Managing an ecommerce store isn’t easy.
There’s a lot going on behind the scenes, including day-to-day maintenance tasks, user experience testing, conversion optimization, analytics and data interpretation, customer journey mapping…the list goes on.
So why add another worry to the list?
The term “customer lifecycle management” (CLM) refers to the processes, principles, and feedback mechanisms that retailers use to move customers through the various stages of the buyer lifecycle.
Effective customer lifecycle management, which encompasses marketing, sales, user experience, loyalty-building, and more, can dramatically increase sales and revenue.Effective customer lifecycle management, which encompasses marketing, sales, user experience, loyalty-building, and more, can dramatically increase sales and revenue. Click To Tweet
Yet many retailers overlook this important part of their “ecommerce machine”, conflating it with other key processes (like customer relationship management or CRM). Even if they do set up CLM processes, they often fail to adhere to best practices.
In this post, we’re going to show you exactly how to manage your customer lifecycle, ensuring that you don’t lose out on easy sales and revenue.
What is the Customer Lifecycle?
What is Customer Lifecycle Management?
An Important Note: Understanding the Difference Between the Customer Journey and the Customer Lifecycle
How do Retailers Manage the Buyer Lifecycle Compared to the Customer Journey?
Why is Customer Lifecycle Management Important?
What are the Five Stages of the Customer Lifecycle?
10 Steps to Successful Customer Lifecycle Management
Sounds good? Let’s dig in.
The customer lifecycle is a visual representation of the different stages that a typical customer passes through before, during, and after making a purchase.
The customer lifecycle has a few notable characteristics that distinguish it from other documents and conceptual models.
First off, it is business-facing, which means it is used to define customer relationships from the perspective of the business. It represents the ideal journey of a typical customer in an abstract way, from initial contact to first purchase and loyalty.
Second, the buyer lifecycle is a high-level and general document. While it may account for specific channels and touchpoints, customers are grouped into loose categories based on specific behaviors.
Finally, it is a practical tool. It is used to understand how many customers are currently occupying the various stages of the customer lifecycle, such as prospects, first-time customers, or advocates.
It is also used to target marketing and sales content to customers appropriately, thus increasing their value. If you know that a specific customer is in the “Acquire” stage, for example, you can pitch them incentives and offers, encouraging them to move to the “Develop and Nurture” phase.
Customer lifecycle management consists of three primary ongoing stages:
CLM is also about implementing a clear, rigorous analytics framework so that it’s possible to track and measure the movement of people along the buyer lifecycle, gauging the effectiveness of your overall strategy.
Achieving these aims involves setting up an infrastructure for measuring the number of users at each stage of the buyer lifecycle (sometimes referred to as “pipeline”) and utilizing available channels to target them with relevant content and experiences.
Finally, CLM involves a long-term commitment to testing, both in a positive sense to increase conversions along the buyer lifecycle, and in a negative sense, “sealing up” problematic areas.
Retailers often confuse the customer journey with the customer lifecycle (also called the “buyer lifecycle”).
The customer journey is the sum-total of all the experiences that a customer might have with your store, from start to finish. This “journey” will often encompass dozens if not hundreds of touchpoints.
Crucially, the customer journey is visualized (usually in a customer journey map) from the perspective of the user. Retailers use customer journey maps to improve the customer experience.
The buyer lifecycle is a simpler model, usually only encompassing a handful of stages, that categorizes customers according to their relationship with your store and envisions the ideal next stage.
Retailers use an understanding of the buyer lifecycle to encourage customers to move from one stage to the next, with a view to boosting sales, revenue, and referrals.
Specifically, retailers manage the buyer lifecycle by targeting customers with specific content and experiences to turn them from leads into customers, and from customers into repeat customers and advocates (rather than improve existing experiences comprising the existing customer journey).
There is a degree of overlap between the customer journey and buyer lifecycle, but for all intents and purposes, they should be treated as separate concepts.
