Prospective Customers: The First Phase of the
Customer Life Cycle
Before your customers
are actually your customers, they are simply prospects who may or may not be
aware of your product, brand, or company. Your job, as a marketer, is to first
make them aware of your product, brand, or company and then peak their interest
enough that they will convert to an active customer or user. Once you have
their interest peaked, of course, your next job is to provide the trust,
security, and incentive that they need to overcome any barriers or obstacles
and become a registered or paying user or customer. This phase of the customer life cycle – the
process of converting a prospect into a customer or user - is often the most
challenging. It involves a marketing acquisition budget as well as an awareness
of what will transition prospects from "just interested" into fully
engaged.
New Customers or Users: The Second Phase of
the Customer Life Cycle
So, now you've
converted a prospective customer or lead into a paying or registered customer.
That's great and shows that you have some real marketing skills. However,
ideally you want your new customer or user to be a customer or user who has a
long term relationship with you, not just one who purchases one time and then
never returns. Think of this phase of the customer life cycle as
though it's like the early phases of dating. Your new customer has been
"sold" enough on you to go out on one date or make one purchase, but
they're not sure if you're a long-term commitment yet! It's your job to build a
relationship with them so that they continue to return, interact, and purchase
from you for a long time to come. Again, the quality of your product or service
will certainly matter here, but so will the way in which you communicate with
your customer and show them that you respect their privacy, time, and, most
importantly, business.
Active Customers or Users: The Third Phase of
the Customer Life Cycle
Now you've converted a
prospective customer into a paying or registered customer. This is the stage at which you need to not
only impress the customer with the quality of your product, but also follow-up
with them to build a relationship, make them feel important to you, and ensure
that, when they think of you, those active customers think of returning to
you. If we're still using
the dating analogy, think of this as the time when you make sure that you're
always being polite and wearing your best clothing when you communicate with
the customer!
Repeat or Loyal Customers or Users: The Fourth
Phase of the Customer Life Cycle
If you've managed to
get a customer over the first two hurdles, converting them from a prospective
customer or lead to an active customer and then from an active customer to a
repeat customer, you should be congratulated! Earning loyal customers who will
make repeat purchases or visits to your website or service is quite a marketing
accomplishment. Once your customers become repeat customers, the aggressiveness
and frequency with which you want to communicate with them will diminish, but
it certainly won't disappear. You'll want to make sure that customers are being
reminded that they are important to you, as well as being given reasons and
incentives to remain loyal. There's always a competitor out there ready to move
in on your user or customer base. Your best tool to retain customers who have become repeat or
loyal customers is to keep an ongoing dialogue with them through all of your
marketing communications channels, including email.
Lapsed Customers or Users: The Fifth Phase of
the Customer Life Cycle
Unfortunately, even a
loyal or repeat customer may eventually lose interest or contact. When a
customer has gone a significant amount of time without interacting with your
brand or company or purchasing a product, they are referred to as a
"lapsed" customer. In most cases, you will break your lapsed
customers down into two to three groups. It's common to consider short-term
lapsed, long-term lapsed and "seasonally lapsed" customers
differently. However, how you define what those groups are (and perhaps how you
develop your own segmentation for lapsed customers) will depend greatly on your
product, industry segment, or customer base. If, for example, you sell shoes, a
customer who didn't purchase from you once a quarter would easily be considered
lapsed as shoes are a constant and ongoing need. If, however, you only sell
snow boots, you wouldn't expect customers to purchase from you over the summer,
so the time between purchases to define a lapsed customer and the point in the
year when you would want to contact lapsed customers would be different. Essentially, a lapsed customer is a customer
who has not made a repeat purchase within a time frame that you have defined as
the time between which active customers typically make purchases.
Inactive or Abandoned Customers or Users: The
Sixth Phase of the Customer Life Cycle
Of course, some lapsed
customers may eventually turn into inactive or abandoned customers who no
longer purchase or interact with your company. Some of these inactive customers
will have reasons for no longer having a relationship with your company that
you cannot control, such as a bad experience with customer service or a change
in their financial situation. However, many inactive customers may simply have
forgotten about you, been lured away by competition, or simply need an
incentive to re-purchase for you. Customers in this phase of the customer life
cycle should be divided into two groups – customers who should not be
communicated with at all any more and customers that you hope to win back via a
customer communication or marketing campaign.
Of course, within this
customer life cycle, different customers will have different values (some will
spend more and be worth more to acquire, retain or win-back). However, no
matter how big or small the value of the customer, their customer life cycle
and relationship with your company, product, or brand will most likely follow
the cycle or path outlined above. Fortunately, if you know the likely life
cycle or pattern of a customer, you can make changes to your customer
communications or marketing strategy to try to optimize the length of time and
the value that a customer brings to your business.
