A great sales team isn’t just focused on individual deals. It’s always looking at the bigger picture and seeking to create happy repeat customers for the long term. One of the best ways to develop loyal customers is to optimize the customer experience over time by implementing a customer lifecycle management program.
This article will explore what customer lifecycle management is, why it has become such an important part of today’s sales process, and how you can use it to make a lasting difference with your customer base.
What is the customer lifecycle?
The term customer lifecycle describes an overview of the customer journey through their interactions with your business. The journey simply refers to the path potential customers take when encountering your business and the steps that follow as they hopefully move toward conversion, or purchase, and beyond.
It’s worth noting that the customer lifecycle is not necessarily a linear journey. Customers may not follow the same route from one step to another. The best customer lifecycle strategy is one that is flexible enough to accommodate these differing customer paths.
The customer lifecycle management process outlines the 5 stages that your customers are likely to visit in their customer journey. For maximum effectiveness, each of the customer lifecycle stages should be guided by a different marketing strategy that is personalized to meet the needs of the customers occupying that particular stage.
Why is customer lifecycle management important?
Knowledge is power. Customer lifecycle management is founded on the understanding that the more you know about both your existing and new customers, the better you can serve them. Success means better customer experiences, and better customer experiences drive stronger customer relationships and brand loyalty, both of which fuel sales.
In your customer lifecycle model, each stage in the customer journey should reward you with intelligence that will help you create the relevant content needed to keep customer engagement high. Understanding this data is your key to a deeper, more meaningful connection with your customer base all the way to purchase.
For example, a rewards study conducted by Mastercard showed that when cardholders receive personalized offers, issuers see an “up to 18% spend lift from those who redeem, and a 75% reduction in churn.”
Let’s take a closer look at the key ways a customer lifecycle management strategy can benefit your business momentum and success.
Uncover valuable insights about your customers and business
Regular and repeated evaluation of the customer journey stages leads to a deeper understanding of your customers’ needs, preferences, and goals. Patterns of behavior might also emerge that you can incorporate into your marketing and planning.
The customer data may also validate important customer feedback about your product or service. These insights can influence the focus, direction, and timing of research and development as well as product design. In other words, what’s learned from your customer lifestyle management process can directly impact numerous facets of your business operations.
Optimize the customer journey
Organizing your customer strategies around the 5 stages of customer lifecycle management equips you to match the medium and message to the customer. Rather than a one-size-fits-all approach, you can tailor how you engage based on where the customer is in their customer journey.
Capturing the loyalty of your customers requires a level of personalization that conveys an understanding and respect for that person. This applies not only to the unique demands of each individual customer lifestyle management stage but also the learned preferences of that customer. Delivering the right message at the right time in the right place can help shorten the path to purchase.
Improve the customer experience
Among the most powerful benefits of your customer lifecycle management strategy are the improvements you can make to the customer experience. Mine the insights from the data you collect to consistently improve and refine over time how you help the customer move from stage to stage.
By removing as many barriers as possible, both proactively and reactively, you make the customer experience as friction free as possible. An ongoing commitment to improving all the touchpoints in the customer journey can help accelerate the person’s evolution into a lifelong buyer for your business.
Increase customer loyalty
This might be the most important benefit of all. Devoted customers will continue to use your products or services. They are typically more open to new offerings and will often adapt more willingly to increases in price. Happy existing customers also often tend to spend more over time than others.
But that’s not their only contribution. These happy customers are also more likely to express their love of your brand to others, advocating for you to their network. In this way, they augment your own marketing programs, perhaps even cutting steps out of your customer acquisition process. A customer lifecycle management program can help them feel valued, inspiring them to remain brand ambassadors for years to come.
Boost customer lifetime value (CLV)
What is meant by customer lifetime value (CLV)? In the most basic terms, CLV refers to the amount of money an individual is predicted to spend with your business for their customer lifetime. But it’s also more than that. The CLV really seeks to quantify how valuable the customer will be to your business over time by looking forward rather than back as customer profitability evaluations do.
It’s a critical metric as a higher CLV means that you have more committed customers. CLV is also valuable for helping determine customer segmentation, measuring brand loyalty, shedding light on how your marketing efforts are working, and helping you judge product quality.
