A Beginner's Guide to the Customer Life Cycle

The customer life cycle increases your ability to find new customers and retain them. Learn the stages in the customer life cycle and what to do for each.

Updated April 27, 2020

A key component to growing your business is to understand the customer’s journey as they get to know your business, build affinity for your products and services, and eventually become an advocate for your company.

The process isn’t simple, but by understanding this journey from the customer’s perspective, you learn how to navigate them through the various stages in that journey.

This is the essence of the customer life cycle. You execute marketing activities that drive consumers across the customer life cycle stages. Doing so enables you to grow your business.

Overview: What is the customer life cycle?

The customer life cycle defines the various stages a consumer passes through on the path to becoming a loyal customer. It involves the touchpoints a consumer will have with your company from the first time they hear about you through to an ongoing relationship with your business.

By understanding the stages that comprise the customer life cycle, you’re able to identify how best to reach new customers and what strategies work to retain and grow a customer’s relationship with your company.

Your efforts to nurture clients through these stages allow you to grow the customer’s lifetime value, and so, it’s useful to document these stages in a customer journey mapping, a visual representation of the consumer’s touchpoints with your company.

Note that the customer life cycle is not a passive process. It’s one that your business must actively engage in to drive consumers through the life cycle stages to the end point, when they become a loyal advocate of your business.

Stages of the customer life cycle

The customer life cycle comprises five stages. We’ll walk through each here, but keep in mind that customers may actually drift back and forth between stages, and even repeat some, such as when the client takes into consideration the value delivered by a new product offering even if they bought other products from you in the past.

1. Awareness

The first stage in the customer life cycle is the awareness phase. This is the point where a consumer first becomes aware of your business offerings.

A customer may find your business in many ways. For example, they may use a search engine like Google, and come across your business in the search results. Other common means of discovery are for the consumer to see an advertisement for your business, or get a referral through word of mouth or social media.

All customers start in the awareness stage. They must learn about your business before they can engage with you, so it is typically considered the most important phase in the customer life cycle.

It can also be the most expensive for your business from a cost per acquisition perspective, especially if you run ads to raise awareness among your target audience of consumers.

Therefore, you want to make sure any outreach to potential customers, called prospects, is done in a coordinated, planned fashion. Build out a small business marketing plan. Think about your product positioning. You may even need to create a marketing proposal if you have to sell your plan to others in the organization.

As part of this, ask yourself how you want to go about creating awareness with new clientele by considering which small business marketing tactics you want to leverage as part of your marketing plan. Do you choose to go with advertising?

Do you want to try inbound marketing through methods such as search engine optimization (SEO)? If you’ve constructed buyer personas, a profile of your target customers, it becomes easier to know which marketing tactics will likely work best to reach your intended audience.

Maximizing awareness:

Because this is one of the key stages of the customer life cycle, take time to consider your options based on your budget and what kinds of objectives you want to achieve, for example, if you want to grow new acquisitions by 5% for the month. Here are some tips to help.

  • Collect data: When you’re building an acquisition strategy for the first time, you don’t know which tactics will ultimately work best to raise awareness and bring customers into your sales funnel. Therefore, set up a means to capture data that you can analyze to help you zero in on the tactics that ultimately work best. For instance, if you want to set up a website, you’ll need to set up tracking software such as Google Analytics on your site to identify where consumer traffic is coming from. This data collection can also be as simple as asking customers how they heard about your business.
  • Use different tactics: Try a variety of methods to acquire customers. Test different tactics one at a time until you have a body of data that helps you identify the ones that work best in terms of meeting your objectives. For instance, perhaps advertising on Facebook works better at delivering customers than SEO. You won’t know unless you try various methods, so keep an open mind and be willing to spend even a modest amount of your budget on different tactics.

2. Consideration

In the consideration stage, the consumer has discovered your business and is now collecting information to weigh the pros and cons of your offerings. Sometimes, this assessment is against your competition.

Other times, the consumer is contemplating how well your solutions fit their needs whether that be their budget, the outcomes they’re looking for by using your offerings, or other factors like ease of use.

Consumers will use the information on your website as the primary means of determining whether or not to buy. They will also examine consumer review sites, social media, or even call your business to collect answers they cannot get otherwise.

It’s at this stage that a consumer might enter your sales funnel as a prospect or lead. To encourage that, your business website should be set up to engage with the customer in a genuine way so that they don’t feel sales pressure. The website should also make it easy for consumers to provide contact info in order to enter your sales funnel.

It’s also a good idea to use a marketing campaign to tip consumers in the consideration stage into the purchase stage. At this point in the customer life cycle, be sure you’re using an integrated marketing campaign so that the outreach doesn't become disjointed given that the consumer is already aware of your company.

Maximizing consideration:

The key at this stage is to tailor your communication with the client so that it’s personalized. If the customer has sent an email requesting a quote, your response should incorporate their name.

On your website, offer the ability to sign up to a free newsletter as a means of capturing customer contact info, then be sure the newsletter and any subsequent outreach is personalized to that prospect by again referencing them by name or tailoring the newsletter content to their interests.

Here are additional suggestions to help make this phase a success.

