully become a long-term customer is called the customer lifecycle. The customer lifecycle is made up of five stages: reach, acquisition, conversion, retention, and loyalty.
In short, it provides a detailed plan for how a customer will progress through the flywheel and sales funnel, and pinpoints areas where improvements can be made.
You can use the customer lifecycle to create content that will help you acquire new leads and deliver customer experiences that will make them happy at every stage.
What is Customer Lifecycle Management?
The goal of customer lifecycle management is to track the business’ performance over time in relation to the customer lifecycle. This includes tracking the stages of the customer lifecycle, assigning metrics to each stage, and measuring success based on those metrics.
Each company has the ability to control and direct the customer experience.
You can ensure customers choose your brand’s product or service, and eventually become loyal to that brand, by guiding them through a similar set of steps that most customers follow.
You’re not tricking people into buying your product. You’re providing them with content that they want and adding value. This way, you’re showing that you’re a trustworthy and transparent brand that cares about its visitors and customers.
The customer lifecycle is an important tool for understanding how your customers behave. The following sections provide more detail on what each stage of the cycle looks like.
Customer Lifecycle Stages
Most businesses have a customer lifecycle that consists of a handful of basic stages.
- Approach
- Acquisition
- Development
- Retention
- Loyalty
Stage 1: Approach
The first step in the customer lifecycle is the approach stage. Most of the work is done by the sales and marketing teams at this point, as the customer is still a lead. The goal is to convert them to customers, but before that can happen, the sales and marketing teams must make sure the leads are worth working with.
You would split your leads into groups based on things like age, gender, location, occupation, and income. The leads that are most valuable to you become prospects, marketing-qualified leads, or sales-qualified leads. These are the people you want to offer your products to, because they’re more likely to be interested in what you’re selling.
Stage 2: Acquisition
You currently have leads or prospects who have a high chance of becoming customers. They are at the beginning stages of your company’s sales pipeline.
This stage of your company’s growth will require you to have dedicated sales and customer service agents available to answer questions and concerns from your potential customers.
Your marketing and sales teams should promote the usefulness and value of your product or service to each group of leads. Remember that segmentation is still important, as even the most qualified leads will have different pain points. You can segment your leads and market several products/services to different groups.
Stage 3: Conversion
This is where the hard work pays off and you see results. In other words, you win the sale and the prospect becomes a customer. The key to success in this stage is focusing on selling the relationship, not just the product.
This happens when a customer pays to start using your product or service.
The conversion rate is one of the most important metrics when determining how successful a sales team is. This number tells you what percentage of leads were turned into customers.
For example, if your site received 2,000 unique visitors in a month and you made 20 sales, your conversion rate would be 1%.
You will not be able to convert all sales prospects and some customers will not make a purchase. When this happens, their customer lifecycle comes to an end. Although it may be tempting to file this information away, it is important to use it as a learning opportunity to improve future sales and marketing efforts.
Stage 4: Retention
In reality, the retention phase includes several smaller phases, which we can also name the customer journey map.
Onboarding phase:
The onboarding process begins immediately after a customer purchases your product. Your goal is to get them up and running as soon as possible. That list should include:
- Migrating the customer from his or her previous system to your system (if applicable).
- Ensuring the customer’s technical setup meets your requirements.
- Training the customer to use your product through self-guided learning systems, live and/or virtual training sessions, knowledge base materials, and/or consultative phone calls.
Onboarding is when customers are first introduced to your product and company, and it’s important to make a good impression during this process because it will influence the customer’s satisfaction for the rest of their experience.
Support phase
It’s important to keep lines of communication open with customers after they’ve completed the onboarding process and started using your product. This is especially true during the first few days. If customers don’t immediately start seeing value in your product, they’re more likely to leave.
The churn rate represents the number of customers you are losing and how quickly they are leaving. To prevent customers from leaving, you need to provide them with easy access to support so you can fix problems quickly and get back to delivering value.
Adoption Phase
Support is important during the first few months after a sale because this is when the customer should be able to start using the product successfully.