How to calculate CLV
If you’re curious about your CLV, you can estimate it by following these 4 steps:
Step 1: Forecast a customer’s lifecycle with your business.
Step 2: Estimate future purchases to forecast future revenues.
Step 3: Estimate the costs associated with producing and delivering future products.
Step 4: Calculate the current value of those revenue amounts.
For more help tackling your CLV, check out “Customer Lifetime Value: Why It Matters & How to Calculate It.”
What are the 5 customer lifecycle stages?
Just as a map can help you understand a geographical location, possessing an understanding of each customer lifecycle stage can help you unlock the potential impact and power of your customer lifecycle management strategy.
While a variety of different customer lifecycle paths have been developed, many still rely on the 5 stages developed by marketing analysts Jim Sterne and Matt Cutler in their 2000 paper, “E-Metrics. Business Metrics For The New Economy.” In their model, there are 5 stages that include:
- Reach
- Acquisition
- Conversion
- Retention
- Loyalty
Each customer lifecycle stage contributes to the full arch of that customer’s engagement with your brand. It starts with them learning of your business, product, or service; you educate them about why it’s worth their attention; evolving them into a paying customer; and hopefully ultimately growing them into a repeat customer and long-term brand advocate.
It’s important to note that given the importance of customer retention, you’ll likely move your customer base through the 5 stages many times during your relationship with them.
Stage 1: Reach
The first stage represents the prospective customer learning about your brand, product, or service. They may have discovered you through research, customer reviews, or word of mouth. The name of this stage refers to it being your opportunity to reach the prospect during the early part of their evaluation process.
Useful tools at this stage can include social media, digital ads, search engine optimization (SEO), and marketing. The goal is not necessarily to sell during this stage but to build that connection between your brand and the prospective customer’s needs—whether that’s today or down the road—and to get them to request more information.
Stage 2: Acquisition
During this stage, it’s all about solidifying your relationship with the prospect. As the name suggests, you are looking to acquire and add them to your customer base. You do this by building on what they may already know about your company and inspiring them to take a follow-up step.
This next step might be to spend time on your company website or visit a store to see and test your product. It could be a request for a product demo to dig a bit deeper into the details. It might also involve checking in with a sales representative. In nearly all these cases, your dedicated sales and customer service representatives will play an important role.
Stage 3: Conversion
In this stage, your focus is to turn the prospect’s interest in your brand into a purchase. It’s time to apply what you’ve learned in the previous 2 stages about the customer’s priorities and needs and then demonstrate how your product or service is superior to competing alternatives. Offering a clear, seamless buying process is critical in this stage.
Once you’ve converted the prospective customer into an existing customer, you can start working to ensure they become a repeat customer. This requires looking ahead and thinking about what you can do to further enhance their customer experience and strengthen their brand loyalty. Proactive customer service is always important but increasingly so here.
Stage 4: Retention
At this point in the customer lifecycle, you’ve created a new customer. Now the objective is to retain them by helping them get the very most out of your product or service and tapping them to learn how your product and experience can be improved.
Personalized experiences are a great foundation for nurturing retention. You know a lot about your customer by this point. Create a customer experience that reflects that. You can also build on your knowledge through surveys, events, and even contests. Consider offering exclusive deals, discounts, or bonuses as they can help prepare the customer for stage 5.
Stage 5: Loyalty
You’ve reached the final stage in the process. The name says it all. It’s about creating long-term, happy customers. They are satisfied, avid users of your products or services. They buy consistently over time, regularly purchasing more of your products and/or reliably renewing their subscriptions.
You know your customer has reached this stage when they become brand advocates, recommending you to family and friends. They are truly more than customers; they are brand champions who share your story in reviews, on social media, and across their network. But remember, brand loyalty all starts with effectively managing the first 4 stages and keeping the customer satisfied over the long term.
How to build an effective customer lifecycle management strategy
The most successful strategies tend to have certain ingredients in common. As you look to create or adapt your own, here’s a list of key steps and considerations to think about as you move forward.
Define your target audience
The customer lifecycle must naturally start with the customer. The better you define your target audience, the more likely you are to reach them. Determine their preferred communication channels, their pain points, when they usually start their customer journey, and what they like most and least about the products or services they’re currently using.
