The Customer Life Cycle - Its importance in Marketing

February 25th at 9:37am by Susan Levermann

The Customer Life Cycle - it sounds like a customer entering into a lifelong relationship with a brand or company. The idea of connection for life is, of course, a bit exaggerated - but with some products or services, such as telephone or electricity providers, customers enter into very long relationships and rarely change. Some companies however, such as Starbucks, have very short customer life cycles, as consumers are likely to order a coffee or cold drink of their own volition and without weeks of agonising choice or comparison of offers. Calling it a lifetime is a bit exaggerated, but you have to look at it from a company point of view and divide it into individual sections.

Customer Life Cycle: The Definition

The Customer Lifecycle encompasses the relationship between a company and customer. This life cycle can be divided into different phases taking place both before, during and even after the purchase. Strictly speaking, this is not a real cycle, because an existing customer cannot become a new customer again. Nevertheless, he can make repeat purchases and start the Customer Life Cycle from scratch. As mentioned earlier, the Customer Life Cycle varies depending on both the industry and company.

Customer Journey vs. Customer Life Cycle

Dividing the Customer Journey into phases? From first contact to the purchase – this somehow seems familiar. Of course! The Customer Journey and the Customer Life Cycle are at first glance very similar and are difficult to distinguish. In contrast to the Customer Journey, the Customer Life Cycle is an active process that is specifically controlled and extended by a company’s management and marketing department. 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 is clearly defined – this is not the case with Lifecycles, due to their cyclic nature.

From Prospective to New Customer and Beyond

Before we explain the individual stages of the Customer Life Cycle in more detail below, we want to first focus on the role of the customer. It is no longer a secret: the most successful companies in the world have the most loyal customers. Their marketing experts and management have recognized that it is more productive to invest in existing customers and thus encourage repeat purchases. This is usually more economical and cost-effective than just relying on new customer acquisition. In the course of the Customer Life Cycle, the development of a consumer to a customer can be illustrated:

Prospect:The consumer scrolls through brochures or daily newspapers, watches tv or listens to the radio and becomes aware of the company through a commercial or advert. His interest is aroused or intensified as he compares offers. This is how the beginning of a future business relationship begins. He is now interested in the company and has had contact with them for the first time.

Customer: By purchasing from a company for the first time, the prospective buyer now becomes a customer. The priority is on encouraging further conversions and encouraging consumers to repurchase through discounts or promotions.

Existing customer: The customer develops into a seasoned buyer and the bond with the company is intensifying. The development of a customer relationship should be a top priority, ensuring that the customer does not become a "deadweight".

Inactive customer:If the customer becomes inactive, purchases are reduced and the relationship between consumers and companies gets gradually worse. However, targeted measures can be taken to re-refresh them and thus prevent the customer from dissolving and ending the business relationship. Effective churn management can here reduce the rate of emigration.

Former customer: If reactivation is unsuccessful, the customer switches to the competitor. From there, only clever recovery measures can save the day and best, the customer can be recovered.

5 Phases of The Lifecycle & Effective Marketing Measures

The Customer Lifecycle follows a cyclic pattern and is therefore non-linear. As a result, customers can be in the cycle at a variety of points. The Customer Life Cycle can be divided into different phases, all of which can be supported by different marketing measures.

The Customer Life Cycle consists of 6 phases

Awareness: Here, the customer becomes aware of the product and comes into contact with 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. He reads customer reviews and informs himself about the product, for example, on the Internet.

🡪 Tip: Links to relevant content & real reviews, high-quality product images and appealing design

Commitment: After the company manages to attract the customer's attention, the acquisition process begins. It is important to leave a good first impression or to expand it further, as the customer has already become aware of the brand. The first contact between brand and consumer takes place at this stage. Interaction and careful engagement are now required so that the potential customer does not depart. This is not so easy - in our digital age, customers are inundated with pop-ups, advertisements or advertising mailings. Therefore at this stage, it is important to provide the customer with personalized marketing on all available channels in order to distinguish your offering from the competition and persuade the customer to stay.

🡪 Tip: The customer should be offered trial versions so that they 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.