  • Leverage a CRM: CRM software, such as HubSpot, is key to the success of a business, particularly at this and the post-purchase phases. The reasons are many, including a CRM’s ability to inject personalized messaging at scale. A CRM also tracks customer interactions with your business and helps you segment consumers into the various stages of the customer life cycle, making it easier for you to track where each customer is at, and to engage them accordingly.
  • Provide access to information: Provide the information on your website necessary to help customers make decisions about your products or services. Post case studies or customer testimonials on the site. Also, make sure your website design is laid out to facilitate a smooth, engaging experience. One way of doing this is to leverage a content management system (CMS) to build your website, or if your site is already in place, to create landing pages that tie into the tactics you used in the awareness phase. In this way, the landing page can speak to the customer in a more specific manner. For instance, if customers arrive through search engines using the keyword "best dentist," provide a landing page with information on your credentials and any awards or high customer ratings you may have received on sites like Google Maps and Yelp as well as the factors that differentiate your dentistry from competitors.
  • Offer a carrot: To help move customers from the consideration phase to a purchase, give them some type of benefit for entering your sales funnel. For instance, offer a discount on their first purchase if they sign up for your newsletter or provide you with contact info.

3. Purchase

Here, we arrive at the point where a prospect becomes a customer. They’ve evaluated your offerings and decided to buy from you.

But just because a customer reaches this stage does not mean the purchase is guaranteed. If you’re an e-commerce business, it’s possible for a customer to abandon their selection in your website’s digital shopping cart.

Or if your website doesn’t clearly state how to make a purchase, or that purchase process involves too many steps, the customer’s likelihood to give up increases.

Therefore, take a look at your purchase workflow and track how many customers drop off before the purchase is complete. This insight allows you to find and fix those points where customers are getting stuck.

Maximizing purchases:

Once your hard work in the prior stages results in a sale, it’s not time to rest on your laurels. Every purchase should be followed with a thank-you email. This can be executed automatically if you employ a CRM. This deepens the relationship with the customer and motivates them to come back. Here are other suggestions to help.

  • Collect more data: You want to collect data about the kinds of customers who make a purchase so you can find more like them to target during the earlier stages. Therefore, you want to use sales tracking software to collect this information. A CRM can offer this as well as Google Analytics and perhaps also the advertising platform employed in the earlier stages of the client life cycle.
  • Remove purchase barriers: Adding functionality such as chat to your website can help remove barriers for customers to make a purchase. Through a chat box, customers can ask questions and receive an instant response. Look for chat software that can automatically respond to the most frequent questions, and pass harder questions to your team.
  • Perform follow up: If you’re an e-commerce business, adopt e-commerce software that automatically follows up with customers who abandoned items in their digital shopping carts to remind them to complete their purchase.

4. Retention

The retention phase is all about deepening the relationship with the customer after the purchase so that they are more likely to buy from you again. This happens by providing follow-ups, reminders, and promotions to customers, usually via email.

Once a customer makes a purchase, consider what related products they might be interested in and recommend those to the client. Your client management software will come in handy again, here, to keep all of your information about a customer in one place.

Also, keep the customer engaged in your business by providing regular updates, such as offering promotional discounts for additional purchases or sharing information about the latest happenings with your business. It’s about keeping the customer connected to your company.

One method of doing so is to apply various marketing channels to perform outreach. Because you’re targeting consumers who are already customers, your costs are lower and your conversion rate is typically better than those consumers at the awareness or consideration phases.

Maximizing retention:

You can employ several techniques to grow retention.

  • Hand-hold customers: If your offering requires some type of onboarding, you want to hand-hold your customers as quickly as possible so they are able to make use of their purchase. This can include sending customers links to online video tutorials or scheduling a time to offer training.
  • Provide support: At this point in the customer service life cycle, it’s about ongoing support and service. Proactively reach out to customers via email or phone call to check in with them and answer questions about their purchase. Also include FAQs or other helpful documentation on your website.
  • Personalize communication: It’s important to personalize your communication with customers at the retention stage. You know what the customer bought, so base your outreach on this, such as suggestions for related products. A CRM can track this kind of detailed information at the individual customer level to help you scale your business.
  • Encourage additional sales: Pay attention to the types of follow-up that evoke additional purchases. For example, casinos know that sending an offer for a free hotel room generates a response in some customer segments while a free lunch buffet is all it takes for others. If you see customers tend to make further purchases when you provide an email with a discount code, that’s the approach you want to take. Just be sure not to use the technique too frequently or it will stop working due to customer fatigue.

5. Advocacy

The last stage is when a customer becomes so fond of your organization that they become advocates for your brand. They tell friends and colleagues, and recommend your business to others through online reviews.

These brand loyalists are the means by which you can not only generate additional sales, but also expand your customer base.

Maximizing advocacy:

It takes time and careful effort to build brand loyalty. Once a customer reaches this level, you want to move them to a special client category where they receive unique perks or other incentives to keep them actively engaged in your business.

  • Implement a loyalty program: Create a loyalty program that rewards customers for shopping at your business. Starbucks employs this tactic, offering free drinks and food items once customers accumulate enough points through purchases.
  • Create a referral program: Sometimes a loyalty program does not make sense for your business type, such as a service business like a dentist. Therefore, instead of a program based on purchase frequency, create a referral program that rewards customers for bringing in new business.

Final advice about the customer life cycle

Once you’ve got your strategies set up for each stage of your company life cycle, you want to go back to validate they are working to get customers through each stage. Perform customer life cycle analysis to evaluate your current methodologies and fine tune them.

Keep optimizing the process so that you can build up a large base of customers who advocate on behalf of your company because they love the experience of buying from you.

Through continual improvement of your approach in each stage of the customer life cycle, you can build a base of loyal clients and grow your business.

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