What Is the Customer Lifecycle? (Why It Matters in Marketing)

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Every year, Costco loses between $30-40 million on rotisserie chickens. They could easily flip this loss into a profit by raising the price a single dollar, but they choose not to. Why?

Because they understand their customer lifecycle.

They know that keeping prices low on certain items brings people into their warehouses. And once they’re in the door, they’ll spend more than enough to make up for the loss.

The result? More than $4 billion in annual profits. In short, when you understand your customers’ behavior, you can be more strategic with your marketing efforts.

In this article, I’ll explain the different customer lifecycle stages, why they matter, and how to implement a marketing strategy that increases your CLV.

What is the customer lifecycle?

MARKETING
TERM
DEFINITION

Customer Lifecycle

The customer lifecycle encompasses every step in the buyer’s journey. It includes the moment they enter your marketing funnel, their first purchase, and their ongoing, post-purchase interactions with your brand.

As you can see from that broad definition, we’re talking about a much deeper relationship than what’s represented by the typical website conversion funnel. 

What are the customer lifecycle stages?

As a marketer, your goal is to move prospects through the sales funnel and convert them into new customers. Then, you need to convert existing buyers into loyal brand advocates through ongoing customer relationship management (CRM).

To do all that, you’ll need to collect data about the entire lifecycle of your customer base, not just the moment someone made a purchase for the first time.

Side note, you may want to read my post about customer journey maps. The process I discuss in that article will help you understand the five different stages in the customer lifecycle I’ll cover next.

Discovery

This is the initial contact point with a potential customer. It could be through a Google search, Facebook ad, cold email, or referral from another customer. During the discovery phase, the customer is often in research mode, exploring different potential solutions to their problem. They often do not initially have specific brands in mind during this research phase. 

In most cases, you’re not trying to get the person to buy from you at this point. Rather, you’re trying to grab their attention and begin developing a relationship with them. 

Education

Once you’ve made the initial contact with a potential customer, it’s time to begin engaging and educating them. You work to understand their pain points, as well as provide them with information that helps them understand their challenges even more clearly. 

At this stage of the customer lifecycle, the person understands the problem/opportunity. They are now reading your reviews and comparing you to several competitors, so you need to both show how your product/service solves their problems and also differentiates your brand from the competition.

Some of the marketing strategies you might employ at this stage are:

• Blog posts
• Webinars
• White papers
• Testimonials
• Comparison tools

Your goal at this stage is to help the customer see that you are the best possible solution for their problem.

Purchase

If you’ve properly engaged with and educated potential customers, there will come a point where they finally decide to purchase from you. Your objective is to make the purchase process as smooth and pleasant as possible.

There’s a reason that Amazon has spent so much optimizing their purchase process. They know that a smooth purchase makes it much more likely that the customer will convert and will then purchase again.

Post-Purchase Engagement

It’s great when a customer purchases from you once. It’s even better when they become a repeat customer. To consistently make this happen, you need post-purchase engagement and relationship-building. This often involves following up with the customer to ensure that they were satisfied, recommending other products or services that they might enjoy, asking for feedback, and engaging with them across various platforms including email.

Advocacy

The ultimate goal is to turn customers into advocates. An advocate is someone who is loyal to your brand and is committed to sharing your brand with others through word-of-mouth (WOM). This may occur through social media, reviews, and other forms of endorsement. 

Advocates are one of your most effective marketing tools, and the stats back this up:

• Those referred by a friend to a brand or product are four times more likely to purchase.
• The lifetime value (LTV) of referred customers is 16% higher.
• Referred customers have a 37% higher retention rate and 18% lower churn rate.

If you want to turn customers into advocates, shower them with superior service. In addition, differentiate yourself from the competition, whether through superior products, a better price, unique emails and direct mail, more personalized customer service, or a combination of these.

Benefits of customer lifecycle management

There are several critical reasons to track and optimize your customer lifecycle.

First, customer life cycle analysis helps you understand how customers interact with your brand at each stage of the customer journey. Armed with this information, you can identify customer touch points, and optimize them to provide a superior experience. As a result, you’ll realize higher conversion rates, retention rates, LTV, etc.

When you understand what the digital customer experience lifecycle is and how to track it, you can use it to build brand loyalty. You can personalize customer communications at every step, providing them with exactly what they need to move to the next stage. This personalization leads to increased satisfaction and a lower churn rate.

Additionally, tracking the lifecycle helps you identify problems and opportunities at each stage and then respond accordingly. For example, you might learn that a relatively low number of people move from the discovery to the education stage. This could indicate a problem with the top of your content marketing funnel. Maybe the organic search keywords you target on your blog or your Facebook ads don’t convert well.

