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Customer lifecycle: Understanding the journey to lasting loyalty

Last updated

5 October 2024

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Attracting new customers is crucial, but the real magic happens beyond the first handshake. The true value lies in nurturing customer relationships throughout the entire customer lifecycle. This is where you cultivate loyalty and long-term growth. 

The customer lifecycle is the process of how customers interact with a business from their first touchpoint until the end of their relationship with it. Depending on the type of business, this lifecycle can last for years and include many purchases across a variety of products and services. 

Understanding the customer lifecycle’s role in your business will help you learn how customers experience their interactions with your organization. With increased insight into how your actions address your customers’ pain points, you can implement proven customer lifecycle management tactics. This will enable you to better meet your target customers’ needs and develop lasting relationships that influence customer loyalty and build advocacy.

What is the customer lifecycle?

The customer lifecycle is a description of the entire relationship a customer experiences with a business. It ranges from the customer’s first point of interest through continued interactions as a longtime customer. It extends to the moment the customer parts ways with the company and beyond.

Instead of simply observing the customer’s actions, the lifecycle provides insight into what drives those actions and how you can align your services to their needs. You can build brand loyalty and increase sales through customer advocacy when you intuitively address customer needs throughout their relationship with your company.

Why is the customer lifecycle important?

While customer acquisition and conversion are crucial points in a customer’s journey, they don’t tell the whole story about what builds customer loyalty. Neither does it show why a customer turns away from a brand.

The customer lifecycle is everything a customer experiences with your company from beginning to end. It includes the many facets of their interactions with you. Managed correctly, it’s the reason customers share positive buzz about your brand and encourage others to seek out the same experience.

When you gather data about the customer lifecycle and take steps to manage it effectively, you can enhance your customers’ experiences and help them make informed decisions.

Customer lifecycle stages

While each business has different offerings and customer experiences vary, five distinct stages clearly define the customer lifecycle. By understanding how a customer experiences these five stages, you can conduct a customer lifecycle analysis and create a map to intuitively meet your customers’ needs.

Reach/awareness

To become interested in your product, a prospect needs a way to hear about what you have to offer. Accurately targeting prospects requires you to understand where your target customers are most likely to search for products. Placing your communications in the right place at the right time is crucial for gaining awareness that will encourage the first point of interaction.

Evaluation/consideration

The evaluation/consideration stage of the customer lifecycle is when potential customers actively compare different products or services to determine which best fits their needs. At this point, they are researching options, reading reviews, and exploring features or benefits.

Businesses often engage customers with targeted content, free trials, and consultations to help them make informed decisions.

Acquisition

This is the process of attracting and gaining new customers or leads. The first point of customer contact is crucial for making a good first impression. You’ll want to ensure the customer has enough information to make an informed decision without feeling pressured to purchase.

The customer will seek information about your offerings, pricing, and why your brand is a better choice than the competition. Whether you’re selling a product or a service or whether you’re offering a free trial or introductory offer, your communications with customers should align with their interests and answer any potential questions.

Conversion

Conversion can be initial (free trial sign-up) and secondary (paid upgrade), but the point of purchase is a major milestone in the journey for both you and the customer. This vital step requires a clear and seamless process that enables the customer to make a purchase they feel excited about.

You don’t want your potential customer to abandon your product or service now, so you’ll need to ensure there are no payment barriers. Customer support should be readily available.

Once the purchase is complete, congratulate the customer on the first step of their journey with their new product. 

Engagement

This is where the focus shifts to building a lasting relationship with the customer.

During this stage, businesses aim to keep customers actively involved through personalized communication, product updates, helpful content, and customer support. The goal is to enhance the customer experience, ensure satisfaction, and encourage repeat business.

Engaging customers through loyalty programs, feedback surveys, or community involvement helps strengthen the bond and increases the likelihood of retention and advocacy.

Retention

After the customer makes a purchase, they will start forming a new opinion about your brand. During this stage, you’ll want to keep communicating effectively to ensure you’re meeting their needs. You might send customer satisfaction surveys, newsletters, offers about related products, and relevant content that can help customers reach their goals.

During this phase, the customer establishes a relationship with your brand. They might share their experiences through reviews, online content, or word of mouth.

