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 methods of sales and marketing are too inefficient, too expensive, and can be a risk to the business itself. Putting off 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 companies get the right message, to the right person, using the right media, at exactly the right time.
Consider the following:
“Purchase decisions include many factors that most consumers are not even aware of. 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 consumers experience, compare it to their demographics, and use the resulting information to market their products.” (Armstrong et al., 2005)
Marketing Factors: Consumer Buying Behavior
Feb 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 meant 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 offer, the lifecycle marketer targets an audience that is most likely to be successful.
The benefits of a lifecycle marketing strategy extend beyond higher conversion rates. Gathering useful and measurable data will allow a business to develop trends, segments, and behavior 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. Rather than focusing on individual campaigns targeting the masses, lifecycle marketing considers the individual lead/customer, noting 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 stages of the lifecycle: reach, acquire, convert, retain, and advocate.
1. The scope phase is the starting point. The reach refers to the potential target audience. You can engage with both current customers and prospective 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 gloss, the ad, the website, the wow, the bang. Reach 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 may work well. Unlike many campaigns, all methods used during this phase will be coded and measured. The ultimate goal of reach is to acquire leads, but in case 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 potential customer 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 manage 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. Similar to the Scope phase, the entire scope of Acquire 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 buyers buy? Age, gender, purchasing power, need for additional services, and other factors determine your next step as a seller. The closer a business 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 search 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.
Existing 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 improving, this trust cannot be overstated.
Retention is where the lifecycle marketing strategy really improves the business. Knowing that the client will stray if we neglect it, it is imperative that we keep in touch. Working closely with management applications to create trend models 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 necessary, the tools to do what they do best: sell a business to their 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 planned 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 towards offers, incentives and messages given. 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 for all marketing? The difference is that the 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 must:
- 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 business 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 whole picture. As the strategy itself implies, marketing takes place throughout the customer life cycle. 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 those of non-regular customers.
• It costs six times more to sell something to a prospect than to sell the same thing to a customer.
Like all good relationships, Life-Cycle Marketing relationships take time to develop and their value must be assessed over time using a variety of measures. Doing this isn’t always easy, but for companies that adopt this strategy, the rewards are worth the effort.