For a more detailed analysis of this topic, check out our article: Customer Journey vs. Buyer Lifecycle.
Why bother with customer lifecycle management at all?
Customer lifecycle management is important because it is the means by which you move and encourage potential customers towards making a purchase.Customer lifecycle management is important because it is the means by which you move and encourage potential customers towards making a purchase. Click To Tweet
CLM also enables you to maximize the value of existing customers.
Customer acquisition costs are rising. With effective CLM, you can maximize the value of existing customers.
The buyer lifecycle includes stages after purchase, including loyalty (customers that make numerous repeat purchases) and advocacy (customers that recommend your store to their friends).
Because customer lifecycle management is also about testing and improving conversion rates between the various stages of the customer lifecycle, it allows you to remedy any issues you might have.
The customer lifecycle is usually split into four or five distinct stages. Every retailer will define their own unique buyer template, but there will always be commonalities.
Here’s a typical ecommerce example:
It’s essential to attach metrics to each stage of the buyer lifecycle. This will enable you to see how well leads are converting to customers, and so on.
For the reach/awareness stage, ad impressions and site visits are the best measures. Your conversion rate or acquisition rate indicates the number of visitors that turn into customers. Customer retention rate and referral rate are good indicators for the later stages.
For more details about essential ecommerce metrics, check out our in-depth article on the topic: 10 Best Ecommerce Metrics to Track to Boost Your Sales.
With the theoretical dimension out of the way, let’s take a look at how you can actually build an effective customer lifecycle management strategy.
Here are ten key tips to keep in mind:
Begin by defining the buyer lifecycle in general terms. You don’t need to spend lots of time creating a detailed, unique model at this stage.
Opt for an existing and widely-used ecommerce template. You can always add more nuanced stages as you gather more data and customer feedback.
You may wish to split up some of the broader stages, for example, by turning “reach” into “awareness” and “interest”.
The template you choose will form the basis of your overall strategy, allowing you to innovate and optimize going forward.
It’s essential to attach the right metrics to each stage of the buyer lifecycle.
By attaching one broad metric to each individual step of the buyer lifecycle, you can track the long-term effectiveness of your marketing, sales, and on-site optimization campaigns from a high level.
Use the following categories for tracking purposes:
Often, retailers will conflate their “sales funnel” with the buyer lifecycle. While these terms are interchangeable, generally speaking, your sales funnel is used to measure on-site activity at a granular level, encompassing page views, add-to-cart rate, and transactions.
For a comprehensive overview of key ecommerce metrics, check out our in-depth article on the topic: 10 Best Ecommerce Metrics to Track to Boost Your Sales.
While the customer journey (as expressed via a customer journey map) and buyer lifecycle are fundamentally different concepts, there are important areas of overlap.
Touchpoints across the customer journey correspond with different stages of the buyer lifecycle. And pinpointing key customer-facing touchpoints will highlight areas for improvement, allowing you to move more prospects and customers along the buyer lifecycle.
Determine the main points of interaction during “awareness”, “conversion”, “retention”, and “advocacy”. Doing this will give you valuable insights into the user experience at each stage of the buyer lifecycle.
If you don’t already have a customer journey map, then your user experience is likely suboptimal.
Check out our in-depth guide to see where you might be going wrong: Customer Journey Mapping in Ecommerce: Examples & Templates.
How do you reach customers at each stage of the buyer lifecycle?
Define the channels, marketing or otherwise, that are under your control.
A large part of CLM is managing communication channels in the context of the buyer lifecycle, whether they’re used for marketing, sales, or nurturing existing customers.
Viewing these channels through the lens of the buyer lifecycle helps you to clarify your goals and target relevant sections of your customer base.
When you understand, for example, that email marketing is a key channel for turning repeat customers into advocates, you can tailor your content and segmentation strategy to better achieve this goal.
In an ecommerce setting, there are a handful of core channels that retailers use to interact with customers.
