How to apply the Customer Life Cycle can bring benefits to your company

customer lifecycle

Sometimes we get attached to a customer. That customer who has had a relationship with the company for years, with whom we have had lunch several times and attended meetings.

Some, we even remember the challenge that was to win him over, then convince him to increase his orders, showing all the value of the company’s solution to him.

But, there comes a day, when his company changes its focus, closes for any reason, or the evolution of his company’s products or services – with the digital transformation, for example – are no longer understood by him, or incompatible with its systems and processes.

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The opposite can happen as well (which would be much more serious!): your company has not evolved with technological innovations and the relationship with these and other customers is coming to an end.

The truth is that the relationship with customers has a beginning, middle and end, it is called the Customer Life Cycle. It is up to good sales professionals to master this cycle to make the most of this relationship, generating value for both parties and profitability for both companies.

Customer Life Cycle: May It Be Eternal While It Lasts

Knowing your customers is essential to getting the way you communicate with them right and defining the right approach to attract them to your business.

But it is quite common for some companies to forget this point and focus only on the customer prospecting stage. And so, a flawed strategy like this can get in the way – a lot! – The growth of your business.

Focusing on selling at any cost, without practicing consultative selling, is a very common mistake.

That’s why you must know the Customer Life Cycle to understand the best way to meet your needs, depending on the relationship stage in which companies are.

But what is the Customer Life Cycle anyway?

The Customer Life Cycle is a concept that deals with all stages of a customer’s relationship with a company. In other words, it analyzes and interprets different desires and needs from the moment they are identified until the moment they cease to be the business’ customers.

How important is the Customer Life Cycle?

As soon as a company gets to know details of all the stages that mark the relationship with its customers, it will be possible to develop specific strategies for each one.

The organization will have a more solid base to plan and put into practice actions according to the profile of each one, adopting a more adequate interaction.

After all, how can you act as rightly as possible in a relationship if you don’t know who you’re targeting? That’s where the Customer Life Cycle comes in: providing the information necessary for a company to truly understand its target audience, at that moment.

The purpose of this form of management is precisely to help create more assertive strategies and help improve results for individual customers, expanding the results of the company as a whole.

The 5 stages of the customer lifecycle

To implement this concept in your business, it is important to know that it consists of 5 steps:

1- Customer Segmentation

The first step is to segment your customers. It’s time to get to know the habits, consumption behavior, preferences and expectations of the target audience. It’s the beginning of the relationship, when you try to get to know the customer:

  • What do customers want?
  • What do you need?
  • What value can they see in your company’s solutions?

It is necessary to answer these questions and only later know what the company can offer its customers. A CRM system can certainly help in this segmentation phase.

2- Customer Acquisition

Knowing your target audience better, the time has come to attract them and turn them into customers, in fact.

It will be at this stage that the company must develop ways to attract people’s attention and prospect customers. Bet on marketing strategies, demonstrate the company’s differentials and don’t forget the audience preferences detected in the previous step.

3- Profitability

Now that customers have been conquered, the time has come to expand this relationship. It’s time to recoup all the investment of time, resources and funds used in the previous steps.

Use up-sell and cross-sell strategies for each recognized segment. The objective is to try to increase the company’s profitability by increasing consumption: selling more to customers and selling higher-margin products or services to them.

4- Customer Retention

At this stage, it is necessary to remember a well-known fact: it is much cheaper for a company to keep a customer than to acquire a new one.

There is no point in being able to attract customers, but not being able to keep them satisfied with the solutions offered.

For this, attention is needed! Customers usually show signs of their discontent. Data such as a decrease in purchases and an increase in complaints are alerts that will help detect probable dissatisfaction.

The calculation of the so-called Churn Rate, customer churn rate, is essential at this time. This is the percentage of customers who left your company during a period compared to the number of customers existing at the beginning of that period.

Once this trend is detected, it is necessary to contact customers who show signs of dissatisfaction and find out how to satisfy their needs again.

For this, it is customary to use the technical calls of Customer Success: teams specialized in providing full assistance to customers, so that they always get the best possible value from your company’s solutions.

5- Customer Recovery

Even with retention efforts, it is inevitable that some customers will be lost over time.

If the loss has occurred, it is necessary to create actions to recover them.

It is necessary to understand that one of the most important points at this stage is knowing how to listen to lost customers, understand their decisions and be able to answer their questions and frustrations. Getting in touch with them is not a bad idea, quite the opposite.

Use CRM at all stages of the Customer Lifecycle

Through detailed information collected about each customer, CRM makes it possible to increase the chance of conquest and loyalty. Thus, companies can customize products and services, messages and actions according to identified individual preferences.