Customer Life Cycle Marketing
5 Steps to Getting Loyal Customers
Building and maintaining customer relationships is essential for any successful company. That is why it is especially important to know the best ways and means to build a community of loyal customers—including the journey your customers take through your website and other channels.
Every person on that path is a (potential) buyer, and at a different point in their journey. Understanding the life cycle phases can help you maximize the overall buying experience, turning prospective buyers into purchasers and one-time buyers into returning, loyal customers.
Definition: Customer Life Cycle
The Customer Life Cycle encompasses the relationships between a company and its customers with the goal of permanently retaining them. This life cycle can be divided into different phases, which take place both before, during, and even after purchase. Strictly speaking, this is not a real cycle, because an existing customer cannot become a new customer a second time. Nevertheless, they can make repeat purchases and start the Customer Life Cycle from scratch. Cycles vary depending on the industry and the company, for example, in their duration or frequency of repetition.
From Prospects to New Customers and Beyond
Before going into the individual stages of the Customer Life Cycle, we want to focus on the role of the customer in advance. There is no secret to it: the most successful companies in the world have the most loyal customers. Their marketing experts and managers have recognized that it is more profitable to invest in existing customers and encourage them to make repeat purchases than to only rely on acquiring new customers. In the course of the Customer Life Cycle, the development of a consumer to a customer can be illustrated:
- Interested parties: The consumer flicks through brochures or newspapers, watches tv, listens to the radio or surfs the web, and encounters a company commercial or advert. Their interest is aroused or increased and the customer compares offers. This is the beginning of a future business relationship. They are now interested in the company and have had the first contact.
- New customers: By purchasing from a company for the first time, prospective buyers become customers. The priority is on encouraging further conversions and encouraging consumers to repurchase through discounts or promotions.
- Customers: Customers are turning into experienced buyers and intensifying their ties to companies. The expansion of the customer relationship after purchase is then a top priority to prevent buyers turning into an inactive customer.
- Inactive customers: If the customer becomes inactive, purchases are reduced and the relationship between consumers and companies gets gradually worse. However, targeted measures can be used to refresh the relationship and thus prevent customers from dissolving and terminating the business relationship. Used here, effective churn management can reduce the rate of emigration.
- Former customers: If reactivation is unsuccessful, the customer switches to the competitor. From there, only clever recovery measures can save the day and at best, the customer can be recovered.
Customer Life Cycle vs. Customer Journey
Dividing the Customer Journey into phases? From the first contact to the purchase—this seems familiar. Of course! At first glance, the customer journey and the customer life cycle are very similar. In contrast to the Customer Journey, the Customer Life Cycle is an active process that is specifically controlled and extended by a company’s Marketing departments and Management. Companies have only partial influence on a customer’s Customer Journey because they cannot influence indirect touchpoints such as recommendations from friends or third-party publications. In addition, the beginning and end of the Customer Journey are clearly defined—this is not the case with life cycles, due to their cyclic process.
The 5 Phases of the Life Cycle and Relevant Marketing Tips
The Customer Life Cycle follows a cyclic pattern and is therefore non-linear. As a result, customers can be at a variety of points in the cycle. The Customer Life Cycle can be divided into different phases, all of which can be supported by different marketing measures.
Phase 1: Awareness
Here, the customer becomes aware of a product and encounters it for the first time. This is done through special offers, advertisements, or particularly interesting content. Search engine optimization and ad placement also help to generate further attention. Important information needs to be provided at this stage, as the potential customer now wants to learn more about the product or services. They read customer reviews and inform themselves about the product, for example, on the Internet.
Marketing tip: Create links to relevant content and real reviews, use high-quality product images and an appealing design. The goal should be to obtain permission to make contact (e.g. via opt-in) in order to be able to contact potential buyers with further marketing communication.
Phase 2: Engagement
After the company was able to attract a customer’s attention, the acquisition phase begins. Here, it is important to leave a good first impression or to expand it further, after all, the customer has already become aware of the brand. Then, the first contact with the consumer takes place. Interaction and careful engagement are now required so that the potential customer does not depart again. Yet, this is not as easy, as in the digital age customers are inundated with pop-ups, advertisements, or advertising mailings. At this stage, it is important to meet the customer with a personalized marketing strategy on all available channels in order to distinguish your offer from the competition and persuade the customer to stay.
Marketing tip: Companies should offer trial versions so that interested parties can try out the service or product and get a better idea of it. Ideally, potential customers can get more information about the offer at events.
Phase 3: Purchase
This is where the magic happens! At this stage, marketing does not have much to do, because the buyers have already made up their minds. It is no longer a matter of convincing, but instead of making the purchase as pleasant as possible.
