Business needs to build effective ways of interaction with consumers. Understanding its customers’ core needs, a company can offer clients goods or services which are the most relevant and valuable. As a product or an organisation, a consumer has his or her development pathway in terms of relationships with a seller. This is a process called customer lifecycle. The essence of this concept is that each customer goes through a series of stages interacting with a company’s product [4]. Can the business influence this lifecycle in any way for its benefit? Of course, yes. In modern marketing, there is such a concept as customer lifecycle management (CLM). This management consists in the fact that a company takes actions allowing it to move consumers through different stages of their lifecycle step by step – from the first contact with a brand to a formation of loyalty [3]. In this case, we can claim that customer lifecycle is the basis for the implementation of communication actions between a company and a consumer within a certain phase of interaction with the company’s product. Hence, the question arises: why? First of all, at each customer lifecycle stage, the business should act in such a way as to provide a consumer with the value he needs. Otherwise, all of the company’s activities would be meaningless: customers would simply ignore the impact on them, as there have been no relevant offers. This means that campaigns at a particular phase of this cycle should be targeted at the current consumers status [2]. In other words, a company must understand:

  1. if a consumer is a new one or not;
  2. if a consumer had made a purchase, after this he or she bought something one more time or it was a one-time thing;
  3. if a consumer can be identified as a risk client (i.e. he or she can stop buying the company’s products at all), there are some possibilities for reactivation or not;
  4. if a consumer has a high level of regular, repeating purchases, transforming him or her to a loyal customer has potential or not.

Customer retention costs less than acquisition. Besides, according to studies, a growth of retained clients share by 5% boosts company’s profits to 95% [1]. So, all CLM campaigns can be mainly focused on retaining existing customers: from stimulating their re-purchase to creating true loyalty to a product.


Sources:

1. Bain & Company, Inc. Prescription for cutting costs: Loyal relationships. [Online]. Available: http://www2.bain.com/Images/BB_Prescription_cutting_costs.pdf. [Accessed: 10- Dec- 2019]

2. Customer Lifecycle Management (CLM): Why it Matters More Now Than Ever Before. [Online]. Available: https://exponea.com/blog/customer-lifecycle-management- clm-why-it-matters-more-now-than-ever-before/. [Accessed: 10- Dec- 2019]

3. Ecommerce Customer Lifecycle Management: An Easy Guide. [Online]. Available: https://www.growcode.com/blog/ecommerce-customer-lifecycle-management/. [Accessed: 10- Dec- 2019]

4. Lifecycle Marketing 101. [Online]. Available: https://mobilegrowthstack.com/ lifecycle-marketing-101-21e874be642f. [Accessed: 10- Dec- 2019]

5 комментариев

  1. Very interesting article, but despite I believe in reality of CLV and CLM and understand how it can help business, it has some limitations in real life.

    It’s hard to implement CLV and CLM in FMCG companies now – as we do not usually have our consumer’s data when they buy a product. It starts to appear with the help of retailers and its loyalty cards (when one buys our brand in a shop we can monitor how often he/she does it, which sum of money spends etc), but the info is still not clear – who says that consumer will not go to another retailer? Also it is impossible to match data from loyalty cards of different retailers as personal date is hidden. It can become more real with the help of banking, but there are still very complicated mechanisms of transformation purchase data into exact products bought in a transaction.

    Also I don’t really believe in 100% loyalty – usually a person has some brands in repertoire and switches between them, and we need to understand it creating campaigns directed to “loyal” consumers or consumers with the high level of regular & repeating purchases.

    Hope someday we in FMCG will be able to segment consumers as it is written in the article (segment not like “n% new, x% risk ets, as we can do it know thanks to research agencies, but understand exact client relates to a segment) and will be able to boosts profits to 95% retaining 5% more clients 

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  2. First of all I want to thankful Maria for this topic, but for me this information was not enough.I absolutely agree that it;s very important to be ‘near’ with customer on each step of purchase but how? I think it’s very important to understand how we can be with customer and how we can receive the information from him on each step. And if we speak about targeted marketing campaigns I want to add that for companies will be also important to have a portrait of consumers, they are may be several. But it will be very helpful tool for understanding where we can reach our consumers and what tools use to motivate each type of consumers for purchase. And I want to agree with Ari that in FMCG it very hard to have a clear CLM but for B2B market this article can be useful:) Thank you!

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  3. Thank you Maria for interesting overview! Yet the messages in the article have some limitations: it is hard to implement elsewhere except online, e-commerce and B2C. Not every business can influence CLV in any way for its benefit, and I would like to learn more about exact instruments and cases how can it do so. Maybe there are some innovative cases from classic business model where company tracks customers’ way, understand if they are new, loyal, gone etc. and targets campaigns directly to them. Would be nice to see

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  4. I agree with previous commentators on the fact that the concept of CLV in its ideal view nowadays can be used in online services, B2C and e-commerce. Such companies can easily collect data from customers, find out if client is new or not, how many purchases he/she made. Moreover, digital world allows to predict needs of customers even when they didn’t realized them yet. For instance, a user is looking for a dinner in google and e-commerce retailer gives him/her exclusive offer in mobile app just some minutes later.
    Speaking of knowing the stage consumer interacts with the company, there can be created a strategy for moving a client from the first purchase to its loyalty and even for returning gone client. I would like to read more in this topic — and to see real cases how it works.

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  5. Thank you Maria for the topic. I can say that my thoughts on CLM and targeted marketing campaigns coincide with your ideas. The concept of CLM, that customers need to treated differently throughout their lifecycle, is especially important in digital projects. I would add that RFM Segmentation could be a great complementary instrument in order to create targeted marketing campaigns based on customer lifecycle, as it considers such variables as recency, frequency and value of customer purchases. Thank you! 🙂

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