Customer retention is important as studies show that the cost of acquiring new customers is five times higher than the cost of retaining existing ones.

Loyalty

As the customer receives valuable services, information, or products from your organization, they depend on your product or service to meet their needs.

When you’re providing excellent customer service and valuable products, the customer is more likely to become an advocate for your brand. Depending on their enthusiasm and reach, they might write reviews, provide referrals, share their thoughts on social media, and share information through other online channels.

Customer lifecycle: Example

To better illustrate this concept, let’s look at an example customer lifecycle.

  • Reach/awareness: while seeking songs from a favorite band, a prospect sees an advertisement for a music app that will allow them to craft a library of songs from different musicians. The prospect clicks on a link to the website but hesitates to download the app. Instead, they return to their original task.

  • Consideration/evaluation: later, while browsing social media, the prospect sees another mention of the app by a satisfied customer. Now, they feel curious about the app, and they do some of their own research. They read some customer reviews and start researching the different pricing options available.

  • Acquisition: to sweeten the deal, the company offers the prospect a 30-day free trial, which they decide to accept. They can access all the benefits and experience the service before committing to a subscription.

  • Conversion: before their free trial ends, the customer decides to subscribe to a paid plan, marking their conversion from a free trial user to a paying subscriber.

  • Engagement: over the following months, the customer creates a library of many songs. The app learns the customer’s preferences and suggests similar music. The customer finds this helpful. This ongoing engagement keeps the customer satisfied and reduces the chances of churn.

  • Retention: the focus shifts to keeping the customer from canceling their subscription or switching to a competitor. The app might offer special discounts, loyalty rewards, or access to exclusive content to ensure the customer stays subscribed. Regular satisfaction checks, surveys, and improved features help retain the customer long-term.

  • Loyalty and advocacy: the customer shares their experience with like-minded friends and increases their use of the app. To gain access to more music and enhanced suggestions, they invest in the premium version of the app. This version meets all their needs, and they happily promote the app through multiple channels. The premium version includes a loyalty program that provides discounts with every successful referral. The customer becomes a brand ambassador, increasing sales for the company.

Customer lifecycle vs. customer journey vs. conversion funnel

Marketing terms related to the customer experience are often used interchangeably, although they have different meanings.

The customer journey, the customer lifecycle, and the conversion funnel are closely related, but these terms don’t mean the same thing. Understanding the relationship between the lifecycle, journey, and conversion funnel begins with clarifying the difference between the customer journey and lifecycle.

What’s the difference between customer journey and lifecycle?

The customer journey describes the touchpoints a customer experiences from the moment of awareness until customer loyalty is established. The customer lifecycle includes the customer journey and goes beyond it to describe the different stages customers experience during their entire affiliation with a brand, including retention and advocacy.

The customer journey is a more detailed look at specific experiences along the way, while the lifecycle is a higher-level view of the stages of engagement between a business and its customer. It focuses on the individual touchpoints a customer interacts with as they move from awareness to purchase and beyond. It’s highly customer-centric, mapping how customers perceive and experience the brand at each stage.

The customer lifecycle refers to the broader stages of the relationship between the business and the customer over time. It’s more focused on how the business manages the relationship, aiming to maximize customer lifetime value (CLV).

The conversion funnel is a framework that visually represents the stages a customer journeys through before taking a specific action. It illustrates the gradual progression from initial awareness to the final step of purchasing or another significant move.

You might create a conversion funnel to outline the initial purchase process and another that illustrates the jump to customer loyalty with a premium subscription or another long-term commitment.

Because customers often form long-term relationships with brands, conversion funnels can be used to gain insight into different interactions throughout the customer lifecycle.

What are the “five As” of the customer path?

Some companies refer to the five As—a concept developed by Dr Pholip Kotler—of the customer path as a framework to map a customer’s journey. This is similar to how the customer lifecycle is divided into five stages.

The five stages of customer journey awareness are as follows:

  1. Awareness

  2. Appeal

  3. Ask

  4. Act

  5. Advocacy

By using these stages to delineate the customer journey, you can optimize each phase for a seamless and satisfactory experience.