Here’s a quick rundown:
Certain types of marketing and outreach work more effectively than others at different stages of the buyer lifecycle. Understanding which channels are relevant for each stage enables you to tailor your content, promotions, updates, etc. accordingly.
Do you have separate, well-defined sales strategies for each stage of the buyer lifecycle?
If the answer is no, you could be missing out on a large chunk of first-time sales and repeat purchases.
This will allow you to pinpoint any shortcomings in your current approach and, crucially, to develop and optimize your existing strategies in the context of specific buyer lifecycle goals and metrics.
Where are customers dropping off? It’s good practice to compare your current metrics with overall ecommerce benchmarks in the industry (along with your own internal goals).Where are customers dropping off? It's good practice to compare your current metrics with industry benchmarks (along with your own internal goals). Click To Tweet
Using third-party data, especially in the early stages, will allow you to see if you have any major issues associated with the stages of the buyer lifecycle. You might find, for example, that an unusually low number of customers are becoming advocates. You can then tailor your strategy accordingly.
Because the cost of acquiring new customers is constantly rising, it’s necessary to “tighten up” your buyer lifecycle as much as possible. You’ll instantly boost revenue if you can convert more leads to first-time customers, first-time customers to repeat customers, and so on.
While user experience mainly falls under the remit of customer journey mapping and optimization, it’s also relevant in customer lifecycle management.
User experience optimization is inextricably linked to conversion optimization. Happy and satisfied users are much more likely to turn into first-time customers, repeat customers, and evangelists.
Gather feedback for each group of users (leads, customers, repeat customers, and advocates) associated with the stages of the buyer lifecycle. Use this information to pinpoint the main areas where improvements are likely to have an impact on your key buyer lifecycle metrics.
For a full overview of ecommerce user experience testing, check out our article on the topic: 11 UX Tips for Ecommerce That Will Help You Improve Your Conversion Rate.
Many retailers focus exclusively (or near-exclusively)on the reach and conversion stages. But this is a big mistake.
See customer lifecycle management as a way of maximizing the value of your existing customers.
By placing loyalty and advocacy on an equal footing with reach and acquisition, you can increase revenue without expending large amounts of resources.
This point follows on from the one above.
Customer lifecycle management is as much about driving down costs as it is about boosting conversions.
One of the biggest areas of expenditure for online retailers, if not the biggest, is customer acquisition.
Buyer lifecycle management involves clearly defining your marketing strategy for the reach and awareness stage with a view to driving down expenditure.
It’s difficult to quantify your level of reach (the total number of potential customers) in the buyer lifecycle, but total site visitors is a good general metric.
If you can attach a cost to each new site visitor, it will be easy to calculate your overall customer acquisition cost. Tie marketing strategies the “reach” and “acquire” stages of the buyer lifecycle to determine the specific cost of acquiring new customers. Then determine ways to reduce that cost.
Testing is an essential part of customer lifecycle management. Each stage has a specific metric associated with it, and this makes it possible to test and track new marketing and sales strategies over the long-term.
Many retailers make changes without running proper tests first. But A/B testing and multivariate testing allow you to compare different iterations and strategies along your buyer lifecycle before rolling out new changes.
It’s good practice to view all of your testing campaigns, whether user experience optimization, conversion optimization, marketing and sales, loyalty-building, and so on, through the lens of the buyer lifecycle. This allows you to gauge the overall effectiveness of your optimization strategy over time.
Customer lifecycle management enables you to direct all of your sales and marketing strategies towards a handful of measurable outcomes.
Fundamentally, CLM is about optimizing marketing and sales activities for each individual stage of the buyer lifecycle. Assigning specific metrics to these stages for tracking purposes is a big part of this process.
It’s also important to reiterate the importance of testing. Because it’s possible to clearly measure how many potential customers are moving through the various stages of the buyer lifecycle, long-term testing becomes much easier.
Now, time to map out your customer lifecycle and start collecting data.
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