Evaluation: In that "hot" phase, the buyer is ready to buy. At this stage, consumers are frequently comparing offers from competitors and evaluating which offers the best choice. It is important to respond quickly and informatively to the consumer's questions.

🡪 Tip: It is worth creating detailed blog articles that provide the customer with accurate information and benefits of the product. In addition, information about the ordering and delivery process should be presented in a comprehensible and simple manner.

Purchase: This is where the magic happens! At this stage, marketing doesn't have much to do anymore, because the buyer has already decided to buy. It is no longer a matter of convincing, but instead of making the purchase as pleasant as possible. Easy navigation on the website is essential in e-commerce.

🡪 Tip: A 25% discount for new customers or free shipping helps reassure customers that they’ve made the right choice and makes your offer even more attractive.

Post-Purchase: You’ve succeeded in converting the customer - does this mean the goal’s been reached? Far from it, because this is where the work really begins. Often, companies tend to do either too many, or too few after-purchase marketing measures. 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 purchases they made or give them advice. In this phase, it is important to retain your new customer and turn them into a regular customer.

🡪 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 NPS®)

Digression: Net Promoter Score (NPS®)

This key figure helps in generating meaningful feedback. The NPS® is an important tool that should be integrated into the Customer Life Cycle. This asks how likely it is that the consumer would recommend your product or service. Using the data obtained, you can analyze the individual phases in detail and find out at what stage improvements are needed. We have summarized more information in our blog post about the Net Promoter ScoreⓇ.

Advocacy: Here, the hard work pays off as loyal and satisfied customers develop into brand ambassadors and recommend products and services. This phase is the desired end result of any Customer Life Cycle. If the customer fails to see the value in a product, it will be difficult to make him 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.

🡪 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 VIP's and share their experience on the company pages (Instagram / Facebook) to receive discounts and vouchers.

Customer Life Cycle Mapping 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 the needs of the customers. 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 Mapping: Phases of Customer Life Cycle in a Diagram

Customer Lifecycle Marketing - this is how it works

Throughout the Customer Life Cycle, suitable marketing measures are needed that increase long-term customer loyalty and manage to generate repeat purchases. The focus should be on exisiting customers as is this more economical, as lower marketing costs are needed compared to the acquisition of new customers. Successful marketing campaigns have at best no gap between the individual phases. This ensures that points of consumer and brand contact are not just at every stage of the cycle, but also in between.

Personalization of the Customer Journey

Often consumers can hardly move for advertising emails and newsletters. Your own mailbox is likely overflowing and you can quickly lose track of (and interest in opening) these mails. It is therefore important for companies to generate as relevant content as possible for the buyer. Content based on the customer's behaviour 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 this implementation.

Faster Support

So that customers don't have to wait forever on hold for the service hotline, or wait for answers to their emails, live chats are available. AI-based chat bots 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, this quickly comes over as unprofessional and uninterested. All the contact points that the customer has with the brand should merge into one unified customer experience.

Lifecycle E-mails in E-Commerce

Customer loyalty is particularly important in e-commerce, because the competition here is just one click away and consumers are much more willing to change their allegiance. Online, everything is a little faster than in traditional sales, which is why marketing experts are particularly challenged. How do you manage to turn easily distracted passing trade into lucrative and loyal customers? Many companies rely on so-called Lifecycle e-mails to target their customers at every stage. In this case, suitable individual content is sent to the customer, which should and 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, 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 send regular purchasing impulses to the new customerswho have already made a purchase. This helps in retaining the customer in the long term, and can be supported by sending a thank you email after the conversion, integrating 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.

Effective marketing measures can extend the customer life cycle

The Meaning of Customer Life Cycles for Companies

If you look more closely at the Customer Life Cycle, you get an external view of the business. You receive information about how customers perceive the brand and at what stages they interact with it. Whilst doing 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 Lifecycle Marketing tries to prevent customers from ending their Customer Journey and exiting the Customer Lifecycle. Instead, they are trying to get them to return and turn customers into active regular customers in order to increase sales and revenue.

Susan Levermann

Content Marketing Manager