A targeted campaign crafted around these details will be more effective and return more meaningful customer data that you can apply to subsequent stages.
Share relevant content with potential customers
Once you know your target customer, you can create specific content that they will find relevant. Think of your website, blog, webinars, and social media efforts. With every communication, test that the material reflects the interests and needs of your potential customer and existing customer base.
Also, remember to use the channels preferred by your customers. Then track what is working the best. Social media is a great tool for testing. Use the customer data to adapt and refine the content.
Provide quality customer service
Customer service can be a superpower as you seek to move people through the acquisition stage of the customer lifecycle. An effective customer service team can power the relationship building and product/brand education that will fuel success in the stages that follow.
Customer service is an especially important feature of building brand loyalty and allows you to consistently connect with customers through each customer lifecycle stage. These customer touchpoints also provide data you can use to improve the overall customer experience.
Offer customer self-service options
Customer service can begin before a purchase is made. As you manage the acquisition stage, think about offering convenient self-service options. It could be a chatbot or FAQ page to address simple common questions of your target audience. Feedback widgets, interactive product demos, and knowledge bases are other great self-service tools.
In addition to helping customers, these resources can reduce the burden on your customer support team, freeing them to address other issues. Finally, sales representatives can proactively use the self-service tools and direct prospects to a product demo, for example.
Make the purchase stage easy
The conversion stage of your process will be best served by making purchasing as seamless as possible. Empower your customers by providing a clear, user-friendly, intuitive online ordering system and easy-to-use in-store tools.
Confusion and frustration here can mean lost leads and compromise your brand’s reputation. Also, remember that you’re collecting valuable customer data at this stage. Consistent improvement of the purchase stage will yield great dividends with customers appreciating the thoughtful customer experience.
Give customers a personalized experience
Regarding customer experience, your ability to offer a personalized customer lifecycle is key to retention. Once a nice-to-have, tailored experiences are increasingly the norm and expected by consumers. How well you adapt your engagements to your customers’ individual tastes, preferences, and needs will help determine whether they become loyal customers or not.
Some examples could include customized offers or discounts on items they previously searched for and early-bird alerts about deals on products they’ve already purchased. Informed by data, these personalization efforts can also return useful new customer data.
Gather feedback from your loyal customer base
The customer lifecycle management process is really a conversation between you and your prospective customers and existing customers. It’s personalized, relevant, and consistent across the customer lifecycle stages. One way customers can participate is through feedback you invite along the way.
Options span all types of surveys and feedback from your website and widgets in-app. Your customer-facing teams are also valuable resources for customer thoughts and recommendations. But the feedback is only as meaningful as your ability to use it to improve the customer experience.
Prompt referrals from repeat customers
If you succeed in getting a customer to the loyalty stage of the customer lifecycle, the benefits for your business can be significant. Not only are they repeat customers offering a potentially great CLV, but they can be very effective brand advocates. Encourage them to refer others and then provide an easy way for them to do so. Referrals are an inexpensive way to acquire new customers.
In fact, a 2020 study showed that referred customers are 18% more loyal and have a higher CLV than other customers. Offering incentives, commissions, or discounts for referrals can be an effective way to gain and sustain interest among your existing customers.
Six best practices for customer lifecycle management
Each company employs customer lifecycle management in its own way. But the aim is likely to be the same: Harness your data to become experts about your customers and then use that knowledge to create a superior customer experience at each stage. As you develop your own strategy, keep these 6 recommendations in mind.
Tip #1: Chart your customer touchpoints
Customer touchpoints are the foundation of any successful customer journey. These include all the ways in which you connect with your customers, from social media, email, and phone to app, digital ad, and in-store. Tracking your touchpoints helps ensure a positive interaction with customers at each one. By making the touchpoints part of your customer lifecycle analysis, you can learn how customers are moving through the lifecycle stages and use those insights to improve their experience.
