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Customer Lifecycle: Learn the 5 Phases

When we talk about getting to know your audience so that you can offer them a personalized and humanized experience, an organized spreadsheet or customer relationship management system (or CRM) can help you keep track of what relationship they have with your business and how that relationship has changed over time. Of course, this is essential for any business but it is also important to take steps that help maximize the value of each customer.

We are talking about the customer lifecycle, a concept that involves your relationship with the consumer from the moment he hears about your brand until the moment he either leaves it behind or continues to purchase your products and services.

Understanding this process in each of its phases helps you make the most of this relationship, generating value for your business (i.e. increasing profitability, etc.), as well as the consumer.

In this article, we will better understand the customer lifecycle and its phases and the tools that can be used to help monitor the process. Check it out below:

The customer lifecycle concept

The customer lifecycle begins from the moment he or she first hears about your business and goes through the search, purchase, use, billing, retention, upgrade, downgrade, and renewal process, until the time when they stop consuming your brand.

Knowing these customer relationship phases in more detail will enable your company to create specific strategies for each of them.

This will give you better results at each stage of the lifecycle because you are planning and taking action on a more consistent basis and have more interaction with the customer as they move through the cycle.

The importance of understanding the customer cycle

By knowing the lifecycle and each of its steps, you will be able to maximize the value of the customer. In other words, you understand how much your time investment is worth and how much it usually provides your business in terms of profit or revenue.

Knowing this, you will be able to understand that retaining satisfied customers is better than capturing new ones, and you can use this information to foster a culture of retention within the company.

The concept of lifecycle value is tied to how much the customer interacts with the brand. The more a client buys your products, clicks into the emails, signs up for a webinar, and more, the higher their activity. You need to ensure the activity is high so that customers increasingly generate value for your business. Consequently, you do not need to invest in awareness or retention in this case, as the customer will already be satisfied with the service.

The problem is that, in practice, companies end up becoming too focused on one part of the consumer’s lifecycle.  A practical example of this is when the business considers a monthly payment, a purchase, or a visit to his restaurant as the full cycle.

Ideally, the start of the cycle should be from the moment the consumer learns about the brand until he ceases to consider its use, exploring various alternative products. As we examine the lifecycle, we must look at customer acquisition and retention costs as well as their experience during that process.

Thus, the company should view customer service as an essential investment to strengthen its relationship with its audience, not as a cost.

The 5 Phases of the Customer Lifecycle

The customer lifecycle can be described in five phases, which must be properly identified so that you can invest enough time in each. We will explain them in detail below.

1. Knowledge

This is the moment where customers first make contact with your brand. To achieve this, the company must incentivize a potential customer to purchase its services or products. It is worth creating relevant content on the Internet through blogs, social media networks, and more.

2. Acquisition

In this second phase, it is time to promote experiences. The company encourages the prospect to try their product in order to make them a repeat customer. At this time, promotions that involve, for example, trying free samples or test use of the product/service for a certain period of time are applicable.

3. Monetization

Here you have already won the customer, but you need to take action to make them loyal to the brand. To achieve customer satisfaction, this phase of the cycle takes the greatest investment in time and money. Here, customer service strategies and actions should focus on the quality of the experience, making the customer feel important.

Loyalty programs and up-selling and cross-selling strategies are welcome at this stage, as well as exclusive promotions. It is important to focus on developing actions that make consumers more profitable at the height of their lifecycle.

4. Retention

This is when the customer may begin to say goodbye to your brand. Most of the time, it is barely noticed by companies, which makes it more difficult to reverse this process. They start using your product less and there is less engagement.

The identification of this stage is essential for the company to understand what leads to this distancing and promote actions and campaigns to retain customers before losing them.

5. Recovery

In this phase, we find inactive customers. You need to understand what caused their dissatisfaction and what must be done so that you can make them active again.

Tools that help you monitor the lifecycle

There are a variety of ways to monitor a customer’s lifecycle, depending on your business market. There are cases where the consumer knows your brand and becomes a lead, but doesn’t use your product.

A clear example of this is a person who downloads the Uber app but never registers their credit card and, therefore, does not use your product. You must then pay attention to when the first use will occur because it is only at this stage that it generates value for your company.

Thus, depending on the business model, you will need to pay more attention to a particular phase, which may not be common to all companies.

The use of management systems like CRMs helps because they gather data from people who show an interest in your brand but may not be prepared to make a purchase yet.

With technology, your company can monitor customer actions, collect data, and create insights from them. The challenge is to manage large amounts of information so you can keep up with different customer lifecycles.

What’s more important than the CRM tool used is knowing what you need to do with each client and situation. You have to know how to provide the best service. It is a matter of effort to monitor what is happening during the customer experience.

Defining the most effective business strategies will be possible after understanding the customer lifecycle of your business, so you can grow your base and thrive. In each phase of the relationship with the company, the consumer has different needs and attitudes, which should serve as the basis for their decisions and can help you foster a long-lasting relationship. 

By Felipe Arruda – Marketing Strategist

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