How to shorten the customer lifecycle journey
There are many types of customers. Customers who buy your product because of a 50% discount, to then never buy from you again. Customers who visit your website many times but never go through with actually buying something. And then there are the customers who buy one of your products, to then buy another. And another. Loyal customers. Customers that immediately think of your company when another need arises. These are the customers that provide you with the highest customer lifetime value (CLV), as they keep returning to your store. Over and over again.
Although all of your customers are important, specifically focusing on building a loyal customer base gives a lot of benefits. It saves time and money, while increasing revenue. But how do you build a loyal customer base? And what has the customer lifecycle journey got to do with it?
In this guide, we’ll explain how you can start building a base of loyal customers by managing the customer lifecycle journey. But first, let’s start by explaining what the customer lifetime value is and how it relates to the customer lifecycle journey.
What is customer lifetime value (CLV)?
Customer lifetime value is a measure of the total revenue a company expects from a single customer during their entire relationship.
It is an important metric to be aware of, because it shows the potential value of each customer for your business. But it also lets you identify what type of customers you should focus on to build a loyal base. Which eventually leads to increased customer loyalty, higher revenues, and increased ROAS. Because you now know who you should target.
There are two types of Customer lifetime value. Predictive CLV, which bases its calculations on predictive AI. And Historical CLV, which is built on past data. Both are effective for determining the CLV, but as the predictive abilities of AI increase over time, we prefer predictive CLV.
What is the customer lifecycle journey?
The customer lifecycle refers to the journey a customer takes from becoming aware of a need and product/solution, buying the product/solution, to ideally becoming a loyal customer. The journey consists of 4 standard stages, from the orientation stage to the loyalty stage:
1. The orientation stage:
The customer becomes aware that he has a problem or need and begins orienting on products and services that may solve their problem.
2. The comparison stage:
The customer compares the options he has found to ensure he can buy the best solution to his need.
3. The decision stage:
The customer has compared the available options and is ready to buy.
4. The evaluation stage:
The purchase has been made. Now is the time to turn your new customer into a loyal customer who repeatedly buys your products or services.
Originally, the model is visualized as a funnel, such as the one shown below. However, renowned consultancy firm McKinsey found that the orientation and even consideration phase can be shortened or even skipped if you truly understand your customer.
By tailoring the shopping experience to their individual expectations and characteristics, the chance of conversion is significantly higher. But perhaps even better, it makes your customer feel understood. Thus forming a mutual bond of trust and understanding. A bond that eventually leads to them becoming loyal to your company and brand.
How to shorten the customer lifecycle journey and increase the CLV
The key to both shortening the customer lifecycle journey and increasing the CLV is truly understanding your customer. Because only through understanding your customer are you able to provide them with a unique tailored shopping experience. That is where personalisation comes in.
Personalisation is the art of transforming customer data into uniquely personalized content, tailored to the character traits and behaviour of each individual consumer. It is the method to make your customer feel understood and eventually turn them into loyal customers.
By implementing personalisation into your marketing strategy, customer satisfaction will increase. And because your customer has such a good experience with your company, the chance of them becoming loyal customers increases too. Which leads to both a higher customer lifetime value, and a shortened lifecycle journey.
Shortening the customer life cycle journey starts by implementing a customer data platform (CDP). With the help of smart technology, Spotler Activate CDP takes the hard work out of your hands. It collects data from multiple channels and turns it into individual predictive customer profiles. Profiles that you can use to deliver highly personalized content. So that your customer feels truly understood and you can build sustainable relationships.
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