What does customer lifecycle management mean?
Company lifecycle management (CLM) is how companies keep track of and handle customer interactions over time. It means keeping in touch with a customer through all five stages of the customer journey, from the first contact to the point where they become loyal.
The methods in CLM are for:
- Getting new customers
- Getting them started and showing them the company’s goods or services
- Getting people involved at every step of the way
- Getting customers to stay by offering rewards and loyalty schemes
- Finding out how happy your customers are
- Making more money off of them while they work for your company
At every stage, people who have a stake in the business use data to improve the customer experience. This makes customers happier and more loyal to the business.
Word for
Customer lifecycle management is what CLM stands for.
Why it’s essential to use CLM
- Customer lifecycle management that works well is essential to running a business because it directly affects the bottom line.
- Companies with a complete picture of their customers can make better choices about what products to make, how much to charge, and how to advertise.
- Companies can improve the overall experience for their customers by focusing on the things that make them choose their product or service over those of their competitors.
- Companies make the most of each relationship with this helpful knowledge. This leads to more repeat business over time.
- Customers who have had a good experience with a business are much more likely to tell others about it. This is also a type of organic marketing.
The Five Stages of a Customer’s Life
Before you can fully understand customer lifecycle management, you need to know the five steps of the customer lifecycle.
1. Awareness of Brand
People buying a brand may know about it, what it stands for, and what it offers.
It is the first stage of the process and where most businesses start their efforts to get new customers.
The main goal of at this stage, a customer lifecycle management strategy, is to get new customers and build the business through targeted campaigns, social media outreach, and industry events.
Content marketing, partnerships with influencers, and sales prospecting are other ways to raise brand recognition. These methods help introduce the brand to new groups of people or products and move them further down the sales funnel.
2. Getting things
In the acquisition phase, the goal is to turn a perfect customer who knows about a brand into a loyal buyer.
At this stage, also known as the “purchase stage,” CLM tactics focus on giving customers a great experience and giving them reasons to buy, making them more likely to do so.
Potential buyers expect a personalized experience and a smooth sales process from start to finish at this stage.
A sales engagement tool can help because it gives real-time customer information, automates sales processes, and makes it easier for reps and prospects to talk to each other.
3. Changing into
The customer completes their purchase and starts using the product or service. This is the conversion step.
Now, it’s essential to help new customers get the most out of the product or service by giving them valuable tools and guides.
Making the onboarding process easy and fun is very important since this is the first step in building a long-term connection with a customer who might stay with you forever.
Making sure they know what to expect, making sure the onboarding process goes smoothly, and keeping in touch with them all will help them use the product or service properly, which lowers the chance that they’ll go somewhere else just for a better experience.
4. Keeping them
In the retention stage, you keep people interested and happy after they’ve bought something.
Customer service, loyalty schemes, quick communication, and feedback are all critical for turning one-time customers into long-term customers who buy from you again.
At this point, people are ready to leave if a few things happen that can be stopped:
They don’t get what they want.
It doesn’t answer their questions or address their worries.
They can’t get what they need from the goods or services.
Of course, there are some things that companies can’t control that might make it harder for them to keep doing business with another company. These include company outlook changes, budget cuts, or restructuring.
Still, setting reasonable standards for customers and going above and beyond to meet them will make them loyal and keep them with the company longer.
5. Trust and Support
People who have bought from a business for a certain amount of time (which varies from business to business) move on to the loyalty and support stage.
In this case, the customer has become a brand supporter and is ready to tell others about the company’s goods or services. It also gives businesses a chance to get helpful information about their customers that they can use to improve their goods, services, and internal processes.
The business needs to make it easy for customers to do this because many won’t do it independently.
A simple follow-up email that asks for feedback after an invoice or billing cycle can go a long way. If they are ready to leave a positive review, that could mean a significant increase in sales.
Customer Lifecycle Management Pros and Cons
Companies that handle the customer lifecycle keep customers longer and get a better return on their marketing and sales efforts. They also find that happy and loyal customers are more likely to buy from them again and that returning customers can bring in new customers through word of mouth.
These are the main reasons why customer lifecycle management is a good idea:
Lessens the loss of customers
It’s usually easier and cheaper to keep customers than to get new ones, so keeping good relationships with the ones you already have is essential. There are two main ways that CLM can help you find ways to keep customers and keep them coming back:
It helps companies determine which customers will likely leave and prepare for that possibility.
It helps you learn more about your customers’ likes and dislikes and how they usually act, which you can use to make more effective ways to connect with new customers.
Up to 70% more sales are made to people who have already bought from you than to people who are new to your business. Cutting down on customer turnover leads to more money, smoother processes, and happier customers.
Increases the happiness of customers
Customers who feel like they are being cared for are more likely to be happy with their purchase and stick with the business.
Companies can use CLM to learn a lot about their customers’ habits and likes, which helps them develop good ways to make their customers happier. With this knowledge, businesses can develop engagement strategies that are just right for each of their customers.
It makes the customer more valuable over time.
Companies can get a higher average customer lifetime value by tailoring the experience to each customer.
According to a McKinsey study, 71% of customers expect personalization. Businesses that do an excellent job of it make at least 40% more money than those that don’t.
Customer lifetime value tells a business how much money it can expect to make from a single customer throughout its relationship with the business.
By putting personalization first, CLM helps businesses find ways to make customers more loyal and make money from customers they might not have had otherwise.
More money is coming in.
Businesses can make decisions based on data that leads to more sales and revenue if they have a better idea of what their customers want.
Cross-sell and upsell opportunities, for instance, help businesses make the most money by building on current customer relationships instead of spending a lot on expensive ways to get new ones.
