Life hardly goes as organised as we plan it. It comes to us messy. As consumers, we’re constantly bombarded with messaging from companies and brands, and our path to purchasing and using products and services is more complicated than ever. So, it should come as no surprise that in this day and age, there’s really no such thing as a neat and tidy sales funnel. Customer lifecycles—like the lives of their customers—are messy.
Still, while it would be impossible to present a single customer lifecycle model that applies to every single business out there, experts have settled on a handful of basic phrases that are common to the majority of companies. These are the reach, acquisition, conversion, retention, and loyalty stages.
Phase 1: Reach
This phase (also commonly called “discovery” or “awareness”) is where the clock starts, and the customer lifecycle officially begins. Well, sort of officially. After all, it’s tough to know exactly when a customer experiences his or her first contact with your business or your brand. In fact, it might be tough for the customer himself or herself to recognise that touch point.
Still, from a marketing perspective, it’s important to track those touch points as accurately as possible. That way, you can figure out which marketing and advertising efforts—both print and digital—are most effective in driving brand awareness and reach.
Here are a few ideas for measuring reach, adapted from this article:
• Identify the most common search terms that are bringing people to your website for the first time.
• Monitor visitor data (i.e., new website visitors and returning website visitors).
• Keep a pulse on social analytics (especially new followers or other first-time user interactions) and online reviews.
• Poll trade show and event attendees (i.e., ask them if they had heard of you before).
• Analyse pay-per-click (PPC) and AdWords data.
• Survey both current customers and prospects on how they heard about you.
Phase 2: Acquisition
Once you’re on a prospect’s radar, it’s time actually to initiate contact. Your mission: to turn your marketing contacts into leads. A lead is an individual or organisation that expresses an interest in your goods or services.
So, how do you turn someone who is simply aware of your brand or product into a potential buyer? In the most basic sense, it’s about interaction and engagement. This can happen via phone call, email, or other targeted online messaging. But remember, it’s not just about making contact; instead, it’s about making the right kind of connection at the right frequency.
This phase of the customer journey is a little more trackable in terms of concrete data, as it’s relatively easy to define the point at which a contact becomes a lead. It’s also the stage that often gets the most attention from marketers trying to quantify the success of their efforts. “
There are two types of acquisition metrics you’ll want to consider: those that tell about the “what” and those that tell you about; the “who.” More specifically:
“What” analytics tools allow you to track traffic, view sources and referrals, and set up the event and goal tracking. The most common tool for monitoring these data points is Google Analytics.
“Who” analytics tools, on the other hand, help you answer questions like Who is viewing your website? What did they do before and after they signed up? How is your site being used?
Phase 3: Conversion
This is where you win the sale, and the prospect becomes a customer. The key to success in this phase is focusing on selling the relationship—not just the product. At the most basic level, conversion happens when a customer actually remits payment to begin using your product or service.
One of the most critical sales conversion metrics is the conversion rate, which tells you what percentage of leads actually ended up turning into customers. As illustrated here, the basic formula for conversion rate is:
Conversion Rate = (Total Number of Sales ÷ Total Number of Leads) X 100
For example, if you made 30 sales last year out of the 100 leads you generated over the same time period, your conversion rate would be 30%.
Phase 4: Retention
After sales, there’s still a game to be won – the retention game. In reality, the retention phase includes several smaller phases, some of which are ongoing:
Onboarding. The onboarding process begins immediately after purchase. Your goal is to get your customers up and running as soon as possible. Create a checklist of all the items (i.e., milestones) that your customers must complete in order to use your product successfully from the first time.
Support. Once a customer has completed the onboarding process and has begun using your product, it’s absolutely critical that you keep the lines of communication open in case the customer has any problems, questions, or concerns. This is especially true during the first 90 days, because if the customer does not immediately begin to see value in your product, then he or she will be much more likely to leave you ultimately.
Adoption. One of the reasons why support is so crucial during the first 90 days after the sale is that this is the period during which the customer should successfully adopt your product. What does that mean? It means the product becomes integral to the customer’s daily activities and operations.
Within 90 days—a full financial quarter—the customer should see clear value in your product. However, if the customer doesn’t fully adopt the product, then he or she probably won’t look at those results. Also, in the absence of results (i.e., return on investment), there’s no incentive for the customer to continue using your product (i.e., renew his or her subscription).
Engagement. The only way to ensure your customers are happy and successful is to engage with them continually. This includes monitoring their satisfaction through:
• Net Promoter Score (NPS) surveys,
• customer health/happiness indices,
• customer advisory boards, and
• customer outreach initiatives.
Expansion. Many companies view upselling and cross-selling opportunities as a means of extracting as much revenue as possible from each customer. But that mode of operation isn’t sustainable in the long run. Why? Because if you upsell and cross-sell with reckless abandon, you can’t be sure you’re actually providing additional value to the customer. Also, if you’re not, your customers will catch on—and when they do, boom: all trust is lost. It won’t be long before those customers walk out the back door. Instead, it would help if you approached expansion with a goal of helping your customers extract as much value out of your product as possible.
Phase 5: Loyalty
In a perfect world, every single customer you acquire would make it to this stage. At this point, the customer is not only satisfied with your product, but also delighted. He or she is a brand ambassador. This is someone who sings your praises via online and in-person reviews, recommendations, or testimonials—all of which are extremely powerful when it comes to attracting more customers.
In addition to keeping an eye on customer reviews and ratings, you can track loyalty using retention measures such as churn rate and renewal. If you’ve done everything right, those renewals should really be non-events. In other words, you should continue getting the same revenue—or, if you’ve implemented a successful expansion strategy, even more, revenue—as time goes on.
Additionally, you can get a pulse on customer loyalty by creating a referral program and tracking its use. For example, you could provide program participants with unique sign-up pages where they send their referrals. When done right, these types of programs can produce great results—especially if you offer some type of reward or incentive to one or both parties.
The customer journey and lifecycle should be a smooth ride and should have a funnel shape, where all inputs lead to desires outputs, but like you are quick to know, life is messy. In all, ensure to appropriately track your progress at every phase so as not to lose your customers, because, at the end of the day, they are the ones still keeping you in business.