The Customer Lifecycle and how to use it

The Customer Lifecycle and how to use it

Your customer or client goes through the following customer lifecycle:

Acquisition phase of the customer lifecycle

During the acquisition phase of the customer lifecycle your prospect discovers that you exist, finds out a little more, maybe talks to their friends or colleagues, mulls it over some more and then takes the next step towards becoming someone who hands you over money to pay for your product or service.

The acquisition phase is all about creating awareness and driving that first action on the buying journey.

As marketers we have an interesting array of digital marketing tools available to drive acquisition:

  • Paid  digital advertising (Facebook Ads, Google Ads, LinkedIn Ads etc)
  • Organic (non-paid) content (blog posts, social media posts)
  • Email marketing
  • Organic search (SEO)
  • Affiliate marketing (people you pay to send you traffic or leads)
  • PR
  • Traditional channels (radio, magazine, outdoor, expos and conferences)
  • Influencers
  • Word of mouth referrals

We need to choose which of the above channels bring us customers in the most efficient way.

The two most important KPIs (key performance indicators) for an acquisition channel are:

  • Cost per acquisition e.g. cost of a qualified lead or sale
  • Quality of acquisition e.g. what percentage of your prospects are actually qualified leads

How you define the above KPIs is specific to each business. In the world of insurance for example an acquisition can be defined as someone who buys an insurance policy. In this example:

  • Cost per acquisition = how much did we pay to get a new client who has paid their first premium
  • Quality of acquisition = what percentage of the leads that came into the call centre were qualified leads that converted into a paying client?

This is where marketing and sales merge and also where the most friction occurs: marketers blame the sales people for not converting their leads into sales, and sales people blame marketers for crappy leads.

At the end of the day, EVERYONE is accountable for revenue, so that’s where teamwork and communication are vital for a healthy organisation.

Conversion phase of the customer lifecycle

My pet hate is when people ask questions like “what’s the conversion rate?”

My immediate reaction is to ask them “What exactly do you mean by conversion?”

Conversion means many, many things to different people.

Visitor to lead is a conversion rate.

Click to sale is a conversion rate.

Lead to enrolment is a conversion rate. But what exactly is a lead? Is it someone who completes a form on your site or is it someone who completes the form on your site and is ALSO pre-qualified by a pre-sales team? And is an enrolment defined as someone who has signed up for a course or someone who has signed up AND paid?

It’s super important therefore that you define each metric as accurately as possible and when you talk about conversion, you must ensure people know EXACTLY what you mean by that.

We can do quite a bit to influence conversion rates in each step of the funnel.

We can target a better audience and attract better quality leads. We can make our landing pages more effective. We can ask pre-qualifying questions on our web forms. We can filter leads with a pre-sales team. We can give our sales people better scripts. We can offer more convenient payment methods at checkout.

Conversion is where marketing and operations/sales must work together to remove any friction in the conversion funnel.

Retention phase of the customer lifecycle

Now there’s the old saying that it’s cheaper to keep an existing customer than to acquire a new one. And this is 100% correct.

One of the companies I used to work for had an Acquisition team and a Retention team. The Retention team would joke and say “You burn, we earn”, which created much rivalry which was sorted out on the Action Cricket field later, but the truth is that the spend on acquisition marketing was much higher than retention marketing.

Retention marketing includes all activities that KEEP a customer.

My favourite principle when it comes to retention marketing is this RELEVANCE.

You keep clients and customers happy by consistently making them happy (with great service and a great product) and you communicate in a RELEVANT manner.

Relevance means you don’t treat everyone the same. Each person is a customer for a slightly different reason and using the power of DATA we can group people into audiences so that we can target them with more relevant messaging.

This is called SEGMENTATION.

In the old times segmentation was unsophisticated. You had MENSWEAR and WOMENSWEAR in the department store. You had segments of people who lived in CAPE TOWN vs JOHANNESBURG. You had segments of people aged between 18 and 25, 30 to 40, 60+.

The more technology advanced the better our segmentation became.

We were able to track people’s behaviour. How much they spent. How often they spent. What they bought. 

Technology evolved.

We now havepredictive algorithms that can tell you when someone is likely to buy again. What products they are likely to buy. Recommendation engines like those used by Netflix and Amazon.

We can get super smart with our targeting and messaging and let the machine do the work.

In dystopian future novels we find sales droids following people around making personal recommendations: “Jack, nice tie you’re wearing there! You’ve got that wedding coming up next month and I think this jacket will look fantastic with that tie. And it’s on sale today!”

We’re not quite there yet. But soon.

Right now, what I like is behavioural segmentation and custom messaging based on the principle that past behaviour is a predictor of future behaviour. And not all customers are equal so they shouldn’t be treated equally.

This is the Pareto principle: 80% of your revenue comes from 20% of your customers. This ratio will be slightly different in your business but the principle remains true.

Focus on your most important customers first. Don’t waste your resources on trying to retain customers who will NEVER give you value. 

What retention tools do we have available?

The most important marketing principle (and life principle really) is to CARE.

If we truly care about customers we will show that we value them and they will stay with us.

We will check up on them. See how they’re doing. Make sure they’re happy. Are they still doing that course they signed up for? Are they still happy with the service they’re getting?  

This is the warm and fuzzy part. We also have some hard tools that can be used to retain customers in a caring way:

  • Discounts
  • Promotions
  • Incentives
  • Rewards

People who are loyal to you love to be recognised for their loyalty. And get freebies.

Over to you

How are you using the principles of the customer lifecycle in your marketing today? Let me know in the comments below!

About Tony Lopes

I help sustainable businesses grow. I have more than 20 years experience in digital marketing strategy and analytics. I live in Johannesburg, South Africa with my wife, daughters and 2 Rhodesian Ridgebacks.

Leave a Comment