What is Customer Lifecycle Marketing?
Customer lifecycle marketing is a high-level approach to personalized customer communications, based on recognizing that different marketing messages and strategies work best for customers at different stages of their journey with a brand. To forge stronger relationships with your customers, you need to understand the distinct life cycle stages that your customers go through and provide the highest value at each stage, in order to realize the most effective customer engagement, monetization and long-term retention.
What are the Customer Lifecycle Stages ?
All customers progress through a series of phases during their relationship with a brand. Understanding – and mapping out – the customer lifecycle of your particular business is an important step in tailoring your marketing strategies. To get you started, here is a very basic series of lifecycle stages to consider:
- Prospects, a person who showed some interest, but have not purchased
- Active customers, customers who have purchased
- Inactive customers, customers who have purchased, but not recently
- Lapsed customers, customers who have purchased, but not for a long time
Here is series of customer lifecycle phases, typical of an online business:
- Anonymous site visitors, people who are visiting your site, apparently for the first time
- Known/returning visitors, site visitors who have been to the site before
- Registered users, people who have registered but who have not yet made a purchase
- First-time customers, customers who recently made their first purchase
- Active customers, customers who have made multiple purchases over a period of time
- Frequent customers, customers who purchase more frequently than other active customers
- Risk-of-churn customers, customers who have purchased, but not recently
- Churned customers, customers who have purchased, but not for a long time
- Reactivated customers, customers who had churned and then returned to make another purchase
The next step in understanding your customers’ needs and wants is to map out their life cycle, or stages. Once you know who falls at each stage of this hierarchy it will be easier for them to identify with what you have offered and you need to decide how to define which customers fall into which stage. For certain stages, this is obviously quite simple. However, for other stages, you will need to analyze your customer data a bit more deeply to decide which customers should be classified into which stage. There are various statistical and predictive techniques typically used to achieve accurate classifications for these stages.
Some Strategies for Customer Lifecycle Marketing
To achieve greater levels of engagement, spend and long-term loyalty, customers must feel that they are understood and valued by the brand. Customers in different lifecycle stages have different needs, and different types of messages/offers will appeal to them differently. At its most basic level, customer lifecycle marketing is about providing customers with the greatest value at each stage of their relationship with the brand. At a higher level, it is about positively influencing their emotions and behavior over the long term.
While the goal is always to develop an engaged and loyal customer base, there are different tactics and messages that will resonate more with customers at different stages of the customer lifecycle. Here are some examples of how to do this:
- Anonymous site visitors – Your goal is to convince these visitors to register or make a purchase, so consider giving them first-purchase discounts, free bonuses and the like, via website pop-up messages and retargeting ads. Leverage the little you know about them to make the offers as relevant as possible.
- Registered users – With a combination of email marketing and retargeting, this is the stage where messaging needs to focus on the benefits of engaging with the brand, along with incentives to encourage a first purchase. This series of messages – sometimes called a “welcome series” or “nurturing” ,should be personalized as much as possible, based on all available data .
- First-time customers – Unfortunately, most first-time customers at most sites will never return to make a second purchase there. On the other hand, many of the customers who make a second purchase will go on to make a third, and the chance that they will become loyal customers continues to climb with each subsequent purchase. So, at this lifestyle stage, your goal is to provide relevant and valuable incentives to entice customers to make a second purchase, as this increases the chances of them becoming loyal, long-term customers.
- Frequent customers – As these are the brand’s most valuable customers, it is important to treat customers in this lifecycle stage with highly relevant and personalized communications that provide value and make the customer feel understood and appreciated. Customized rewards and loyalty programs are a great idea. RFM segmentation can help achieve deeper personalization, by revealing the most valuable customers (VIPs) and those whose customers are at the greatest risk of churning.
- Risk-of-churn customers – This is a critical lifecycle stage to identify: when you know that a customer is about to churn, you can use highly relevant and personalized re-engagement communications to help retain customers for the long term, instead of letting them lapse.
- Churned customers – Once customers have lapsed for a long period of time, the only way you may be able to get them re-engaged with the brand is to send them aggressive offers and incentives, personalized based on each individual customer’s prior purchases and behaviors.
- Reactivated customers – Data shows that the future value and retention rates of reactivated customers is nearly on par with that of first-time customers. Therefore, marketing and engagement campaigns for this lifecycle stage should be very similar to those used with first-time customers. Reactivated customers should receive special treatment, such as exclusive bonuses and personalized offers, in order to turn them back into active shoppers.
What are the Benefits of Customer Lifecycle Marketing?
As it was already mentioned, the primary benefits of customer lifecycle marketing include increased customer engagement, monetization, retention and loyalty. This is because personalized customer marketing always provides customers with a more positive experience that may make them loyal to you, even when your competitors try to pull them away.
No one wants to be inundated with irrelevant emails, texts and ads. From the customer’s point of view, more relevant, timely and emotionally intelligent communications make them feel understood and valued. When you succeed at delivering true value, your customers will be more responsive and feel a stronger connection with your brand. This leads to greater brand loyalty and, ultimately, higher customer lifetime value.
Another clear benefit is increased marketing ROI: when your paid channels deliver relevant and timely messaging, you will consistently see greater uplift from your campaigns.