Marketing tip: A 25% discount for new customers or free shipping helps reassure the customers of their selection and makes the offer even more attractive.
Phase 4: Post-Purchase
A customer made a purchase—so is the end goal achieved? Far from it, because this is where the work really begins. Often, companies tend to do either too many or too few marketing measures after purchase. Finding the balance may be difficult at first, but it can have a huge effect. For example, companies can offer their customers products that build on the purchase made or give them advice. In this phase, it is important to keep the new customers and turn them into regular customers.
Marketing tip: Loyalty programs reward customers for repeat purchases and encourage increased purchases. Other follow-ups are also helpful: customers can be asked for customer satisfaction reviews and statements (for example, through the Net Promoter System®).
Phase 5: Advocacy
Here, the work done pays off, loyal and satisfied customers develop into brand ambassadors and recommend your products and services to others. If the customer fails to see the value in a product, it will be difficult to make them a brand ambassador. At this stage, the stated goal is to make the Customer Life Cycle as long as possible and to bind the customer to the business.
Marketing tip: Bonus systems, bonuses, vouchers, special offers, special conditions—there are a variety of options here. For example, regular customers can earn loyalty points if they recommend the brand to friends and acquaintances. Especially loyal customers can become VIPs and share their experience on the company pages (Instagram / Facebook) to receive discounts and vouchers.
Customer Life Cycle Mapping—Everything at a Glance
With the help of a graphical representation, the so-called Customer Life Cycle Map, the entire interaction between the company and the customer can be clearly displayed. This detailed overview makes it possible to improve the marketing concept and strategy and if necessary, adapt it to customer needs. In most cases, the representation is an X-Y chart. Within the various phases, the customer commitment is compared with the elapsed time. If it is not possible to keep the new customer after a conversion (action), the customer engagement decreases. From this diagram, too, one can clearly deduce the general goal of keeping the commitment with the brand as high as possible. Loyal customers recommend products and therefore always have a high customer commitment.
Customer Life Cycle Marketing: How It Works
In the course of the Customer Life Cycle, marketing measures are needed that increase long-term customer retention and generate repeat purchases. Focusing on existing customers is much more economical, as less marketing budget has to be taken into account compared to acquiring new customers. Successful marketing campaigns have at best no gap between the individual phases. This ensures that points of contact are created between the consumer and the brand not just at every stage, but also in between.
- Personalize the Customer’s Journey
Often consumers can hardly save themselves from advertising emails and newsletters. Your own inbox is likely overflowing and you quickly lose track and interest in opening these messages. It is therefore important for companies to generate content as relevant as possible for the buyer. Content-based on the customer’s behavior and intentions is more attractive to consumers, leaves a lasting impression and thus, forms a positive image of the company. The collection of data is essential for implementation.
- Ensure Speedy Support
Customers should not have to wait forever on hold for the service hotline or wait for answers to their emails. Live chats are available to help. AI-based chatbots make it easy to solve many problems or answer initial questions.
- Create Multiple Channels
Consumers are used to being able to access information anytime, anywhere. In doing so, customers are looking for companies that present themselves uniformly on all channels. If this is not the case, a brand quickly appears unprofessional and disinterested. All contact points that the customer has with the brand should merge into a unified customer experience.
- Address All (Potential) Customers
How do you manage to turn easily distracted passing trade into lucrative and loyal customers? Many companies rely on so-called life cycle emails to target their customers at every stage. In this case, suitable individual content is sent to the customer, which should/must not be pure advertising.
For example, for potential customers who have signed up for a newsletter and have not yet made a purchase, it is recommended to send a welcome email with a discount or voucher for new customers, which is only valid for a certain period of time. Initial offers and product suggestions could also be integrated into this mail to give the customer a further incentive. The contents of the mail should be as exclusive as possible. It is also important to set regular purchasing impulses with regard to new customers who have already made a purchase. In order to retain this customer in the long term, it is suitable to send a thank you email after the conversion and integrate suitable cross- and up-selling offers. However, existing customers can also be tied to the company with unobtrusive mailings. Individualization is particularly important here because this makes the customer feel even more valued.
The Meaning of the Customer Life Cycle for Companies
If you look more closely at the Customer Life Cycle, you get an external view of the business. You get information about how customers perceive the brand and at what stages they interact with it. In the course of this, it also manages to attract, serve, and retain customers. This allows companies to maximize revenue potential for each individual customer. Consistent, personalized, and accurate content enables new customers to become regular customers. Customer Life Cycle Marketing tries to prevent customers from ending their customer journey and exiting the customer life cycle. Instead, it is all about trying to get them to return and turn customers into active regular consumers in order to increase sales and revenue.