Gone are the days when a customer’s relationship with a brand would begin and end with just a single transaction. Today, that single transaction is the beginning of a customer’s journey. Customer journey, also known as the customer lifecycle, is the progression of phases a customer goes through when interacting with your brand.
It is an ongoing process that requires businesses to continuously monitor and improve their customer acquisition, conversion, and retention efforts to optimize the customer experience and maximize revenue over time.
This article covers what customer lifecycle management is, its stages, and how to analyze these stages.
What is Customer Lifecycle Management?
Customer lifecycle management manages and nurtures customer relationships throughout all stages of the customer journey, from acquisition to retention and loyalty. It includes assigning metrics to each lifecycle stage and measuring success based on the metrics.
The goal is to optimize the customer experience and maximize revenue from each customer over time. That is, identifying potential customers, acquiring new customers, converting them into paying customers, retaining them as long-term customers, and ultimately building customer loyalty.
Every business has the opportunity to control and guide the customer journey. And, so, it is essential to guide customers in your direction by delivering the value they expect rather than hoping they will choose you.
You must continuously monitor and improve your customer acquisition, conversion, and retention efforts to optimize the customer experience and maximize revenue over time.
Customer lifecycle management is essential because it helps you manage customer relationships effectively and to identify and target the most valuable customers. Every industry, be it eCommerce, Insurance, Banking, etc., can benefit from a customer lifecycle management system.
By understanding the different stages of the customer journey, you can tailor your marketing and sales efforts to each customer segment’s specific needs and behaviors, resulting in more effective and efficient use of resources.
Customer Lifecycle Stages
Stage 1 – Reach
The reach stage is the first step in the customer lifecycle. It involves identifying and targeting potential customers interested in the product or service. This stage builds awareness and ensures that the right people know the brand offerings. It is your chance to reach out to customers while they are evaluating options.
This stage aims to increase brand awareness, generate leads and grow the customer base. Some standard methods for reaching customers include social media marketing, content marketing, email marketing, and search engine optimization.
Curating tailored content such as blogs, white papers, and learning resources is a great way to maximize your reach and build trust.
Metrics you need to measure:
- The number of visitors: This metric can be used to track the effectiveness of different marketing channels, such as social media and advertising, in bringing potential customers to the website.
- Bounce rate: The bounce rate is the percentage of visitors who leave a website after viewing only one page. A high bounce rate can indicate that the website needs to meet the needs of potential customers.
- Engagement rate: This metric can be used to track engagement with content, such as blog posts or videos, and can indicate the level of interest among potential customers.
- Lead generation: The number of leads generated, such as email sign-ups or contact form submissions, can be used to track the effectiveness of lead generation tactics.
- Brand mentions: The number of times the brand is mentioned on social media or in the press can be used to track brand awareness.
- Cost per lead: This metric can be used to track the effectiveness of different marketing channels in generating leads while keeping costs under control.
Stage 2 – Acquisition
The acquisition stage is when a customer is fully aware of the product or service. In this stage, the customer actively seeks and evaluates options to meet their needs.
Companies typically use marketing and advertising tactics such as paid ads, social media advertising, email campaigns, and other forms of digital marketing to attract potential customers.
This stage aims to generate leads and convert them into paying customers. And during this stage, focusing on building trust and providing information to help the customer make informed decisions is paramount.
In this stage, effectively onboarding users is essential as this is your chance to help them understand your product/service better. So, start with the most crucial elements they need to know and gradually introduce them to other features and updates.
Keep the information short with visually appealing images and flow. Save all the sign-ups, permissions, and personal information requests for the later stage. However, If you communicate your value efficiently, users will eventually register and grant permissions.
Onboarding elements you can use!
Welcome Screes / Splash Screens: They can introduce new users to the application with a welcome message, sign-up, or both!
Tutorials: They are an excellent way to illustrate how the app functions. A slideshow with screens and video tutorials provides users with a clear product walkthrough.
Screen tips / Tool Tips: They enable users to instantly understand your app’s value proposition—a powerful solution for driving features and user adoption.
Metrics you need to measure:
- Conversion rate: This metric measures the percentage of website visitors who take a desired action, such as making a purchase or filling out a form. A low conversion rate can indicate that the website or lead generation tactics are not effectively converting potential customers.
- Funnel analysis: A funnel analysis can track the path that potential customers take on the website and identify where they are dropping off in the conversion process.
- Lead quality: The quality of leads can be measured by looking at factors such as demographics, behavior, and interests. A high-quality lead is more likely to convert into a customer.
- Return on investment (ROI): The ROI of different lead generation tactics can be measured by comparing the cost of the tactic to the revenue generated from the resulting sales.
- A/B testing: A/B testing can be used to compare different versions of a website or lead generation tactics to identify which version is most effective in converting potential customers.
Stage 3 – Conversion
The conversion stage is when a customer takes a specific action, such as making a purchase or signing up for a service. Now, they have officially converted and turned into your customer.
You must focus on converting potential customers into paying customers during this stage by providing clear CTAs, making the buying process easy and seamless, and providing an excellent customer experience.
To provide an excellent customer experience, you need to communicate your value effectively to your customers. Push notifications can help you stay in touch with them throughout their journey and increase conversions over time.
Try and understand your users’ needs and preferences and communicate value in the right and appropriate way. Sending timely and relevant notifications will create an excellent experience for your users and build a long-term relationship with them, leading to customer loyalty.
