Managing the Customer

Lifecycle
Customer Lifecycle
Customer lifecycle is a representation of the stages that customers go through
in their relationship with a company, as seen from the company’s perspective.

The core stages in the customer lifecycle are

Customer Acquisition

Customer Retention

Customer Development
Customer Acquisition

New Customer
• New to the product category - customers who have either identified a new need
or have found a new category of solution for an existing need.

• New to the company – Won from Competitors

Barriers
• Strong Commitment

• High Level of Investment

Prospecting

Searching for opportunities that generate additional value for the

company.

Associated with Market Segmentation and Targeting process.

Prospects are chosen targets.

Business to Business Prospecting
Sources of B2B prospects — Advertising response enquiries

• Customer Referrals — Publicity

— Email campaigning
• Online sources
— Attendee and delegate lists from exhibitions,
— Search engines
seminars, workshops, tradeshows, conferences,
— Company websites
events
— Portals
• Lists and directories
— Social media
• Canvassing
• Networking
• Telemarketing
• Promotional activities
Business to Consumer Lead Generation

• Advertising
Cognitive Advertising – Concerned with what people are thinking
Raising Awareness

Developing Understanding

Generating Knowledge

 Affective Advertising – Developing liking for product

Three major concerns for advertisers attempting to generate
new customers:-
• Message
• Media
• Timing
• Sales Promotion
Banded Packs
Sampling
Free Premium
Free Trial
Cross Promotions
Discounts
Lotteries
Coupons
Competitions
Rebates or Cashbacks

Bonus Packs
• Buzz or Word of Mouth • Telemarketing & Cold Canvassing

• Social Media • SMS

• Merchandising – Behaviour • Email

Triggering Stimulus • Product Placement
• Referrals • Pitchers
KPI of Customer Acquisition Programs
1. How many customers are acquired?

2. What is the cost per acquired customer?

3. What is the value of the acquired customer over the longer term?
CRM Tools in Customer Acquisition

Lead Management

Campaign Management

Event-based Marketing
Customer Retention

Customer retention is the number of customers doing business with a

firm at the end of a financial year expressed as percentage of those who
were active customers at the beginning of the year
Measures of customer retention
1. Raw customer retention rate. This is the number of customers doing business with a firm at the
end of a trading period expressed as a percentage of those who were active customers at the
beginning of the period.

2. Sales-adjusted retention rate. This is the value of sales achieved from the retained customers
expressed as a percentage of the sales achieved from all customers who were active at the
beginning of the period.

3. Profit-adjusted retention rate. This is the profit earned from the retained customers expressed as a
percentage of the profit earned from all customers who were active at the beginning of the period.
Economics of Customer Retention
• Increasing purchases as tenure grows

• Lower customer management costs over time

• Customer referrals Customer

Retention
• Premium prices
Strategies

Positive Retention Negative Retention

Strategies Strategies
Negative Retention Strategies
• Impose high switching costs on customers, discouraging their defection.

• Adding penalty clauses in the contract

Negative customer retention strategies produce customers who feel trapped.

They are likely to agitate to be freed from their obligations, taking up much management time.

Negative word of-mouth; in today’s social media environment it is easier than ever and highly
effective.
They are unlikely to do further business with that supplier.
Positive Retention Strategies

• Creating customer delight

• Adding customer-perceived value

• Creating social and structural bonds

• Building customer engagement.

Customer Delight

• Delighting customers, or exceeding customer expectations, means going beyond

what would normally satisfy the customer.

• Customer’s perception of their experience of doing business with you exceeds

their expectation. In formulaic terms:

CD = P > E

where CD = Customer Delight, P = Perception of performance, and E =

Expectation
Add customer-perceived value
• In-pack or On-pack
• Loyalty schemes
Voucher
• Customer communities • Rebate or Cashback

• Sales promotions • Patronage Awards

• Collection Schemes
• Free premium for
continued purchase
• Self Liquidating Premium
Customer Development
Growing the value of retained customer

Cross Selling - Selling additional products/services to existing

customer

Up Selling – Selling higher priced or higher margin product or service

to an existing customer
CRM Technologies useful in Customer Development

Campaign Management

Event-based Marketing

Data Mining

Customization

Channel Integration

Marketing Optimization
Terminating Customer Relationships

Strategies for shedding unprofitable customers:

• Make them profitable by raising prices or cutting the cost-to-serve.

• Un-bundle the offer.

• Respecify the product

• Reorganize Sales, Marketing and Service Departments

• Introduce ABC class Service

Customer Sacking Behaviours

• Hardliners – Active and rigorous, regular evaluation of customer

portfolio

• Appeasers – Cautious Approach

• Undecided - Reluctant