A customer lifecycle combines the activities that your team executes with the dynamics that are being experienced on the customer’s side. You can think of the customer life cycle as the way a consumer’s relationship changes with the brand over time, based on the actions of both the company and the customer. A customer lifecycle is your strategy to eliminate avoidable churn and build long-term loyalty within your customer base.

We all consume goods and services, and we’ve all had disappointing experiences as consumers. That feeling of being let down is a powerful feeling, and it’s not something any company wants associated with its product. Here’s some of the risks that allow customer loyalty to be compromised at different stages of the customer lifecycle–and the actions you can take to build loyalty in your customers instead. In this blog we’ll review the common stages of the customer lifecycle and why each is important to customer loyalty. 

What is a Customer Lifecycle Strategy?

A customer lifecycle strategy is the steps you take to relate to and understand your customer, so that you can understand the risks to earning and keeping their business. Maybe there’s a fundamental mismatch of their expectations and your capabilities from the get go. Or maybe your biggest cheerleader at the client just took on a new role and won’t be there to advocate for you. Maybe the customer has a list in mind of promises that were made to them which were never delivered on. 

These risks catch companies unaware and lead to high rates of customer churn because there isn’t a strategy in place to learn these dynamics are changing. That’s why every employee must understand the way their role connects to the success of both customers and the company and successfully navigate these situations. Many companies fail in helping their team prepare for common situations like the ones mentioned above in addition to successfully aligning your product to their ability to achieve their desired outcomes.

Companies that take a step back and look at the lifecycle starting in sales and going through multiple renewals find that they can not only overcome these challenges but drive high levels of adoption and engagement. This is not only true for the customer, but also the employee. When employees see the connection between what they do and positive customer outcomes, it gets all departments excited to contribute to the customer experience.  A customer lifecycle strategy ensures your team understands how they contribute to the success of your customers and also how they fit into the overall operations of the business. 

Your customer lifecycle strategy must incorporate the beginning, middle and renewal phases of the first year, as well as all subsequent phases of each year they do business with you. Let’s look at each of the three phases and how it should be approached:

  • The first phase of the customer life cycle begins in the final stages of the purchase and continues through the first steps a customer takes using your product. This part of the customer life cycle strategy should lay out your recipe for successful product adoption. Adoption doesn’t start in implementation, where most companies prioritize resources. Instead, user adoption begins the first day the customer actually starts using your product in a way that brings them value.
  • Once your customer has achieved first value, the next phase of the life cycle centers on increasing and celebrating that value. The engagement phase of the customer life cycle should support a customer from initial adoption through multiple iterations of matching product functionality to goal achievement. 
  • The final phase of the customer life cycle should capture the renewal process and align on the customer’s goals for year 2 and beyond. This entails summarizing the value that has been gained, as well as developing an action plan for future value attainment that will have the customer excited to continue the relationship.

This approach should be greatly preferred over having an onboarding process and then disappearing until it’s time to renew. When customers only hear from you when you want their money…it’s not a recipe for building loyalty. This approach shows that you are engaged in and committed to providing the customer value and increasing that value over time. 

What is the Importance of the Customer Life Cycle?

Speaking of which, have you ever heard the saying, “checking in is checking out?” When you take the approach of just checking in with customers to see what their needs are, you are taking the easy way out. The truth is, you already know some ways you can and are helping them–or they wouldn’t be your customer. If you aren’t engaged in figuring out for yourself how to grow and improve that value, then you won’t be growing and improving your business. 

Having a well-thought-out customer lifecycle provides your team with the context to have meaningful interactions with your customers. If you have a plan, then you can improve the plan and learn from what works and what doesn’t. But without any kind of strategy at all, you’re just setting goals for the customer’s business to continue, without implementing a strategy that will make it happen. In this context, your “check-ins” really become more of a test as to whether or not the customer remains loyal, when you should be taking action to ensure they do.

