Customer life cycle in CRM

Marketing | Uncategorized

by   Chip House April 04, 2023

Whether you own a business, or you’re working in marketing or in a customer success or support role, you know the importance of having great customer relationships. You’re likely already thinking about how you can improve their experience with your company throughout their customer journey, or customer life cycle with your business.

Customer life cycle management has become increasingly important for businesses to stay competitive and retain customers. In today’s digital age, customer relationship management (CRM) systems have made it easier for businesses to manage the entire customer journey from acquisition to loyalty. The customer life cycle in CRM encompasses all stages of the customer journey, from initial awareness to post-purchase loyalty. The goal of customer life cycle management is to optimize customer experience and maximize the value of each customer. 

In this blog post, we’ll explore the different models of the customer life cycle. Each of them explores a way that companies can think about end-to-end life cycle management, explores commonly discussed stages of the customer life cycle in CRM, how they show up in marketing, and provides an example of a hypothetical business and customer journey.

Note on terminology – Life Cycle or Lifecycle?

One thing to note, life cycle is shortened to one word by many in the field, such as with McKinsey’s customer lifecycle management, or with Deloitte data digitization lifecycle. Both are focused on the customer’s end-to-end lifecycle. End-to-end lifecycle management is a focused service that these companies offer in the consulting field. Lifecycle management McKinsey: This firm provides services helping organizations work with clients to analyze the behaviors and needs that characterize their most valuable customers, determine the right objectives, and identify the best ways of reaching them. Deloitte data digitization lifecycle: This firm models the risk management lifecycle, and provides consulting in a number of areas, helping companies manage online and offline (physical and digital) elements of their business. Digitalization is now creating new opportunities by improving and expanding post-sale service offerings, increasing the scope of insights into customers and machines, introducing new service business models, and making service operations more efficient.

For most of this article we’ll use “life cycle” as Miram-Webster dictionary suggests, two words. 

3 Stages of Customer Life Cycle

The three stages of the customer life cycle, which are generally agreed to be awareness, consideration, and decision, provide a high-level framework for understanding the customer journey. However, some critics argue that this model is overly simplistic and does not fully capture the complexities of the customer journey.

The first stage of the customer life cycle is awareness, where the customer becomes aware of the brand’s existence. This can be done through various marketing channels, such as advertising or social media. At this stage, the focus is on creating brand awareness and generating interest in the brand.

The second stage is consideration, where the customer begins to research and evaluate the brand’s products or services. This stage is focused on providing the customer with the information they need to make an informed decision. This can include providing educational content such as white papers or case studies, as well as offering a free consultation to discuss the customer’s needs and how the brand’s products or services can meet those needs.

The final stage is the decision stage, where the customer decides whether or not to make a purchase. This stage is focused on providing a seamless buying experience and addressing any concerns or objections the customer may have.

While the three stages of the customer life cycle provide a basic framework for understanding the customer journey, it is important to note that the customer journey can be much more complex and nuanced. Customers may go through multiple stages of consideration or decision-making, and their interactions with the brand may be influenced by various factors such as social proof or emotional triggers. Therefore, it is important to tailor marketing strategies to the specific needs and behaviors of each customer.

4 Stages of Customer Life Cycle

Let’s explore another model, the 4-stage customer life cycle. Customer life cycle in CRM is a process that involves identifying, acquiring, and retaining customers through strategic marketing campaigns. The 4 stage customer life cycle consists of four stages: acquisition, conversion, retention, and loyalty. Each stage has a distinct set of objectives and strategies that businesses use to build long-lasting relationships with their customers.

The first stage of the customer life cycle is acquisition. It involves identifying potential customers and attracting them to your business. This stage includes various marketing techniques such as advertising, search engine optimization, social media marketing, and content marketing. The main goal of this stage is to build brand awareness and attract new customers.

The second stage is conversion, which involves turning prospective customers into paying customers. This stage includes strategies such as creating targeted offers, optimizing marketing messaging, and making the buying process as easy as possible. The main goal of this stage is to create a positive experience for the customer and increase the number of conversions.

The third stage is retention, which involves keeping your existing customers engaged and satisfied with your products or services. This stage includes strategies such as loyalty programs, personalized communication, cross-sell and upsell campaigns, and maintaining excellent customer support. The main goal of this stage is to keep customers coming back and create a loyal customer base.

The final stage is loyalty, which involves creating brand advocates and turning loyal customers into your biggest supporters over time. This stage includes strategies such as customer-only emails, training, events, referral programs, special customer-only rewards, and exclusive offers. The main goal of this stage is to create a strong emotional connection between the customer and the brand, which leads to long-term loyalty and repeat business.

5 stages of customer life cycle

The customer life cycle is a framework that outlines the stages that a customer goes through from the initial awareness of a brand to becoming a loyal customer. The five stages of the customer life cycle in general marketing are reach, acquisition, conversion, retention, and loyalty.

The first stage, reach, is all about getting the brand in front of potential customers. This can be done through various marketing channels, such as social media, advertising, and search engine optimization.

The second stage is acquisition, where the focus is on converting potential customers into actual customers. This can be done through various strategies, such as offering free trials or discounts to encourage a purchase.

The third stage is conversion, where the focus is on turning a customer into a paying customer. This can involve providing a seamless buying experience and providing excellent customer service.