Customers’ Support for the Brand
When customer lifecycle management is done right, happy customers talk about their excellent experiences with their work and social networks.
56% of buyers in business-to-business sales look for help offline before they decide to buy. That number goes up to 88% when online customer feedback like product reviews, ratings, and notes are added.
Regarding business-to-business (B2B), where a single deal could be worth up to seven figures, customer champions are especially valuable.
It makes the sales funnel work better
77% of B2B buyers say it was hard to close their last deal. One big reason for this is that the sales cycle takes too long.
Companies can learn more about how customers act and make data-driven plans to improve their sales process using the right tools, such as CLM. This leads to faster sales and higher rates of leads that become customers.
It helps you make a complete marketing plan.
To cover the whole customer journey with customer lifecycle marketing, you need more than one way to sell and talk to customers.
It helps companies determine how their customers connect with their brand and which channels work best to turn those interactions into sales.
Using this information, companies can make a more complete marketing plan with different strategies for every part of the lifecycle. This means that efforts that talk to customers instead of just trying to get their attention have a higher return on investment (ROI).
KPIs for Customer Lifecycle Management
Companies need to keep an eye on the following KPIs to measure their CLM efforts successfully:
1. Conversion Rate: The number of customers who move to a particular stage in the sales process.
2. Average Order Value: The total value of all the transactions that happened in a certain amount of time, divided by the total number of transactions.
3. Total Contract Value: This is the amount of money a single customer has brought over their entire relationship with your business.
4. Cost per acquisition (CPA): A business spends money getting new customers or turning leads into paid customers.
In this section, we’ll discuss measuring the success of upselling and cross-selling by showing current customers more goods or services.
Churn Rate: The ratio of the number of customers who leave a business in a certain amount of time to the total number of customers who were there at the beginning of that time.
Customer Satisfaction Score: A number that shows customers’ satisfaction with a product or service based on polls they’ve filled out.
8. Customer Retention Rate: The share of customers who buy from you repeatedly and stick with your business.
9. Average Engagement Time: This is the time customers spend on each part of the product, website, or sales process.
Lead Response Time: The average time between when a lead comes into your system and when sales contacts them.
You can increase sales, keep more customers, and make them loyal to your brand over time by raising these numbers.
Best Practices for CLM
There is much room for error when making and using a CLM program. When companies do things that could be bad for customers, they risk losing money and frustrating customers.
Companies should follow best practices to make sure their CLM efforts are successful and get the most out of them.
- Set up a method for collecting and managing customer data to ensure you get correct and up-to-date information about your customers.
- Use automation tools to make activities like personalized email marketing, surveys, and customer follow-up calls more efficient and cost less.
- Look at patterns in how customers act to learn more about their buying habits and tastes so you can offer them better goods and services.
- Add CLM projects to your sales playbook so that your team can learn how to quickly and effectively handle customer questions, comments, or issues.
- Make every contact more personal by using the information you get from your customer lifecycle analysis to create unique and perfect experiences for each customer.
- Keep an eye on all parts of the customer lifecycle, such as getting new customers, keeping old ones, getting recommendations, and so on, to find any problems that might cause customers to leave or miss chances to make more money.
- Make detailed reports with key performance indicators (KPIs) like average deal size and conversion rate so you can see how things are going over time and make changes as needed.
Technology for managing the whole customer lifecycle
Customer lifetime management has been changed by technology, just like every other part of business. Tools for automation can be used to make complicated processes more accessible to understand and work more efficiently.
Automation in Marketing
Marketing automation uses technology to automate marketing tasks like polls, email campaigns, lead nurturing programs, and more focusing on customers running themselves.
Companies can get the most out of their customer lifecycle management by automating jobs that take a lot of time and giving them helpful information that would be hard or time-consuming to find any other way.
Marketing automation makes it easy to keep in touch with customers after they buy something or renew their subscription. You can immediately send them offers for related goods and services and see how happy they are with the product or service.
Marketing automation platforms gather customer information that companies can use in the background.
CRM
Almost all businesses use CRM software. It helps businesses keep track of information about their customers, organize the work of their sales and customer service teams, and learn a lot about how their customers act.
CRM software can show a complete picture of every customer’s journey, from the first touch to the purchase. This lets businesses predict what customers need and interact with them before buying.
Setting up automatic follow-up calls, emails, and other tasks that keep customers and buyers interested is also simple.
CPQ
Setting prices for goods and services is hard, but configure, price, and quote (CPQ) software does it for you. Features like contract management and approval processes can be beneficial, especially for businesses with complicated ways of setting prices and selling things.
CPQ software makes it easy to make accurate quotes and follow the rules in minutes. It also speeds up order handling and improves the accuracy of quotes, all of which help businesses make more sales and close more deals.
Getting paid
A billing tool is necessary to keep track of and handle customer payments. It helps companies handle payments quickly and correctly, keep an eye on their account amounts, make invoices, set up payment plans and discounts, keep track of subscriptions, and more.
Besides that, billing tools help the accounts receivable and finance teams ensure they will get paid. When businesses keep up with payments for each customer, they stay polite and keep the money coming in, which helps them run.
Other software, like CRM, can connect to billing software to keep records up-to-date. This way, businesses can get the most out of every contact with a customer.
Information for Business
Business intelligence is a broad term for several data-driven tools that can help you understand how your customers act. Among these are:
- Analytics for the web and apps
- Customer classification made possible by AI
- Analyzing the path
- Making predictions
Customer data systems and other business intelligence tools help companies divide their customers into groups, spot trends, and make smarter choices about interacting with these groups.
