Survival in the digital economy isn’t just about who can acquire the most customers, but who can keep them coming back over time.
Understanding the progression of a customer’s journey with your brand is a critical component in building brand loyalty. It helps you decide how, when, and where to interact with a customer to drive maximum engagement.
So what does it mean to align your marketing strategy with the customer lifecycle?
Whether you’re new to lifecycle marketing, need a refresher, or want to learn something new, this article is for you.
We’ll explain the details and benefits of lifecycle marketing, and help you understand it’s importance for building loyalty in the digital economy.
What is lifecycle marketing?
A customer’s life cycle is the stages they go through while interacting with your company, product or service over time.
It maps out their journey from prospect, to paying customer, to loyal brand advocate, and everything in between. The farther along a customer is in the life cycle, the more valuable they are to your brand – they spend more, and refer more new business.
Lifecycle marketing means engaging with each prospect, lead, and customer differently in relation to their position in their purchasing journey.
By addressing a customer’s different needs and requirements at each stage, you maximize the value of every interaction, and present the best resources, CTAs, messages, and incentives to keep them engaged with your brand.
“Lifecycle Marketing isn’t just about sending messages customers might like — it’s about positively influencing their behavior.” –Anthony Nygren, EMI Strategic Marketing
It’s about realizing that every new customer presents the opportunity for a profitable, long-term relationship. This marketing approach isn’t about closing the most customers in the shortest amount of time, but demonstrating that you’re serious about delivering on customer needs.
This relationship-oriented approach lowers churn rates, boosts conversions, and improves the ROI of your marketing efforts. When customers feel appreciated and valued every step of the way, they return the favor in the form of repeat purchases and brand advocacy.
How do you do lifecycle marketing?
Creating a lifecycle marketing campaign involves leveraging customer data to understand when, where, and how you should engage with a customer to successfully nurture the relationship and guide them to the next stage of their purchasing journey.
As customers spend more time with your brand, their knowledge, confidence, and commitment levels vary, making it necessary for your marketing strategies to address different concerns, needs and requirements at every stage.
This means that the user who just landed on your website will receive a different marketing message, offer or CTA than the user who has been a customer for 10 years.
What are the benefits of lifecycle marketing?
A lifecycle marketer’s main goal is to turn prospects into customers, and turn one-time customers into long-time brand advocates who recommend your product or service to everyone they know.
Lifecycle marketing helps you achieve this goal by lowering your acquisition costs, making customers feel appreciated through personalized marketing, and increasing your conversion rates at every stage.
You save time and money
It’s 5-25 times more cost-effective to focus on building relationships with the customers you already have (no matter what stage they’re at) rather than going after new customers.
Existing customers have already expressed a need for your business, they’re familiar with your brand, and you can leverage historical data to re-engage them without needing to deliver the full advertising pitch.
Focusing on what will motivate existing users to move through the purchasing journey (ie. promoting up-sells and new features) will both drive brand loyalty and save your resources.
Your customers feel appreciated
When you tailor marketing strategies for each customer, they feel personally valued and appreciated, because they’re not getting the same automated treatment as everyone else.
Lifecycle marketing demonstrates that you’re putting in effort to keep the relationship alive.
Plus, companies that prioritize the customer experience generate 60% higher profits than their competitors.
If you lose a customer, 63% of the time it’s because they felt undervalued or neglected.
You increase conversions
While not every single customer will turn into a loyal brand advocate, you greatly increase your chances of doing so when you purposefully move customers through the lifecycle.
Increasing purchase frequency pays off in multiple ways – repeat customers drive 3-7 times the revenue per visit compared to one-time buyers.
Understanding how your users are progressing through the lifecycle helps you identify any problem areas where customers are getting stuck or dropping off, which indicates where you need to dedicate more of your resources and attention.
How do you visualize the customer lifecycle?
The customer lifecycle model itself has been around for a long time. It’s often been compared to the sales funnel, which focuses on squeezing prospects into tighter and narrower stages before they drop out the bottom of the funnel after a sale.
With the expansion of the digital economy and the new ways that we can address, affect, and get customers to each stage, the journey of the modern buyer is best depicted as an infinite loop with room for fluid movement rather than a linear, finite path.
Why? The goal of customer loyalty is not to have customers buy once and never return – ie. have them “complete” the lifecycle and drop off.
The goal is to develop customers into loyal brand advocates who end up fueling the early stages. They help acquire and engage users with reviews, referrals, and user-generated content.
When looked at this way, your site visitors, prospects, and customers all play a part in attracting more customers and retaining happy, loyal ones. Customers may even repeat the lifecycle if your brand offers multiple products (ie. Uber and Uber Eats), or skip a stage altogether.
What are the stages of the customer lifecycle?
