The Customer Lifecycle: The Highway to Customer Loyalty

By Nathan Cavet
Published: 2/2/21
definition backgroundThe Customer Lifecycle: The Highway to Customer Loyalty

No, the customer lifecycle is not about calculating life expectancy. So, do you know what it is exactly?

The customer lifecycle (CLC) is one of the most indispensable tools for any company that wants to transform its prospects into customers and its customers into loyal ones.

Well mastered, the customer lifecycle is a powerful strategic tool that generates more value by optimizing resources.

What is the customer life cycle?

Definition

The customer lifecycle refers to the different stages and events that will punctuate a customer’s relationship with a company.

In the manner of a conversion funnel, it allows to know at which stage customers are in their relationship with your company:

  • How long have they been customers?
  • Do they buy on a regular basis?
  • Are they loyal?
  • Are they inactive or not?

Depending on the stage your customers are at, you will be able to adapt your strategy in a relevant way, optimize their experience and help them progress.

👆 Be careful not to confuse the customer lifecycle with the product lifecycle and the customer journey, which are different concepts.

The Role of the Customer Lifecycle

What is the purpose of the customer lifecycle, and what are its benefits for your company? Properly identifying the stages of your customer lifecycle allows you to:

  • Increase the effectiveness of marketing sales and communication actions by adapting them according to the stage the customer is at
  • Monitor the profitability of these actions in terms of ROI (return on investment) and adapt them accordingly
  • Control budget, by calculating the amount of investment needed to acquire a customer, develop the relationship, build customer loyalty and the costs generated by churn
  • Offer a personalized customer experience, adapted to each stage of the life cycle and to the needs of each individual customer

Stages of the customer lifecycle

There are 4 essential stages in the customer lifecycle:

  • Acquisition
  • Development
  • Loyalty
  • Attrition

Stage 1: The Acquisition phase

During this phase, the company seeks to seduce and convince visitors or prospects to become customers. They are not customers yet, so the company has to do everything it can to convince them.

This requires a preliminary market study and targeting of your potential customers, and then to put in place significant marketing and sales efforts throughout this stage.

Here are a few tips to acquire new customers:

  • Bring added value to your prospects to help them and gain their trust (for example, creating educational content in B2C or a free call for advice in B2B)
  • Be available and reachable by phone, chat or email to answer all questions and remove the last deterrents
  • Do commercial prospecting
  • Set up digital marketing actions (natural and paid referencing, social networks, marketing automation, etc.)

Your objective? To get your prospects to take action with a first purchase!

Stage 2: The Development phase

During this phase, the customer has just made their first purchase. You might think of this as a culmination point, but it is really where it all starts.

Indeed, if a customer has already crossed the barrier of the first purchase, it means that they have trust in your company and that they are interested in what you have to offer.

It is a good dynamic: it is a time when you can multiply customer value by triggering further purchases. You can also calculate the customer lifetime value which is an indicator that will allow you to know the profits a customer can generate over a certain period of time.

The sooner your customers make purchases, the sooner they will reach the loyalty stage.

Furthermore, the better you know your customers, the better you will be able to make them an offer that will meet their needs at the right time.

Few tips to develop your customer relationship:

  • Use CRM software to collect data on your prospects and customers, their characteristics, their behaviors, their habits
  • Try to get a marketing automation software to trigger marketing actions such as emailing according to the behavior of your customers

Stage 3: The Loyalty phase

Your customers have begun to develop an attachment to your brand, your products or services. They become loyal customers. In order for this phase to last as long as possible, be sure to maintain customer satisfaction.

The longer your customer stays loyal to your brand, the more value they are likely to bring you. This is all the more important when you know that acquiring a customer costs up to 5 times more than selling to an already acquired customer. You have invested a lot of time and money to convert them, thus you should ensure a quality customer follow-up.

In order to aim for the long term you have to retain your customers and make additional or regular sales.

The idea is to enter into a virtuous circle of customer satisfaction. The goal is to strive for customers to remain active. In other words, you should make sure that they continue to buy your products and services regularly. You have to delay the attrition phase for as long as possible.

A few pieces of advice for building customer loyalty:

  • Make sure you offer a smooth customer journey
  • Personalize customer experience as much as you can
  • Offer significant benefits for existing customers, particularly through a loyalty or sponsoring program

Having happy customers is a very good sign. However, turning customers into brand ambassadors is even better.

The more you offer an exceptional customer experience, the more your loyal customers will want to talk about you. This is called word of mouth. Your customers become true ambassadors and easily bring you new customers through referrals!

Step 4: The Attrition phase

The attrition phase is a period of customer attrition: a customer becomes less and less active and buys less and less, if at all. The attrition rate is an indicator that allows us to monitor this trend.

During this period, you can still take action before the customer leaves permanently for the competition. You need to understand why your customer is losing interest in your company, so that you can remove blockages and relaunch a buying dynamic with concrete action.

Some advice to retain a customer:

  • Be attentive to his blockages, problems, difficulties, offer your advice and help
  • Use a specific occasion to rekindle the desire to buy (birthday, new product launch, etc.)
  • Offer personalized and special attention (a coupon code, a free call, etc.)

If, despite your efforts, a customer still wishes to leave, let them go. Do not fall into the trap of exhausting yourself to retain them, and save your resources for prospects or clients who are in the previous phases.

After all, that is what the customer lifecycle is all about! Nothing is eternal!

Customer lifecycle management: a major asset

As you’ve surely understood already, you have everything to gain by knowing your customer lifecycle and taking it into account in your strategy and the implementation of your actions.

It is a tool that brings you control and optimization, two key ingredients for success.

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