The fourth stage is retention, where the focus is on keeping the customer engaged and satisfied with the brand. This can be done through ongoing communication and providing personalized experiences.

The final stage is loyalty, where the focus is on turning a satisfied customer into a loyal customer. This can involve creating a loyalty program, providing exclusive offers and discounts, and providing exceptional customer service.

Understanding the customer life cycle can help businesses create a more effective marketing strategy, as it allows them to tailor their approach to each stage of the customer journey. By implementing strategies that cater to each stage, businesses can build long-lasting relationships with their customers and increase customer loyalty.

6 Stages of Customer Life Cycle

Many companies, especially those in software-as-a-service (SaaS) businesses prefer to use the 6-stage customer life cycle. General acceptance is that the six stages of the customer life cycle in SaaS are: awareness, consideration, purchase, retention, advocacy, and loyalty. 

The first stage of the customer life cycle is awareness, where the customer becomes aware of the company’s products or services. This can happen through various marketing channels, such as social media, advertising, or word of mouth. It’s important for companies to establish a strong brand identity and make themselves known to potential customers in order to increase awareness.

The consideration stage is when the customer begins to research the company and its offerings. They may compare the company to its competitors, read reviews, or look for more information about the product or service. This is a crucial stage for companies to make a good impression and stand out from the competition.

Once the customer has completed their research, they may move on to the purchase stage. This is where they make the decision to buy the product or service. Companies need to make the purchasing process as easy and smooth as possible to encourage customers to complete the transaction. Often, for the customer life cycle in SaaS, the first few steps are collapsed into the “acquire” stage, where the goal is to acquire customers at an optimized rate.

After the purchase, the retention stage begins. This is where the company works to keep the customer happy and satisfied with their purchase. Customer service and support are important in this stage, as well as providing incentives and rewards to encourage repeat business. Also, some companies add the concept of onboarding as a stage just prior to the retention stage, focused on getting the customer up and running effectively.

For the advocacy stage, the goal is to satisfy customers such that they become fans of the company and its products or services. They may leave positive reviews, agree to be references and recommend the company to others, or even become proactive brand ambassadors. Companies should strive to create a positive customer experience to encourage advocacy.

Finally, the loyalty stage is where companies strive to create long-term, loyal customers who continue to use and advocate for their product or service. This involves ongoing customer support, regular updates and improvements to the product, and building a strong community around the brand.

Customer life cycle marketing

Customer life cycle marketing is a strategy that involves the use of various marketing channels and tactics to attract, engage, and retain customers throughout their journey with a company. The customer life cycle refers to the different stages that a customer goes through during their relationship with a brand, from initial awareness to post-purchase loyalty. The objective of lifecycle marketing is to provide customers with a personalized and consistent experience that fosters loyalty and encourages repeat purchases.

The marketing life cycle stages typically include awareness, consideration, conversion, retention, and advocacy. At each stage, companies use different marketing tactics to engage with their audience. For example, in the awareness stage, companies may use social media, display advertising, and search engine optimization to attract potential customers. In the consideration stage, companies may use email marketing, webinars, and white papers to educate potential customers about their products or services. In the conversion stage, companies may use landing pages, lead magnets, and sales promotions to persuade potential customers to make a purchase.

In B2B life cycle marketing, the focus may be on building relationships with key decision-makers in an organization. This can involve targeted account-based marketing campaigns and personalized outreach efforts to nurture leads through the buying process.

Examples of customer lifecycle marketing include personalized email campaigns, loyalty programs, and post-purchase surveys. By utilizing a customer lifecycle marketing model, companies can ensure that they are meeting the needs of their customers at every stage of their journey, building stronger relationships and driving long-term success.

Example of customer life cycle

Let’s take a hypothetical manufacturing company and go through the different stages of the customer life cycle as an example.

The first stage of the customer life cycle is awareness. At this stage, the manufacturing company would use various digital marketing channels such as social media, search engine optimization, and advertising to reach potential customers and increase brand awareness. They may also attend industry trade shows and conferences to meet potential customers face-to-face.

Once a potential customer becomes aware of the manufacturing company, they move to the consideration stage. In this stage, the company would focus on providing helpful information about their products, such as through white papers or case studies, to educate the customer and encourage them to consider purchasing from the company. They may also offer a free consultation to discuss the customer’s needs and how the company’s products can meet those needs.

The next stage is conversion, where the potential customer becomes an actual customer by placing an order. The manufacturing company may use strategies such as offering a discount for first-time customers or providing a product demonstration to persuade the customer to make a purchase.

After the purchase is made, the focus shifts to the retention stage. Here, the manufacturing company may use email marketing campaigns to keep the customer engaged and informed about new products or promotions. They may also provide ongoing support and training to ensure the customer is satisfied with their purchase.

Finally, in the advocacy stage, the customer becomes a promoter of the manufacturing company, sharing their positive experiences with others and referring new business. The company may encourage this by offering incentives for referrals or providing exceptional customer service.

This example of the customer life cycle in digital marketing for a manufacturing company shows how businesses can use various strategies to attract and retain customers throughout their journey with a brand. By understanding and implementing the customer life cycle model, businesses can create a more personalized and effective marketing strategy to build lasting relationships with their customers.

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