The Customer Life Cycle (also known as the Customer Loyalty Circle or Customer Life Cycle) describes a procedure designed to ensure the long-term loyalty of customers to a company. The customer should be loyal beyond the purchase of a product or service, and in the best case scenario would bring further customers to the company by recommendation. The customer life cycle begins with the first contact and ends with the permanent termination of the business relationship.
The Customer Life Cycle belongs to the overriding topic of customer loyalty, linked to the acquisition of new customers. Customer retention and new customer acquisition are contrary to each other, because while one group of companies swears by customer retention (and thus also wins new customers, according to the argumentation), Group B focuses more on new customer acquisition. Ultimately, one does not exclude the other – the question is whether companies consider customer loyalty or winning new customers more important. The relationship between the two is a matter of controversy. Experience shows that it is more effective to intensify customer loyalty than to spend a lot of money on advertising measures.
The Customer Life Cycle comprises of five stages. There are numerous possible measures for customer loyalty that are aimed at exceeding customer expectations and achieving maximum satisfaction.
The five phases of the customer life cycle - affecting both analog and digital business - can be summarized as follows:
1. the customer shows interest
2. the customer is considering a purchase
3. the customer buys (or books or orders)
4. the customer needs customer service or repair
5. the customer buys again
In each of these phases there are so-called touchpoints, which are mainly used in the digital strategy. They should ensure that the customer always receives messages tailored to their needs at the right time, in the right place and with the right medium during the customer life cycle. This is a challenge, because the operating company must adapt to the right time for these measures. This also includes the knowledge of when the customer needs to be provided with which knowledge in order to guarantee customer loyalty.
The following five measures are part of the successful design of the customer's life cycle:
1. Awareness: This refers to the question of how best to attract customers' attention.
2. Consideration: The aim here is to make it clear to the customer that they receive added value through the company's products or services.
3. Purchase: The purchase experience must be designed in such a way that it runs smoothly and without incident in order to be positively received by customers.
4. Ownership: This refers to measures that ensure that the customer enjoys the product or service.
5. Reconsideration: The focus of this measure is on products or services that encourage the customer to stay with the company and continue to purchase there in the future.
This is where the differences between customer acquisition and customer loyalty are most apparent, because marketers and advertisers often take the view that the purchase of a product is where marketing measures end, and one then deals with the next new customer. However, there are many ways of maintaining and caring for existing customers that can be successful without great financial effort when implemented correctly. In the best case scenario, offers of products, services or promotions lead to an existing customer becoming a new customer who buys additional products. Furthermore, if the customer experiences joy about the product, this will positively influence purchasing behavior in the future.
Sending e-mails can also be part of the customer life cycle. After the purchase or order has been completed, a thank you email can be sent, for example. Surveys, evaluations or the use of social media can also be used to strengthen customer loyalty. However, automated e-mails reach their limits when the customer contacted gives feedback. Feedback must be acknowledged and reacted to accordingly, thus reaching the limit of automated mail. Even if it is relatively easy to bring customers closer to you through personal approaches and gestures of appreciation, the plan can also fail if the customer feels that it is not meant personally but is part of a prefabricated marketing mailing.
In particular, e-mails that require feedback from customers only make sense if the customer's reactions are dealt with accordingly. If companies ask for feedback, which the customer provides but it remains unanswered, the positive effect can quickly be reversed.
In addition to the acquisition of new customers, the customer life cycle approach is of considerable importance for customer care and customer loyalty. Through targeted and effective care of existing customers, new business can be generated without having to make the effort necessary to generate new customers.