What is customer lifecycle management?

Customer lifecycle management is the process of gathering data from each stage of the customer lifecycle and using it to optimize the customer experience and boost brand loyalty.

Once you track the stages of the customer lifecycle, you can assign metrics to each one and create benchmarks to measure success.

Collecting data about your customers’ interests allows you to expand your reach. You can then provide relevant information to add value to their experiences. By giving your customers what they are looking for, you display your company’s reliability and earn their trust. 

Effective customer lifecycle management usually requires you to conduct a lifecycle customer analysis, gather data surrounding your customers’ needs, and measure key performance indicators (KPIs) as you make changes to optimize the customer experience. Managing your customer lifecycle allows you to guide the customer journey and enhance customer relations.

How to manage the customer lifecycle

Effective customer lifecycle management involves learning how your customers perceive your organization. You’ll collect data, develop personalized communications, introduce relevant content, and create a seamless cycle that consistently meets your customers’ needs.

1. Conduct a customer lifecycle analysis

Knowing where you stand is key to planning improvements. By analyzing each phase of the customer lifecycle and gathering relevant data, you can identify the areas where you fail to meet your customers’ needs.

For example, during the reach/awareness stage, you can identify where prospects most frequently hear about your company and increase activity on these channels.

At the conversion stage, you can recognize and eliminate barriers to purchase.

At the retention stage, you can determine whether you make it easy for customers to continue doing business with your organization.

2. Gather data

Fulfilling the needs of your ideal customers is key to building relationships characterized by longevity and satisfaction. But you won’t be able to do this without measurable data to guide your actions.

Creating data-driven buyer personas and updating them regularly can help you identify your target audience. Once you have identified the demographic and behaviors of your ideal customer, collect insights through interviews, surveys, and customer behavior metrics.

3. Share relevant content

Between the point of initial interest and conversion, you have an opportunity to provide customers with relevant content that adds value to the customer experience. Sharing relevant content gives your customers a reason to trust you before they invest in your products and services.

The content you share might include blog posts, templates, infographics, and other information relevant to your products and your customers’ needs.

4. Personalize communication

Building a personal connection is a crucial part of developing a long-term relationship with customers. According to McKinsey research, 71% of consumers expect companies to deliver personalized interactions. 76% get frustrated when they don’t receive them.

Customers want marketing messages that are relevant to the products and services they show interest in. However, personalization doesn’t end with a purchase, so keep checking in with your customers. For example, you might thank them and ask how satisfied they are with their experience. This enables you to develop authentic relationships with customers based on their needs.

5. Make improvements

Managing the customer lifecycle requires you to make the customer experience the best it can be.

Using the data you have collected about your target customers, you can make improvements throughout each phase of the lifecycle to intuitively supply solutions that address customer pain points.

Upgrade your customers’ experiences even further by opening multiple channels of communication to ensure customer service is always available. 

6. Ask for customer reviews and testimonials

Consumers are constantly bombarded by media and advertising. Building trust is crucial to gaining and retaining their attention.

Over 99.9% of customers read reviews when they shop online, and 49% of customers trust online reviews as much as personal recommendations from friends and family.

Your satisfied customers are key to attracting new prospects and building trust in your brand. Their enthusiasm for your brand can generate interest among newcomers and motivate shoppers to buy.

Customer lifecycle management: Best practices

Lifecycle management isn’t the same for every company or industry. However, you can employ tactics that work universally to manage your customer lifecycle and achieve success.

Follow these tips to streamline customer management for improved results:

  • Create customer personas. These are semi-fictional representations of your ideal customer based on real data and research. They encompass demographic details, behaviors, needs, motivations, and pain points, helping your business understand and empathize with your target audience.

  • Compare your actions to those of your competitors. Your competitors are doing something right if they’re outpacing you. Conduct competitive research to learn what other companies are doing that you’re not to reach customers. You can use these insights to upgrade your approach.

  • Provide self-service options. These days, customers are comfortable performing their own research to learn about new products and services. Self-serve options like a knowledge base, FAQs, and transparent pricing information make customers’ lives easier. They can access the data they need to make an informed decision. Self-serve options are also available after hours, enabling customers to interact with your brand at their convenience without needing to call your sales or customer service team.