What’s more, the customer lifecycle supports the company in maximizing a customer’s lifetime value. Loyal customers will renew their business and then some. According to research by Bain & Company, just a 5% increase in customer loyalty results in a 25% increase in profits. And when each employee is fully engaged in listening and supporting customers, the opportunities only increase. 

Improvements in customer lifetime value are one success metric that it’s vital for companies to track, because it’s how you know your customer life cycle is successfully working to give you a competitive advantage.  Customers who are happy will spend 67% more with your brand, on average, and they won’t even be looking at your competition while they do it. 

That is the power of customer loyalty. Your competitors may be able to mimic your product or services, but they will never be able to duplicate your customer lifecycle and company culture. 

What are the Stages of the Customer Life Cycle?

There are traditionally considered to be five customer lifecycle stages in marketing: reach, acquisition, conversion, retention, and loyalty. But this thinking prohibits teams from long-term planning to keep their customers. A customer lifecycle strategy is a way you can tailor messaging to grow customers in loyalty so they are already engaged in the next stages of the lifecycle. Here are the five steps that Alignmint Growth Strategies managing director Ali Cudby has seen achieve success for a diverse array of clients across market verticals:

  1. Welcome Customers: At the moment a customer chooses to make a purchase, Cudby recommends two messages be clearly communicated: your gratitude for their new business, and a clear expression for who you are and what you stand for as a company. “The experience of being a customer is different from the experience of being a prospect. Your welcome should be a clear transition out of the sales conversation,” she writes in Keep Your Customers.
  2. Onboard Customers: Cudby also recommends designing an onboarding program that gives customers a clear path to success in the relationship. This includes the information customers need to get value from their purchase in the most efficient way possible. Onboarding also sets the stage for managing expectations for the working collaboration, including goal setting, deliverables from the company or customer, processes for metrics tracking, reporting, compliance, and data security. And finally, a good onboarding reinforces the importance of building relationships between the people who will be working together going forward. Loyalty is ultimately a function of people feeling seen, heard and valued.
  3. Inflect Value: The next part of the strategy is looking for the natural “inflection points” where customers want or need information, help, services, or reminders. Cudby writes about the example of a SaaS company with a two-month onboarding process. The company knows that users who have not reached a certain level of adoption by month three are unlikely to renew. So, month three represents an important inflection point after onboarding to contact the client and see what they need. “When you can predict inflection points and reach out proactively, you improve the customer experience and boost loyalty,” Cudby explains.
  4. Rightsized Celebrations: Celebrations remind customers that you see and hear them as distinct and valuable individuals. This even extends to recognizing customers who choose to celebrate your company. “When companies track social media and other customer feedback, they often focus on complaints,” Cudby points out. “But there’s also a cost to ignoring compliments. By design, recognition doesn’t mean big gestures. It means small gestures that build trust over time.” Look for chances to celebrate the small things.
  5. Realign and Renew: Last, Cudby recommends the customer lifecycle focus on realignment and renewal strategically. Realignment allows all parties to evaluate what’s working and what can be improved. As customers see their needs and goals are being considered (and hopefully attained) they become more likely to renew. When companies manage the previous four factors, plus realignment, successfully the renewal becomes a natural next step in continuing a business engagement.

Grow a Customer Lifecycle Management Strategy with Alignmint

A customer lifecycle that is successfully implemented can become your competitive advantage, and more importantly, differentiate you from your competitors. It’s easy to copy product functionality, but it’s much harder to copy all the moving parts of your customer experience.

Helping businesses optimize their customer lifecycle is the mission of Alignmint Growth Strategies. We onboard our clients through a fact-finding process that helps us understand internal and external challenges to providing a great customer experience. We work with stakeholders to create a Playbook that helps every employee understand the processes and perspective that will emerge from small “two degree shifts,” which allow change to occur gradually and with intention.

Managing your customer lifecycle grows loyalty not only among customers, but also employees who feel more supported and recognized for their own performance. We have the outside perspective and expertise to achieve complex organizational needs through simple processes. Let’s talk about a customer lifecycle management strategy that can sustain authentic, long-term success for you. 

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