Until the past several years, most companies could concern themselves primarily with sales if that’s what they chose to do. Many would focus on developing relationships with their customers, but others — especially the early eCommerce marketers — were more than happy to go after the initial sale and then repeat the marketing process with each new prospect that came along.
But oh how the times have changed. The costs of digital advertising have gone up, and quite often an initial sale won’t even cover the cost of acquisition. Also, consumers today have more choices than ever, so they’re less likely to risk making a purchase from a vendor they’re not comfortable with.
Lifecycle marketing is based on the recognition that customers go through stages in their relationship with your company or brand. Relationships don’t happen immediately. Just as people need to meet and get to know each other before they develop a serious, committed relationship, so do prospects need to get to know your brand before they become loyal customers.
Four Stages of Lifecycle Marketing
The customer lifecycle goes through four stages. It begins the first time anyone encounters your brand. The cycle progresses as she decides she’s interested and starts examining what you have to offer, then when she decides to make a purchase, and once again as she congratulates herself on making a great decision.
While important, that initial purchase is never the end of the relationship. Ideally it’s just the beginning of the relationship, and a sense of loyalty to your brand will start the cycle all over again.
Brand awareness is always the first stage of the lifecycle. If people don’t know your company exists, it’s hard for them to buy from you. At first they may not know much about your company or your product. They may see your ad on Facebook or a friend may pass a link to them. They may jump to your website immediately, or it may take a few weeks for awareness to turn to recognition.
Brand recognition can take many forms. They may recognize your product, your logo, a series of videos you posted or some other aspect of your brand.
Ideally, once a prospect recognizes your brand and develops some affinity for it, they will begin to ask questions about it:
- What do you sell?
- What are the features?
- What is the price?
- How does this product compare to others?
If the prospect encounters your product at the right time, this process can be finished in seconds — like when you go to the store and pick up a chocolate bar beside the cash register. In other cases, the engagement could last days, weeks or months. You’ll see them go to your website once or twice a week, look at an item, put it in the cart and then leave.
Conversion is the big moment every company works toward, when someone crosses the field, takes off that “prospect” jersey and puts on a fresh “customer” jersey — and the fans go wild!
In most cases this event is marked by a purchase, but it can also be signified by other actions, like signing up for a free offer or contributing to a Patreon page. Regardless of what it is, it’s a clear demarcation bringing them into a close relationship with the company (and ideally bringing in some revenue to justify those marketing costs).
The fourth stage is when the customer is so happy with their decision that they want everyone to know about it. They may share the news with their friends or post a review on your product page.
Loyalty leads to two things: they can help advocate for your brand, bringing in new customers, or they may start the cycle all over again with your next product or an upgrade on what they’ve purchased already.
The Value of Customer Loyalty
Perhaps the best indicator of a company that focuses on the customer lifecycle is how much attention it gives to customer loyalty. Obviously, conversions are important — generally the most important KPI for measuring an advertising campaign. But if you’re only focusing on conversions, then you’re only measuring initial sales, which means you’re leaving money on the table for your competitors to pick up.
Loyalty Increases Sales and Lowers Costs
If you’re engaged in digital marketing, it takes just a few seconds to determine how much each sale is costing you. Compare that amount to the cost of sending off a quick email or SMS message to your current customers with a new product offer. At a cost of practically nothing, if you get one sale out of this kind of contact, you’re probably turning a profit.
What if you were to invest a bit more energy into cultivating those customers? After a few months, you generate a list of 1,000 loyal customers, and when you launch your latest product, 20% of those customers make a purchase.
Loyalty Means Free Advertising
A second way to measure the value of loyalty is to compare the results of an ad campaign to the results of forwarded emails and social media shares. Regardless of what you sell, buying ads to get 100 sales is expensive. On the other hand, there is no cost for:
- social media shares
- forwarded messages from happy customers
- positive reviews on your website (with photos!)
Today, everyone is an influencer. Your sister may only have 10 followers on Instagram, but if she tells you to check out a new product, chances are you’re going to give that link a click.
Customer Loyalty Programs
Patricia Rioux at Forbes recently put together some impressive numbers on customer loyalty:
- The cost of acquiring a new customer has increased by 50% in the last five years.
- The chance of selling to a current customer is 14 times higher than the chances of selling to a new customer.
- Existing customers are 50% more likely to buy a new product than a new customer – and they will spend 31 percent more.
- Increasing your customer retention rate by a mere 5% results in a 25% to 95% increase in profit.
When you add these numbers together, it becomes quite obvious that investing in a customer loyalty program, giving customers extra incentives to keep coming back, is something that will pay you back many times over.
Channels for Lifecycle Marketing
Because of its unique ability to target specific segments of your audience at specific times, digital marketing makes fostering relationships extremely efficient throughout the customer lifecycle. New companies with the right messages directed at the right people can easily take over a market in a matter of months.
The key is to know how to position your brand, and which channels to focus on with those messages:
- Search engine marketing (SEM). This can work well in building awareness, or for virtually tapping prospects on the shoulder as they’ve begun to engage with your brand. It can, however, be expensive if you’re not focused on specific target markets.
- Search engine optimization (SEO) and Content Marketing. Works particularly well for brand awareness when you introduce your website to new prospects with engaging articles.
- Facebook. Facebook can be very effective at every stage of the customer lifecycle, from early brand-awareness video ads to product and retargeting ads through the engagement phase to social shares through the conversion and loyalty phases.
- Other social ads. From LinkedIn to TikTok, social platforms depend on your market, but overall they are fantastic for building awareness and then building again on that loyalty.
- Email and SMS. Extremely powerful for retargeting during the conversion phase, messaging with updates and recent news can build on a happy relationship. When you love your customers and they love you back, a text message is a great way to keep the relationship thriving.
As you can see, there are a lot of options to consider, and there is a lot of overlap between channels and stages. When it comes to lifecycle marketing, understanding which channels work best in different circumstances requires more than just intuition — it takes experience.
Fortunately, you can outsource that experience, rather than paying for it yourself, by talking to a professional marketing consultant at Hawke Media. Your first consultation is always free.
Ad Age: Social Media Ad Costs Are Rising
Hubspot: Lifecycle Marketing
Content Marketing Institute: Lifecycle Marketing
Saasquatch: What Is Customer Lifecycle Marketing?
Hawke Media: Free Consultation