It is important to keep track of how customers are using your product, how often they use it, and if they are making progress toward defined goals. This can help you spot customer behavior that may lead to them leaving your product. To get started, look at your customer churn data to see which customers did not find enough value in your product to stay. Then, try to understand why they did not see value. Is there something you could have done to prevent this?
Engagement phase
The only way to ensure your customers are happy and successful is to continually engage with them. This includes monitoring their satisfaction through:
- Net Promoter Score (NPS) surveys,
- Customer health/happiness indices,
- Customer advisory boards, and
- Customer outreach initiatives.
After looking at all of your engagement efforts, it is important to see how technology and human interaction work together. Technology can found areas of opportunity, but it cannot always ensure that your company is delivering value. To get the most out of your engagement efforts, you need to see how the two work together.
Make sure you are engaging with your customers throughout the entire customer lifecycle, though keep in mind that the way you engage will change as they progress.
Expansion phase
Some companies try to get as much money as possible from each customer by selling them more things. But this is not a good way to do business in the long term. If you keep pushing things on customers that they don’t need, they will realize it and stop trusting you. Then they will leave.
Instead of expanding your product for the sake of expanding it, you should focus on creating a customer experience that provides more and more value over time. This way, your customers will naturally want to use more of your product’s functionality, and, if it makes sense, buy other products from your company.
This means that data should be used to expand in a smart way that will actually result in value.
Stage 5: Loyalty
The customer is important to the brand because they bring in additional revenue through purchases. The customer might talk about their experiences with the company on social media, which would then reach potential future customers.
At this stage, the customer is motivated by your brand and is willing to be loyal to it. You need to provide them with service experiences that solve their problems and show them the value of your product and brand.
customers can typically be found following one of these paths when becoming familiar with a new brand. The process, however, can be quite fluid as people can learn about new brands in many ways such as through family or friends, social media, advertisements, or research.
Customer Lifecycle Management Best Practices
1. Personalize interactions with prospects and customers.
A key part of managing the customer lifecycle is ensuring that every interaction—including calls, emails, and chats—is personalized to each lifecycle stage. For example, you wouldn’t send an early-lifecycle customer a discount offer to purchase your product when they may still be doing research and considering a competitor. Instead, you’d send helpful resources that will inform your prospect about the problem they’re having and about how they can go about solving it.
A CRM like HubSpot can help you customize interactions with customers by looking at their browsing history on your website. If they look at a certain blog post, you can infer the type of research they’re doing and whether they’re close to making a purchase.
2. Create an omnichannel experience to reach customers where they are.
To have great lifecycle management, you need to be where your customers are. This means providing an omnichannel experience so you can understand the customer lifecycle. Acting inconsistently or being only on certain platforms will create gaps in your understanding of the customer lifecycle.
3. Survey current customers to find out points of friction during the lifecycle.
The most reliable way to learn how you can improve your customer lifecycle is to ask the customers who have already gone through it. Send out surveys to find out where they learned about your company, how they feel about your brand, and where they experienced gaps in the process of becoming a customer.
In other words, your customers are telling you that your website needs to be a priority for the next quarter.
4. Survey prospects who never converted to find out what prevented a purchase.
If you want to know what factors are preventing your audience from converting, your best bet is to ask people who have considered your product but never ended up making a purchase. This information can help you remove any obstacles that are causing potential customers to choose your competitor’s product instead. For example, they might prefer the competitor’s product because it is easier to use, or they might feel that they can’t find enough information about your product online. By addressing these concerns, you can funnel more customers into your business.
5. Continue nurturing customers post-purchase.
Even after customers make a purchase, the customer lifecycle continues. In fact, often retaining customers is more important and impactful than acquiring new ones.
You want your customers to feel valued and appreciated, so you should send them a new perk or check-in email every month. This will help you manage the lifecycle and keep them from going to your competitors.
The key to managing the customer lifecycle effectively is understanding what your customers want and need. This can be done by listening to them at every stage of the customer journey. Doing this will help you to refine your strategy at the reach, acquisition, conversion, retention, and loyalty stages.
Grow Your Business with Customer Lifecycle Management
The customer lifecycle consists of five stages that every customer goes through. By analyzing your performance, initiating marketing campaigns specifically for each stage, and using the right tools to manage each stage, you can take control of the process and create a loyal customer base.
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