GUIDE TOPIC : Customer lifecycle marketing
A Guide to Customer Lifecycle Marketing in Ecommerce
March 24, 2016
Loyal customers are the bedrock of successful, sustainable ecommerce businesses.
But great customers that are valuable to your business don’t just appear overnight - there are a number of stages to go through to nurture them.
Customer lifecycle marketing is an approach that focuses on maximising the value for each customer throughout their customer journey.
This guide to customer lifecycle marketing will cover:
- Stages of the customer lifecycle
- Tactics and examples
- Customer lifecycle software and other tools
Customer lifecycle marketing: a definition
Customer lifecycle marketing (CLM) is an approach to customer communication that recognises that different stages on the journey to becoming a loyal, active customer require different marketing messages and strategies.
Moreover, it involves using what you know about each individual customer - from how they interact with your store to their transactional and demographic data - to develop campaigns that nurture them through their journey.
Put simply, customer lifecycle marketing comes down to three key principles:
Using data from a number of sources to get a detailed view of the customer and their preferences, and identify where they are in their customer journey.
Using these insights to decide which marketing messages will guide each customer through to the next stage of their journey.
Delivering these message at the right time to encourage them to make that transition.
Customer lifecycle marketing: the benefits
We've covered what customer lifecycle marketing is, but why should you invest in it? Here are just a few of the benefits:
- Focusing on retaining existing customers is less costly than acquiring new ones.
It’s often said that it is more costly to acquire a new customer than to retain an old one - according to Bain and Co. a 5 per cent increase in customer retention can increase a company’s profitability by 75 per cent. With its concentration on extending a customer’s lifetime value, customer lifecycle marketing focuses on long term profitability.
- The conversion rates of your marketing campaigns are higher.
Relevant marketing means higher response rates.
- Your customers are happy.
Nobody enjoys being hounded with marketing that they’re not interested in. When you focus on delivering relevant messages at the right time, your customers are more likely to respond to them, and connect with your brand.
- You gain important insight into your customer base.
By segmenting your customers into lifecycle stages, you have great insight into how your business is performing.
Happy customers stick around for longer: they’re more loyal and, ultimately, they spend more money with you.
The stages of the customer lifecycle
We’ve talked about the customer lifecycle, but what exactly are the stages of the customer lifecycle and how do we define them? The following lifecycle stages should form the basis of any solid CLM strategy.
Those who have given you their email address, but has not yet made a purchase.
GOAL: Nurture them into making a first purchase
Those who have made one or more purchases from your store.
- One-time purchasers - those who have made one purchase and aren’t considered ‘at risk’ or ‘lapsed’ (more on this below).
- Repeat purchasers - those who have made more than one purchase and are buying at their expected purchase frequency.
GOAL: Turn one-time purchasers into repeat purchasers and repeat purchasers in loyal, long term customers.
‘At risk’ customers
A customer who has passed the time they might be expected to have made their next purchase, based on the average repeat rate for all other repeat customers, or those in their segment. (This will vary from business to business).
GOAL: Reactivate ‘at risk’ customers before they lapse.
A customer who has gone far beyond the time they were expected to make a subsequent purchase. Defining this lapsed time frame is perhaps the trickiest of all.
GOAL: Reactivate lapsed customers into active customers.
Implementing customer lifecycle marketing
Before we talk about some of the tactics that you can employ to nurture people on in their journey to becoming a loyal customer, it’s first important to get the broader context and understand how customer lifecycle marketing needs to align with other areas of your online retail business.
Marketing and sales strategy
Your CLM strategy should integrate with existing customer strategies, such as:
- Pricing and discount strategies
- ‘Hero customer’ or VIP retention schemes
- Attribution modeling
Merchandising strategy and product affinity
It’s also important to align your CLM strategy with broader business areas and objectives:
- Stock management and product availability
- Product affinity and personalisation - using customer data to personalise your marketing communications
- Category cross-selling priorities
Customer lifecycle marketing: tactics
We’ve talked a lot about ways of segmenting your customer base in order to market to them more effectively. But how do you build these segments into your actual marketing efforts? Here are some examples of tactics you might use.
A lifecycle email marketing campaign designed to introduce new subscribers to the brand.
GOAL: building brand loyalty from the off and encouraging a quick first purchase
Cart and browse abandonment retargeting
Emails and social/display ads triggered by a prospect or existing customer browsing products (or adding an item to their cart) and then leaving.
GOAL: drawing those who have shown purchase intent back to the store to make a purchase
The personalisation of an entire newsletter or sections of a newsletter based on interaction or demographic data.
GOAL: encouraging people to click through from broadcast emails by making them more relevant to the interests of the recipient
A series of triggered emails aimed at maintaining brand engagement after a purchase is made, and encouraging first time customers to make their second purchase.
GOAL: encouraging customers to continue interacting with the brand, and make further purchases
VIP recognition campaigns
A lifecycle email marketing campaign that focuses on the acknowledgement and retention of ‘hero’ customers, usually through an exclusive offer or membership to a ‘club’.
GOAL: maintaining the loyalty of ‘hero’ customers
Reactivation / win-back campaigns
A campaign that focuses on reactivating lapsed or ‘at risk’ customers
GREAT FOR: nurturing these types of customers back into active customers
Customer lifecycle software
Customer lifecycle analytics
Successful customer lifecycle marketing hinges on detailed insight into your customer base to determine the status of each customer.
To achieve this you’ll need a tool that brings together data from a number of touchpoints, for example:
- Interaction data - how a customer interacts with your online store (i.e. their journey through your store, the products they view, the products they add to cart).
- Transactional data - information (usually from your ecommerce platform) about the transactions each customer has made.
- Demographic data - additional details about each customer (i.e. their age, location, gender etc.)
On top of this, you’ll need to be able to define each lifecycle stage (which will vary from online retailer to online retailer) and segment your customer base based on these definitions, as well as track and measure their flow from one stage to another.
While prospects and active customers are fairly easy to define, the boundaries for when you consider a customer to be ‘at risk’ or ‘lapsed’ should be calculated based on your business model and repurchase rates.
Automated lifecycle marketing
Once you’ve segmented your customer base into lifecycle stages, you’ll need a tool that can automate the process of getting these marketing messages in front of the right people, whether in the form of email marketing, social or display advertising, SMS, physical mail-outs etc.
Customer lifecycle marketing with Ometria
Ometria is a marketing platform for online retailers that empowers them to use data to send customers the right marketing messages at the right time to maximise revenue.
Interested in a quick tour of the product?