Digital Marketing

Philosophy and strategy of life cycle marketing

Why use lifecycle marketing?

For many companies, the current recession has made one fact abundantly clear: doing business the same way simply won’t work. The old sales and marketing methods are too inefficient, too costly, and can be a risk to the business itself. Postponing a change in marketing strategy for another year is no longer an option. The web, direct mail, email, social networks, traditional and digital advertising must be in the marketing strategy of a company. Bottom line: Lifecycle marketing ensures that businesses get the right message, to the right person, using the right media, at exactly the right time.

Consider the following:

“Purchasing decisions include many factors that most consumers don’t even know about. There are five steps involved in almost every purchase made: need recognition, information search, evaluation of alternatives, purchase decision, and finally subsequent behavior.” to purchase. Even the simplest purchases may include some or all of these steps.” (Brown, 2005)

“Purchases are also influenced by personal, psychological, and social issues. A good market researcher will study the thought process that consumers go through, compare it to their demographics, and use the resulting information to market their products.” (Armstrong and others, 2005)

Marketing Factors: Consumer Buying Behavior
February 01, 2006 by SL O’Brien

Lifecycle marketers use analytics to predict when customers are most likely to buy. They then come up with incentives intended to encourage the consumer to buy from them. Timing and message are key. Instead of wasting marketing dollars trying to reach a large audience, many of whom have no interest in the offering, the lifecycle marketer targets an audience where they are most likely to succeed.

The benefits of a lifecycle marketing strategy extend beyond higher conversion rates. Collecting useful and measurable data will allow a business to develop trends, segments, and behavioral patterns that can be used for more precise targeting. Thus, marketing efforts will become more specific to the needs of consumers. Your level of trust and appreciation will increase, improving loyalty and soon promotion.

What is life cycle marketing?

Lifecycle marketing transcends traditional thinking about customers and prospects. Instead of focusing on individual mass-targeted campaigns, lifecycle marketing considers the individual prospect/customer, considering where they are in relation to the sale and communicating with them accordingly. To be effective, a lifecycle marketing strategy must capture customer feedback as it moves through the lifecycle stages: reach, acquire, convert, retain, and advocate.

1. The scope phase is the starting point. Scope refers to the potential target audience. You can relate to both current customers and potential customers. Reach is what advertisers and marketers do to get your attention. It’s getting in front of potential customers, turning them into prospects. The scope can be exciting. It’s the glitter, the ad, the website, the wow, the bang. Outreach works best when customers understand a company’s brand, service, or product.

The reach will target the audience at a point where they are most likely to be affected by the message. Advertising, direct mail, variable data direct mail, social media, email, or other methods can work well. Unlike many campaigns, all methods used during this phase will be codified and measured. The ultimate goal of outreach is to acquire leads, but if that doesn’t happen, Reach will collect valuable information to use in future campaigns.

2. The goal of the acquisition phase is customer engagement. Did the prospect interact with the company? Did they walk into the store, call, email, visit a website? Lead acquisition occurs the moment a lead shows interest. We know how they responded (for example, signing up for a newsletter, completing a credit application, taking a survey, requesting a coupon, downloading a demo, or any other action). We have a bona fide prospect, but the completion of the sale may still be in doubt.

Acquire will define the methods and processes necessary to handle this phase of the customer lifecycle. The answers will be personalized (age, gender, point of interest and others), using the information obtained from the prospect. As in the Scope phase, the entire Acquire scope will be coded and tracked so that trend data can be collected.

3. The conversion phase is the point at which the sale is made and the prospect becomes a customer. You can take several actions on both sides of the process before the lead actually converts.

Convert is the phase where customer segmentation begins. What did you guys buy? Where they live? What additional products or services did similar shoppers buy? Age, gender, purchasing power, need for additional services, and other factors determine your next step as a seller. The closer a company gets to its customers at this point, the greater the opportunity to sell them again.

After all, it’s more efficient to keep existing customers than to constantly be looking for new ones.

4. The retention phase is the process of nurturing the relationship and encouraging repeat sales. It is much easier and less expensive to sell additional products and services to an existing customer than it is to find new potential customers.

Current customers have already made the decision to buy. They already have a relationship with a company. They have decided to trust a sales team, product or process. The importance of maintaining, if not enhancing, this trust cannot be overstated.

Retaining is where the life cycle marketing strategy really improves the business. Knowing that the client will go astray if neglected, it is imperative that we maintain contact. Working closely with management applications to model trends and tracking mechanisms will help a business retain customers.

5. The Promotion Phase is the completion of the cycle, returning the business to a better start. These potential customers have the word of a friend, a loyal customer, fresh in their minds.

The clients with the highest lifetime value are those who advocate on behalf of a company. They tell their family and friends. They suggest products on social websites. They run fan clubs. They get a company logo tattooed on their bodies. Ask Harley-Davidson how they’re doing.

Promotion is simply the best possible marketing tool. Advocates will get the attention they need and, if needed, the tools to do what they do best: sell a business to your network.

How does a business use lifecycle marketing?

Once a company has decided to pursue a lifecycle marketing strategy, it must have a clear understanding of each phase of the process. Each phase of the strategy builds on the previous phase, creating a continuous cycle with anticipated expectations and measurable results.

• To begin successfully implementing a lifecycle marketing strategy, marketers must have a clear understanding of their current business state and long-term goals.

• They need to capture the right data to identify their profitable and unprofitable customers, understanding their behavior in response to offers, incentives and given messages. With that information, they must structure a plan to contact customers at the sweet spot when they are ready to act.

• Marketers must have an active tool that allows them to compare results with objectives and act accordingly.

• Test, modify, measure, act. Then test, modify, measure, act. It’s a never-ending process, but isn’t it the same for all marketing? The difference is that decisions made in a Life-Cycle Marketing program are based on facts, not hunches or wishful thinking.

To get the most benefit from a lifecycle marketing strategy, marketers should:

  • Use the lifecycle stage as a means to limit data collection.
  • Create rules and personas for each customer segment.
  • Stop thinking about campaigns, start thinking about building relationships.

What about the impact (ROI) of a lifecycle marketing strategy?

Like any other investment a company will undertake, lifecycle marketing must be implemented with clear goals and expectations for the return on that investment. Unlike traditional thinking where you submit an offer and measure the direct result of that offer, lifecycle strategy looks at the big picture. As the strategy itself implies, marketing takes place throughout the customer lifecycle. In the same way, the ROI must be evaluated in that same period.

Important considerations:
Findings from a study conducted by about.com
• Regular customers spend 33% more than new customers.
• Referrals among regular customers are 107% higher than non-regular customers.
• It costs six times more to sell something to a prospect than it does to sell the same thing to a customer.

Like all good relationships, Life-Cycle Marketing relationships take time to develop and their value should be evaluated over time using a variety of measures. Doing this isn’t always easy, but for companies that embrace this strategy, the rewards are worth the effort.

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