  • Beef up your customer service. Your brand is more than the products or services you provide, and customer service shouldn’t be limited to post-purchase questions. By making proactive customer service available from the first point of contact, you can share information that helps customers understand your product and how it will meet their needs. Access to customer services during the purchase phase can eliminate potential barriers and provide the assistance a customer needs to successfully get through checkout.

  • Eliminate friction from the point of purchase. Don’t be the company that forces customers to abandon their cart after they have made a positive purchase decision. Optimize the checkout process in every way possible to eliminate friction at the final purchase stage. For example, you’ll need to provide a guest checkout option, clear shipping and return information, automated settings that enable the customer to fill out the form quickly, clear pricing (including taxes and shipping fees), and multiple payment options.

  • Invest in automation. Personalizing communication for a large customer base can be challenging. Automated tools allow you to access customer information on demand and send timely, personalized communications to each customer.

  • Create an omnichannel experience. Meeting customers on their preferred platforms is essential in today’s connected world. Providing a convenient experience for customers is the key to great lifecycle management.

  • Develop a loyalty program. While satisfied customers are natural ambassadors for your brand, a loyalty program provides additional incentives for posting reviews or telling friends about their positive experiences.

  • Learn from prospects who didn’t convert. Satisfied customers are a great source of information about what you’re doing right. But don’t forget to learn from prospects that didn’t make a purchase. They can give you insight into where you’re falling short.

Customer lifecycle software

Customer lifecycle management requires a lot of work. Luckily, you don’t have to complete every task manually. The right software can help you remember customers, categorize communications, personalize experiences, and more.

You may choose a specific type of software or combine multiple offerings to adequately serve your customers. 

Content management system

81% of consumers research companies online before going to the store to make a purchase. To meet the expectations of the majority of customers, you’ll need a website and tool to recognize them and reach them after they make contact.

You’ll need a content management system (CMS) to efficiently manage, create, and distribute personalized content throughout the customer lifecycle. It helps you nurture leads, engage prospects, retain customers, and encourage advocacy by delivering relevant information and seamless experiences at each stage.

Customers who receive the right communications at the right time experience a frictionless journey and are more likely to be satisfied with the overall experience of working with your organization.

WordPress is the most popular CMS, powering over 40% of websites. Another popular option is HubSpot, a platform that offers tools for websites, operations, marketing, services, and sales.

An alternative option is Contentful, a headless alternative to a CMS that offers many of the same benefits.

Marketing automation tool

Personalized communication is key to nurturing customer relationships and building trust. However, supplying timely and relevant communication to each customer throughout the customer lifecycle is impossible without the right tools.

A marketing automation tool allows you to send emails, gate content, provide personalized content, and segment your customer list without human interaction. When these tasks are automated, staff members can spend more time interacting directly with customers when they need it most, which improves overall customer satisfaction.

Examples of marketing automation tools include Oracle Eloqua, HubSpot Marketing Hub, and Adobe Marketo Engage.

Customer relationship management (CRM) system

A customer relationship management (CRM) system keeps track of prospect information and makes it easily accessible on a user-friendly platform.

You can segment your customer base by demographics, behavior, and preferences to increase brand awareness during the acquisition stage and nurture customers post-purchase.

With access to information such as a customer’s name, email, phone number, and website activity, you can create personalized communications and send them out when relevant. Your CRM is also a handy tool for gathering customer feedback to leverage that data for improved services throughout the customer lifecycle.

Salesforce is perhaps one of the best-known CRMs. Others include Monday.com, Freshsales, and Pipedrive.

Customer service (help desk) software

Customer service is pivotal to providing an optimal customer experience. Yet, providing exemplary customer service to a large customer base is challenging without the right tools.

Help desk software allows you to create help tickets to categorize customer requests. The software can also provide avenues for communication across multiple platforms and carry out customer experience surveys, which help you better understand and meet customer needs. 

With a unified support communication hub, your customer service team can efficiently respond to all queries and ensure no customer slips through the cracks.

Zendesk, Hiver, and Zoho Desk are some of the most popular help desk ticketing systems.

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