Here is what brands must do to improve customer lifecycle marketing

For brands to create relevant products, they need to identify what stage of the customer lifecycle their customers are in. This article uncovers what customer lifecycle marketing is and the trade secrets behind how customer retention can lead to customer profitability. It also covers 6 great tips for optimising a customer lifecycle strategy.

An effective customer lifecycle is critical for communicating with customers at various touch points for amazing brand loyalty to occur.

What is customer lifecycle marketing?

Whatever type of customers your brand attracts, they all have a life-cycle. If you are a bank, your customers begin their lifecycle with you when they open their pocket money account and progressively move to a mortgage and pension. 

Depending on where a customer is in their lifecycle, companies should create products that serve that need. Customer lifecycle marketing maximises customer retention and allows brands to offer a more relevant product as their customer’s needs change. Car brands do this by offering the ‘starter car’ for people in their 20s, the ‘family saloon’ in their 30s and the ‘sports model’ for their more affluent or mature customers. 

Let’s look at this in-depth and find out how brands can use customer lifecycle marketing to keep their customers… for life!             

Why customer retention and loyalty are crucial for customer profitability

Launching customer retention initiatives decreases churn

Reducing churn rate is a key driver of success and brands that are focused on retention experience far less loss of customers. If your focus is on customer acquisition with no focus on retention, your churn rate is likely to increase. Customers need to be looked after and cared for or they will find a competing brand that does! A retention-based strategy will reduce churn in the long term, resulting in an increase in profitability and market share. Customer lifecycle marketing is one of the strongest strategies you can use to keep a customer. 

Loyal Customers Spend More

When customers are loyal, they spend more, resulting in an increase in customer profitability. This is where providing great customer service comes into play. Many studies have proven that customers spend more on brands that look after them well. The longer the customer relationship lasts, the more they will spend per transaction. 

Statistics on the importance of customer loyalty through customer lifecycle marketing

Some loyal customers spend WAY more over their lifetime as a customer

If focus is on customer retention, the lifetime value attributed to the time spent with the company will increase. According to a 2012 report by Adobe – The ROI from Marketing to Existing Online Customers, “10% of loyal customers are spending 3x more per order than the average customer. The top 1% is spending 5x more per order.” This makes existing customers a great opportunity to drive business profitability and growth. The Pareto principle, also known as the 80/20 rule, states that nearly 80% of a business’s revenue comes from just 20% of its customers – its most loyal ones. Keeping these top customers satisfied is critical.

Retention Increases Profitability

Retention also increases profitability and there are three main reasons for this; a retention-based strategy controls fixed costs; loyal customers use word-of-mouth to increase your customer acquisition rate organically and it’s much easier to up-sell to loyal customers than new ones.

Focusing on Retention Keeps Your Fixed Costs in Check

Keeping your fixed costs in check is crucial, and a retention-focused strategy does this. If you are trying to grow fast and are making significant investments in sales and marketing, overheads will soar. It is a lower risk strategy to match the growth of the business’s overheads to customer retention rates. If you are a new business and have not yet achieved a reasonable level of customer retention, it is likely that you will spend more than you are earning, which is not sustainable in the long term. If your business grows at the same rate as your customer retention rate, you will become less dependent on investment capital and increase the value of your business.

Upselling to Loyal Customers Is Much Easier Than to New Customers

Upselling to loyal customers is a simpler strategy than doing so with newly gained customers. Whilst upselling to new customers is a good way of increasing profits (Amazon has stated that it accounts for 30% of their revenue), doing a hard sell can leave new customers with a negative brand sentiment. 

Paul Farris, Author of Marketing Metrics, reports that upselling tactics succeed 60%-70% of the time when targeted at loyal customers, but this drops to 5%-20% for new customers. 

What are the key benefits of converting a onetime buyer?

When you convert a one-off buyer into a regular life-time customer, several things happen:

  • Sales increase–Customers are more likely to want to buy from you in the future.
  • You make a dent in the competition–Your market share increases in the long term as you keep customers beyond the short-term transaction.
  • Margins shoot upAccording to the B2B Customer Experience Priorities In An Economic Downturn: Key Customer Usability Initiatives In A Soft Economy,” Forrester Research, 2008, “Acquiring a new customer can cost five times more than retaining an existing customer. By focusing on retaining existing customers, you are spending less on marketing.
  • Even greater margins–Loyal customers do not mind paying a little more for great service.
  • Growth is far more organic–Selling to people who prefer you is easier and loyal customers become brand advocates which drive organic customer referrals.
  • You love your work–Selling to people who like you rather than having to push your offerings is always nicer!
  • Employees love their work too–Customer service becomes more of a business focus and therefore more capable. Customer service enjoys their work when customers are happier!
  • Less stress–Having a stronger customer service function leads to fewer complaints and less stress!
  • Good will increases–A fantastic asset for any company to build over time with customers who will be more forgiving if the brand slips up and makes a mistake.

Targeting customers to run customer lifecycle marketing programmes

How to Identify and target life-cycle stages

Customer life-cycle stages can be hard to determine. Identify the lifecycle stages and decode the key indicators that mark a customer as moving into the next stage of their life-cycle. Customer surveys can help with this and are a fantastic tool to unlock the code to more effectively launch a customer lifecycle marketing programme.

Once a brand understands its customer’s life-cycle stages, it can compare against the customer’s transaction data and engagement with the brand to identify where the customer is within their life-cycle.

This enables brands to segment their customers by life-cycle stage. This delivers more meaningful marketing and sales promotions that accurately reflect their needs. Promoting a pension plan to someone in their late 20s works better than promoting it to somebody who has recently retired!

How to optimise your customer lifecycle marketing strategy with 6 Tips  

Identify coverage gaps-If you know a customer has recently entered a new life-cycle stage, your next promotion to them can be for the most relevant product or service that meets their exact need just as they are considering purchasing. 

Evaluate Expansion Opportunities–Are there other products or services that you can offer that the customer will look for based on their life-cycle stage? Brands can significantly increase their customer’s lifetime value by offering additional products or services that meet the customer’s exact needs for their life-cycle stage. 

Know when to re-engage–In some cases, it may be appropriate to not engage a customer with marketing and sales content for a period. By reengaging customers at precisely the right time, they will appreciate the brand’s timely communications that are not overly persistent. A customer who has recently purchased a ‘family car’ will not want to hear about upgrading to a sports car for quite some time!

Develop a strong customer community–Turn transactions into community-based experiences and engage with customers socially (online or at events). Engaging with them informally will give honest feedback and insight about their life-cycle and customer experience with the brand. 

Understand the value of the customer life cycle–Engaging with buyers during life changes adds loyalty. This allows you to play an active role in events such as them moving house or starting a family.

Personalise the customer experience–Show that you care and be genuine about it. Make your communications personal, matching the needs of the customer’s life-cycle stage.


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About James

James is an award winning digital strategist with over 20 years experience helping challenger brands and market leaders (Unilever, Diageo, MasterCard, HSBC) launch and scale their data-driven sales and marketing. Connect on Linkedin

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