Your notifications’ timing, frequency, and relevance matter the most for engagement and conversions!
Metrics you need to measure:
- Purchases: The number of purchases made can be used to track the effectiveness of the conversion process.
- Average order value (AOV): The AOV can be used to track the value of each sale and identify opportunities for upselling or cross-selling.
- Cart abandonment rate: This metric measures the percentage of visitors who add items to their cart but do not complete the purchase. A high cart abandonment rate can indicate a problem with the checkout process or pricing.
- Payment acceptance rate: This metric measures the percentage of orders that are successfully processed. A low payment acceptance rate can indicate a problem with the payment process.
Stage 4 – Retention
Retention is retaining your customers and getting them to return to your product/service for their subsequent actions, such as user sessions, engagement, purchases, etc. It involves building customer relationships, providing excellent customer service, and encouraging repeat purchases.
Retention is often overlooked by brands, even though research has shown that over 80% of future revenue comes from just 20% of your existing customers.
Retention strategies include creating personalized communication, loyalty programs, and providing exceptional post-sales support.
Push notifications won’t just be enough to retain users and make them return for more. You need to deliver a personalized experience.
Using data from the analytics will help send users tailored content and drive all the active and inactive users to re-engage with your app. Sending tempting deals, appreciating loyal customers by celebrating their monthiversaries or anniversaries, sending informative updates that users might be interested in finding out, etc. These subtle and contextual nudges will make users feel heard and valued.
Personalization is not only about delivering tailored content but also about delivering value and improving your users’ experience at every step from all touch points.
Metrics you need to measure:
- Repeat purchase rate: This metric measures the percentage of customers who make repeat purchases and can indicate the effectiveness of retention efforts.
- Customer lifetime value (CLV): CLV measures the total revenue generated by a customer over their lifetime and can be used to track the value of retention efforts.
- Net Promoter Score (NPS): NPS measures customer satisfaction and can be used to track customer service effectiveness and overall customer experience.
- Churn rate: This metric measures the percentage of customers who stop doing business with a company and can indicate a problem with retention efforts.
- Customer satisfaction: Collecting customer feedback on their satisfaction with the product or service can help identify areas for improvement and measure the effectiveness of retention efforts.
- Retention rate by segments: Analyzing retention rate by different segments of customers (such as demographics and purchase history) can help identify which segments of customers are more likely to retain and tailor the retention efforts for them.
Stage 5 – Loyalty
The loyalty stage is when customers become valuable assets to the brand through repeat purchases. It is the ultimate goal of the customer lifecycle. They would also share their positive experiences with your company on social media and provide helpful product reviews that can assist potential customers in the reach stage of the customer lifecycle.
Customer arrives at the loyalty stage as a result of their experiences in the previous stages of the customer lifecycle. Brand loyalty must be developed by providing exceptional experiences and consistently demonstrating the value of the product and the brand to the customer.
The surefire way of increasing customer loyalty is by gamifying the customer experience. Gamification awakens curiosity, fosters competition, and creates a sense of achievement which motivates the user to keep coming back for more, leading to better brand and customer loyalty.
You can use elements like progress bars, badges, and rewards to represent users’ accomplishments as they move to the subsequent levels. Quizzes and trivia to increase awareness of various topics without making them boring.
Here are some simple and effective elements of gamification that can be used to boost your user engagement.
- Badges: They represent small accomplishments that users can receive when they finish a desired task or reach a goal. These badges can be shared with friends and family and added to their profiles.
- Points: Points are simple progress indicators; users can be awarded for every task or action they perform. These points collectively can lead to a new badge or a reward.
- Leaderboards: They instill a sense of competition by showcasing the progress of all individual users.
- Rewards: By offering tempting rewards or deals, you can excite the users and keep them coming back for more, increasing user retention and encouraging loyalty.
- Progress Bars: These bars motivate the users to finish the task and track their timely progress.
- Trivia: Trivia can boost users’ productivity by creating awareness around essential topics and providing important & relevant information.
- Opinion Polls: Polls are the most effective way to ask for the user’s feedback without making their experience monotonous. Collecting their opinions will make them feel their inputs matter to you.
- Mini-Games: Games like spin the wheel, card shuffle, etc., can give out valuable rewards and deals to make users’ experiences fun.
Metrics you need to measure:
- Repeat purchase rate: This metric measures the percentage of customers who make repeat purchases and can indicate the level of loyalty among customers.
- Referral rate: This metric measures the percentage of customers who refer others to the business and can indicate the level of loyalty and trust among customers.
- Brand advocacy: This metric measures the level of positive word-of-mouth and can be collected through surveys or social media monitoring.
- Customer lifetime value (CLV): CLV measures the total revenue generated by a customer over their lifetime and can be used to track the value of loyalty efforts.
- Engagement rate: This metric can be used to track engagement with loyalty programs or community-building efforts and indicate customer loyalty level.
Customer lifecycle management is a crucial aspect of any business. By understanding the different stages of the customer lifecycle, you can develop effective strategies for acquiring, retaining, and growing your customer base.
Understanding and analyzing the customer behavior, needs, and wants at each stage of the lifecycle and then providing them with tailored communication, offers, and services can help improve customer satisfaction, increase retention, and ultimately drive revenue growth.
Create complex workflows and personalize customer journeys from onboarding to retention and loyalty with Upshot.ai. Book a demo and let our engagement consultants demonstrate how you can create excellent customer journeys!
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