There are many different lifecycle model variations that include or disclude certain stages depending on what makes sense for the industry. However, every lifecycle model shares the same concept of re-classifying users as they become more advanced product users and contribute more to your bottom line.
For describing the digital customer lifecycle as it relates to loyalty principles, we use this model – an adaptation of the customer-lifecycle framework from 500 Startups. We’ve also included the marketing goal for users in each stage.
1 – Acquisition
Acquisition represents the moment you have your first transaction with a user. This does not necessarily mean exchanging money, but rather acquiring the contact information of a new lead after they download your app, create an account, or subscribe to your email list.
Marketing goal at this stage: Nurture prospects into users of your product/service
2 – Activation
The activation stage signifies the moment when a user first sees the value of your product first-hand. For a digital business, this is typically during a free trial or limited access period.
Marketing goal at this stage: Nurture users into paying customers
3 – Revenue
A user at the revenue stage is one who has made their first purchase. They’ve decided you’re worth the investment, and have placed an order or paid for their first month’s subscription.
Marketing goal at this stage: Nurture customers into repeat buyers
4 – Retention
Once a user has made a financial contribution to your bottom line, your goal is to ensure they remain customers through subsequent purchases and up-sells, at the very least covering the cost to acquire them.
Marketing goal at this stage: Turn customers into life-long brand advocates and re-activate at-risk or lapsed customers
5 – Referral
A user in the referral stage is one who likes your product enough to advocate on your behalf and bring in new customers. They leave positive reviews and share your message with their inner circle.
Marketing goal at this stage: Continue to increase customer lifetime value
Lifecycle Example: Uber
Let’s look at the lifecycle you would go through as a customer of Uber (the most popular ride-sharing app).
Acquisition: Your friend tells you about their favorite ride-sharing app, Uber, and you visit the app store to download it on your phone.
Activation: You open up the app and fill out your profile and connect a credit card for any future payments.
Revenue: You request your first ride and submit payment for the service.
Retention: You request subsequent rides, and load in money to be used for Uber Eats.
Referral: You tell your friends about the great experience you had with Uber, and recommend they try it out.
What does lifecycle marketing look like in the digital economy?
Digital businesses are uniquely equipped to succeed with lifecycle marketing strategies due to their large amounts of customer data and frequent user interactions.
It’s much easier to engage with customers and influence action when you don’t have to wait for them to walk into your store. Instead, push notification, in-app alerts and email notifications can all be leveraged to expand your reach.
A digital marketer should have unique strategies for helping each type of customer progress through the lifecycle. You wouldn’t send a new lead the same marketing message as a long-time customer, so segmenting your customers from each stage helps you determine what they’ll respond well to.
For example, to have a user complete the acquisition stage, encourage them to subscribe to your weekly newsletter. With a direct line to their inbox to show off educational content or onboarding guides, you’re able to nurture them towards the activation stage where they try your features.
For paying customers, target them with in-app upsell incentives or new-feature campaigns to increase their lifetime value and drive brand loyalty.
Customers you’re focused on retaining will benefit from a reactivation campaign or welcome-back incentives, with the goal that they refer new business in the future.
Lifecycle marketing ends up being a win-win strategy for you and your customers. By keeping track of your customers’ stage in the journey, you satisfy their needs, leading to more profitable engagement with your business.
Why is lifecycle marketing important for loyalty programs?
Every rewards-based loyalty program is made up of an incentive (ie. discounts, points) that you give to customers for completing a specific action (ie. making a purchase, referring a friend).
As you’ve learned, a user’s product knowledge, opinion, and commitment level vary at each stage of the lifecycle.
This means that when designing your loyalty programs, motivating all customers to perform the same action for the same reward won’t deliver the best results.
By actually leveraging a user’s different characteristics at each stage, you can be strategic about the behavior and actions you incentivize to propel them to the next stage.
For example, a user who just came across your website is not someone to whom you want to offer 30% off to make a referral, because your best advocates are those who are knowledgeable about your brand.
Similarly, you’re better off rewarding a long-time client to leave a review than to complete an in-app tutorial, as their loyalty is an extremely valuable tool for referring new business.
The traditional design of a loyalty program is to reward all users (regardless of position in the lifecycle) when they make a purchase. However, once you understand the customer’s journey, you’ll realize that there are many more effective actions you can incentivize to build brand loyalty.
Check out our article to learn more about choosing the best behavior to reward.
By creating a better experience for your customers, you’re making it easy for them to choose your brand again and again.
Start by taking the time to map out a customer’s typical journey with your brand, from the moment they land on your website. What action do you want them to do next? How can you help get them to the next stage in the lifecycle?
To learn more about designing a successful loyalty strategy in the digital economy, sign up for the Digital Loyalty Academy today. Free access for the first 700 students.