Having a clear understanding of your customer lifecycle allows you to pinpoint these kinds of problems and fix them directly. One effective way to see things through your customers eyes is to develop an empathy map. If you haven’t created one before, grab Terakeet’s free template below after reading that article.

Customer lifecycle marketing strategy

So how can you implement the customer lifecycle in your marketing plan? Let’s break it down by each stage.

Discovery stage

The starting place is identifying your target audience segments. In order to effectively engage with potential customers, you need to know exactly who you’re selling to and what they really want.

After you define your target audience segments, use that data to create buyer personas. Some information you may want to include in your personas is:

Once you’ve built customer personas, create a content strategy that will resonate with their needs, and that’s aligned with their search behavior. This could include things like long-form blog posts, in-depth guides, visual content pieces such as data visualizations, downloadable templates, high-value lead magnets, etc.

In addition, identify where they go online for information related to their interests. Explore potential ways to get in front of them, whether through placed content, PR, or ads.

Remember, you’re trying to initiate a relationship with potential customers at this stage. Think of ways you can offer value and build trust.

Education stage

As prospects move from the discovery to the education stage, they will ask more questions before they’re willing to make a purchase. Your digital marketing plan should address those questions and objections as thoroughly as possible.

Some effective ways to do that include:

• A content hub (or knowledge base) that explains how your product can be used and answers common questions
• Content marketing that is optimized for middle and bottom of the funnel keywords
• Webinars addressing common pain points
• Case studies showing how you’ve helped actual customers
• Comparison tables demonstrating your differentiation from competing products
• FAQs
• Free trials or live demos of your products
• ROI or other calculators

The goal of your marketing at this stage is to highlight the value of your solution to potential customers and show that it’s the best fit for their needs.

Purchase stage

The purchase stage is all about removing friction. You want purchasing from you to be as easy as and pain-free as possible. If you have a checkout page, only require the minimum amount of information. Implement live chat so that if the buyer has any questions they don’t have to leave the page. Utilize abandoned cart emails to incentivize people to complete their purchases.

In the case of a high-value B2B purchase, ensure the contract execution process is as simple and straightforward as possible. Make all terms very clear. Be responsive, and be fast with any follow-ups.

Post-purchase engagement stage

Think of this stage like the customer relationship lifecycle. Your marketing goal is to strengthen your existing customer relationships , deepen customer engagement, and increase customer retention. You want to give customers a reason to be loyal to your brand.

You can do that by gathering feedback through a Voice of the Customer (VoC) program. Here are a few ways to improve brand affinity:

• Creating a customer onboarding process
• Enhancing the customer experience
• Following up after purchase to ensure they are happy and satisfied
• Providing useful information about how to best utilize your product/service
• Personalizing recommendations and discounts
• Asking them to engage with you on social media
• Asking for feedback on their experience/purchase

Focus on making customers feel like you really value them and are grateful for the opportunity to work with them. The more customers feel valued and respected, the more likely they’ll come back to purchase again.

Advocacy stage

Turning customers into advocates requires giving happy customers that little nudge they need to share your brand with others.

Ask for reviews on Google, Facebook, and other relevant third-party platforms. Create a referral program that rewards customers for sending friends and family to your brand.

Building a community is also a powerful way to build an army of brand ambassadors, helping you to expand reach and deepen brand love. You can start by building a community around a brand-related hashtag on social media and regularly highlight user-generated content. Beyond this, you can establish a customer loyalty program and regularly engage with them. Lego Ideas, D23 (Disney), and lululemon are good examples of highly engaged communities that strengthen bonds with their audiences while organically facilitating greater advocacy.

Use customer lifecycle marketing to grow CLV

Gather and analyze customer lifecycle data to find out how your marketing and sales teams can most effectively influence behavior.

Are new buyers more likely to respond to an abandoned cart email with a special ecommerce promotion, or to industry influencers reviewing your products? What’s the ideal marketing mix to increase customer lifetime value (CLV) for each segment?

When you know how your customers’ perceptions and interactions change as they become familiar with your brand, you can create better experiences. This knowledge helps you improve marketing campaigns to attract new prospects, reduce friction around the purchase process, and create loyal customers who are passionate about your brand.

Finally, having deep awareness of your brand’s customer lifecycle enables you to generate greater brand advocacy. This helps you to continually expand your reach and capture more customers faster and more easily. It’s when you see an ever-growing group of advocates that your brand has started to master the art of customer lifecycle marketing.

The end result is deeper customer relationships, more revenue, and increased market share.

Customer lifecycle FAQ