CUSTOMER LIFE CYCLE
There are four phases to the customer life cycle.
The four phases include;
• marketing,
• customer acquisition,
• relationship management, and
• loss/churn.
.
• The marketing part of the customer life cycle is when messages are
sent to the target market to attract prospect customers.
• The next phases is customer acquisition which means prospects
become customers when they place an order.
• The third stage is relationship management. Relationship management
is when resell processes increase the value of existing customers.
• The end stage of a customer life cycle is loss/churn when inevitably in
time a company may lose a customer.
• The company then needs to establish a win-back process. The
company then needs to decide which lost customers are of most value
and try to win back their business.
• A CRM system integrates all four phases of the customer life cycle into
three major processes.
– These processes are solicitation,
– lead-tracking, and
– relationship management.
The diagram above depicts the four phases and the three major processes. It
shows the flow of phases and what each phase means
• In customer relationship management (CRM),
customer lifecycle is a term used to describe
the progression of steps a customer goes
through when considering, purchasing, using
and maintaining loyalty to a product or
service.
Customer lifecycle stages
• Marketing analysts Jim Sterne and Matt Cutler
have developed a matrix that breaks the
customer lifecycle into five distinct steps:
reach, acquisition, conversion, retention and
loyalty
In layman's terms, this means
• Getting a potential customer's attention
• Teaching them what a company has to offer,
• Turning them into a paying customer and then
• Keeping them as a loyal customer whose satisfaction
with the product or service urges other customers to
join the cycle.
The customer lifecycle is often depicted by an ellipse,
representing the fact that customer retention truly is a
cycle and the goal of effective CRM is to get the
customer to move through the cycle again and again.
Reach
• In this stage, a customer first develops awareness of a
company’s product or service. The awareness could have come
from social media, advertisements, by word of mouth from
friends or from other means. The customer may or may not
have an immediate need for the product or service, however,
the objective is to create the association between the brand
and a current or future need.
• Marketing activities can be performed through various sources
such as social media, banner advertising or content writing. It is
important to identify the effectiveness of each event at this
stage. It also helps in adjusting the marketing activities if
required.
Acquisition
• While the prior stage created a loose association between
the brand and a customer’s need, the acquisition stage
deepens that association. In this stage, customers learn
more about the company’s offerings from visits to the
website, conversations with sales representatives or by
experiencing or testing products in a store.
• This initiates relationship building with prospect customers
and take it forward. Engaging prospective customers with
email marketing, sales calls or sending
personalized messages work well at this stage of the
customer’s life cycle.
Conversion
• This is the stage where customers purchase a product or
service. It is important to understand the customers’ key
purchasing criteria, then position products to have a
clear advantage over competitive offerings.
• An important thing to focus at this stage is to make sure
your customer has a pleasant and satisfied buying
experience. This also is the time to analyse the
effectiveness of your marketing techniques up to this
point. It also helps in determining what strategies are
working best to bring revenue.
Retention
• Now that a new customer has been acquired, the focus is
to help the customer derive satisfaction and value from
the product and services. A company can achieve this by
using surveys and phone calls to understand customer
satisfaction and address any issues that arise. Customer
retention is important as studies show that it costs less to
retain existing customers than to acquire new ones.
• From this stage, building customer relationships with
regular engagement helps to keep your brand fresh in
their mind. This will also help you to get repeat business or
references or cross sell.
Loyalty
• In the loyalty stage, satisfied customers
continue using the product or continue
renewing their term for subscription-based
offerings. Loyal customers may opt for
additional services or purchase higher-priced
options. In addition, loyal customers will
recommend the products or services to
colleagues, friends and family.
Importance of the customer lifecycle
Understanding the customer lifecycle is essential to the ongoing success and growth of a
business.
For example, if a business focuses all of its attention on the early stages (e.g., reach,
acquisition, conversion), but disregards the post-purchase stages, it will suffer in the long
run -- the business will successfully acquire new customers, but those customers will
become unsatisfied and leave, creating customer churn.
Businesses should improve and optimize all five lifecycle stages, rather than focusing on a
few. Businesses can use metrics to measure the success of each stage. For example:
– Reach: Impressions, branded searches, website visits.
– Acquisition: Leads, inquiries.
– Conversion: Lead conversion rates or opportunity-to-close rates.
– Retention: Renewal rates.
– Loyalty: Net promoter scores (NPS) or customer satisfaction (CSAT) scores.
These metrics can be tracked over time (e.g., quarter over quarter, year over year), as well
as against industry-wide benchmarks. Comparing business metrics against competitors
(i.e., if that data is publicly available) can help address competitive gaps in products or
service offerings.
CUSTOMER JOURNEY MAPPING
• Customer Journey Map is a powerful technique for understanding what motivates
your customers - what their needs are, their hesitations, and concerns.
• Although most organizations are reasonably good at gathering data about their
customers, data alone fails to communicate the frustrations and experiences the
customer experienced.
• A story can do that, and one of the best storytelling tools in business is the
customer journey map.
• Customer journey map uses storytelling and visuals to illustrate the relationship
a customer has with a business over a period of time.
• The story is being told from the perspective of customer, which provides insight
into the total experience of the customer.
• It helps your team better understand and address customer needs and pain
points as they experience your product or service.
• In other words, mapping out the customer journey offers your business the
chance to see how your brand first engages a potential customer, and then moves
through the touch points of the entire sales process.
Why Customer Journey Map?
• The purpose of customer journey mapping is
to understand what customers go through and
improve the quality of your customer
experience, ensuring consistency and a
seamless experience at all touchpoints and
across all channels.
• There is no substitution for listening to your
customers about how the steps in the journey
are working out for them.
• Having built an understanding of the customer journeys with your
business you are now in a position to improve the customer
experience enables:
– Provides a bird's eye view of the entire customer journey
– Bring teams together to resolve specific customer hurdles for understanding
core customer journey paths, where additional development will provide
biggest impact.
– Build faster and higher customer conversion rates by minimizing negative
customer experiences, through identification of key steps and decision points.
– Improved customer retention, through understanding how they transit
through, say, each stage of a procurement cycle to ensure the correct
information is available and accessible to all stakeholders.
– Allows a business to zoom-in a single customer journey in a specific channel.
– Understanding of required metrics to identify customer's progress and fall out
points, providing opportunities to bring customers back on board.
– Allows businesses to prioritize actions in their customer experience strategy
– Reveals the gaps between various channels and departments
• https://vimeo.com/357571873
• https://www.youtube.com/watch?
v=JJURzpU2k2E