Tip #2: Look at things from your customers’ point of view
Your customer lifecycle process needs to fit your customers. This requires developing a deep understanding of their needs, goals, and challenges. Consider developing detailed and segmented customer personas based on your customers’ demographic and behavioral profiles. Then, segment them using important differences like age, geography, income, and hobbies. When you design not only your offerings but also your customer lifecycle around the customer’s point of view, you forge a strong foundation for growth.
Tip #3: Identify pain points in the customer journey
Why are prospects not converting? What in the process is discouraging them from moving to the next stage? Why did they buy and then stop? Look to your data and solicit feedback from customers and the Sales team to identify the customer pain points. By identifying the obstacles and areas of friction, you can make adjustments to improve the process and the overall customer experience. In addition, it enables you to more effectively position your offering as the solution to their needs.
Tip #4: Use metrics to increase customer retention
Analyzing data and feedback is fundamental to customer retention. The better you understand your customer, the more likely it is you’ll be able to create an experience that turns them into loyal return customers. Metrics help you identify customer behaviors and preferences you can use to personalize your engagements. Not only will those engagements keep them coming back, but they can also drive long-term revenue. In addition, metrics can help you determine the cost of retaining customers and where you might find new efficiencies.
Tip #5: Don’t let your Sales team fall into silos
Sales teams are vital contributors to your success. Because of their direct personal interaction with customers, sales representatives possess some of the most valuable customer information and feedback. When siloed, any key insights fail to be included in persona development, customer lifecycle plan development, and ongoing execution. Conversely, without open communication and collaboration, the Sales team may miss out on incorporating this crucial customer data.
Tip #6: Make use of customer lifecycle software
Customer lifecycle marketing software offers a valuable window into how your customers interact with your business at different stages of their buying journey. It can track customers’ habits, purchase history, post-purchase experience, and engagement across different channels. You can use this information to create customer profiles, segment your customers, and develop personalized messaging. Over time, the data-driven insights garnered from your customer lifecycle software can help you minimize churn and increase CLV.
Most common kinds of customer lifecycle management software
There is not just one flavor of customer lifecycle management software. As you evaluate the different options, keep your business and its needs front and center. Think about your industry and the size of your company. Spotlight desired features related to aspects like integration, automation, analytics, and segmentation. Does brand matter? How about ease of use? And then there’s always cost.
To give you a head start on making the right choice, here’s a quick rundown of some of the more common software options available. Which one is right for you?
Content management system
A content management system (CMS) is ideal for you if you need help to create, organize, and store media and other files for use on a website. With a CMS, even non-technical team members can develop, edit, and publish content without knowledge about web design or coding languages. These applications are necessary for streamlining web operations for companies of all sizes, but especially small and midsize businesses lacking a dedicated IT department.
Using CMS tools, you no longer need to outsource the management of your website. You’re able to streamline content creation, editing, publishing, and updating web pages on your own. The system also helps with SEO and security while allowing authors, editors, and administrators to manage media and files used to create site content. Finally, a CMS can even provide insight into how well your content is actually performing in the marketplace.
Help desk software
Help desk software typically refers to the system that addresses your customer queries, enabling your Support team to track user requests and deal with other support-related issues. Sometimes referred to as services desk software, it provides a single point of contact to follow the progress of customer issues, prioritize tickets, and connect with customers on their preferred channels.
Help desk software does this through a combination of prioritization, categorization, automated routing, service-level management, and escalation capabilities. It can also directly support how your help desk agents and processes interface with your other IT service management processes.
Customer relationship management system
At its most basic, a customer relationship management (CRM) system consolidates customer information and documents into a single database. More specifically, CRMs offer a powerful mix of practices, strategies, and technologies to help you manage and analyze your customer interactions and data throughout the customer lifecycle.
With the goal of promoting customer retention and sales, a CRM collects your customer data across your different channels and touchpoints. This data, which can be available to different groups across companies of all sizes, includes key details like the customer’s purchase history, preferences, and needs. The benefits of a CRM system span better customer service, new customer insights, and the automation of certain sales and support tasks.
See real growth with customer lifecycle management
More than ever, your business success is tied to how well you know your customers. Customer lifecycle management offers you a powerful tool for delivering for customers at each of the 5 stages of their customer journey. By using your deep knowledge about them to create personalized experiences along the way, you inspire loyal brand advocates while also growing your bottom line.