The Customer Lifecycle: Definition, Stages And Importance

Updated 15 November 2022

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The customer lifecycle is an important concept in marketing that helps marketers convert potential buyers into loyal customers. By understanding and implementing this concept in marketing strategies, a business can expand its customer base and nurture brand advocates that can directly contribute to the brand's growth. If you are a marketing professional, learning about the customer's purchase journey can help you improve your marketing strategies. In this article, we explain what a customer lifecycle is, discuss its importance, review the stages of the lifecycle and share how you can identify the current stage of a customer's purchase journey.

What Is A Customer Lifecycle?

A customer lifecycle describes a buyer's progression through the different stages of purchasing a product or service. The stages of the lifecycle are reach, acquisition, conversion, retention and loyalty. This concept applies to sales, marketing and customer service professionals, as it helps them understand where a customer is in their purchase journey.

As a customer's requirements at each of these stages are different, the lifecycle acts as a framework for communicating with them successfully. The first step is to identify where a customer is in their purchase journey so that you can utilise the opportunity. You can then take appropriate measures to address the customer's needs at each stage and improve your chances of converting them into a returning customer.

Why Is The Customer Purchase Journey Important?

Understanding the customer purchase journey is important because it directly contributes to the growth and revenue of a company. It helps you understand where a customer is in the purchasing process. Awareness of this framework helps you communicate effectively with customers at any stage of the lifecycle.

You can use this concept to improve your chances of converting prospects into loyal customers. It can also help you monitor the impact of your sales and marketing efforts at each point in a customer's journey so that you can focus on customer engagement and retention. Monitoring the stages of the lifecycle can also help you improve certain processes and customer satisfaction.

Stages Of The Customer Lifecycle

Here are the five stages of a customer's journey while they are making a purchase:

Reach

The first stage of the lifecycle is the reach or awareness stage, where a customer becomes aware of an organisation's products and services. All the prospects start at this stage. Here, the customer is usually looking for solutions to an unmet need and learns about a company's offerings. They may learn via search engines, billboard advertisements, targeted advertisements or word of mouth. The customer may also be comparing other available options.

This stage is important in a customer's decision-making process, as it is where they may decide what to purchase. You can reach customers in this stage through different marketing activities or channels. If this phase is successful, customers usually endeavour to learn more about the product or service.

Acquisition

At the acquisition or consideration stage, customers are deciding if they want to make the purchase. Customers contemplate the pros and cons of the offering and determine how well it meets their needs. They may contact the company's customer care department to learn more, read the information on the company website or look for reviews.

At this stage, a prospect may become a lead and move further in the purchase journey, so their chances of becoming a customer increase. It is important to plan this phase well, as the cost of acquiring a customer can be higher than retaining them. So, it is necessary to identify the different ways in which customers can reach you and how you can encourage customers to make a purchase.

Conversion

Here, a lead becomes a customer. The prospect has gathered all the necessary information and determined that the organisation's offerings are the best option. It is still possible at this stage for a prospect to discover a better option and abandon the purchase. This is common in e-commerce and can be due to unavailable payment options or unclear steps for completing the purchase.

To ensure customers complete purchases, it is important to remove all the barriers that a customer may encounter. You can do this by keeping the process short and making sure customer support is easily accessible. Once the prospect completes a purchase, they have successfully become a customer, and a relationship begins between them and the company.

Retention

This stage comes after the customer has made the purchase and may have also used the product or the service. Here, you try to understand how the customer feels about the product and if they are happy with it. You can obtain feedback by circulating post-purchase surveys or calling the customer.

Offering customers an incentive can encourage them to dedicate time to giving feedback and making repeat purchases. You may offer them discount coupons or free products with their next purchase. You can use survey answers to identify the customers' unmet needs and improve your existing products and services.

Loyalty

The final stage of a customer's purchase journey is the loyalty stage, where the customer makes repeat purchases from the organisation. Here, the customer becomes an asset and can help you acquire more customers. Customers who have reached this stage can act as brand advocates by referring the company and its products to others.

This reduces the cost of acquiring new customers and can increase the number of loyal customers. For this stage to be successful, it is important that you reward loyal customers. Possible incentives are loyalty programmes that reward customers for repeat purchases or referral programmes for bringing new customers.

How To Manage The Stages Of A Customer's Purchase Journey

Here are different ways you can manage the stages of a customer's purchase journey effectively:

1. Collect data

The most important step in lifecycle management is the collection of data. This includes information about customers' interests, shopping patterns and requirements. You can collect data by interviewing existing customers, prospects, past customers and competitors' customers. You can then understand existing customers' opinions and the quality of their experience and take appropriate steps to retain them. You can also use this data to create frameworks for communicating with customers across the lifecycle so that you take the right steps at each stage.

2. Personalise your communication

Another important step is to personalise your communication with existing and potential customers. This shows customers that you are listening to their needs and following them along their journey. Showing the customers that you care for them can help improve your chances of converting them into loyal customers. Personalised communication can also help you effectively address customers' concerns.

3. Improve the customer experience

Managing the customer experience ensures that they have positive encounters with a business. Irrespective of where they engage with a brand, such as in store or via a website, social media or customer care department, it is important that the customer is able access support easily. Customers may contact you during any stage of their purchase journey.

They may contact you at the reach stage to learn more about a product, at the conversion stage to seek help during a purchase or post-purchase to provide feedback. Making sure that customers can reach you at each of these stages increases your chances of converting them into loyal brand advocates. While you can do this manually, there are several tools that can help you centralise and automate these interactions so that customer service teams can manage all conversations effectively.