How does Customer lifecycle Management help retails in business growth 

Customer Lifecycle Management is the heart of any retail strategy today that can help you engage customers in a meaningful way and drive great ROI on your marketing investment. The most critical part of the strategy is to define the stages of your customer’s lifecycle. There are many ways to define it but keeping in mind that retail today is fast-paced, and post-COVID there has been a tactical change in customer behavior, the stages should be well defined to make it possible for marketers to create actionable cohorts for quality engagement and relationship management.  

What is Customer Lifecycle Management?

The customer lifecycle is a term used to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service.

There are four distinct steps to define the customer lifecycle. Acquisition, Retention, Delight, Growth. Acquire a new customer and make them pay for the product and services offered, retain them for long enough to make the acquisition profitable by increasing the customer lifetime value (CLV), and delight your customers to make the loyalty and brand advocates by building a long-term relationship and engaging through their purchasing journey and grow your loyal customer base by getting referrals from your loyal customers and reaching out to new customers on various platforms. 

Why is it important to manage the Customer’s Lifecycle?

Customer lifecycle has acquired a very special place in the overall customer engagement strategy of any retail strategy. The pressure of cost optimization, increased competition, reduced margin, and change in customer behavior from just offline to an omnichannel environment are pushing marketers to find innovative ways to keep the customers engaged. Some facts that are at the core of the strategy are:

• It is 5-10 times more costlier to acquire a new customer than to sell to an existing one.
• A loyal customer will spend 67% more as compared to others and they will also spread the word for you and bring additional customers.
• A well-implemented customer lifecycle strategy helps you reduce customer churn by 30% thus indirectly reducing your acquisition cost.

Or put it another way,

“You can’t build a sustainable, long-term profitable Retail business without having a strategy to reduce churn, increase ticket size and increase repeat customers”

reference – https://exponea.com/blog/customer-lifecycle-management-clm-why-it-matters-more-now-than-ever-before/

Designing The Customer Lifecycle

While there is no standard way to define a customer lifecycle for a Retail business, there are guidelines that give us best practices. 

In a CDP the customer lifecycle analytics uses algorithms that consider multiple factors like customer recency, frequency, monetary value, product affinity & shopping correlation, and a few more factors that directly or indirectly affect customer purchase behavior. Customers are split into various lifecycle stages using the above method that helps you get a better sense of how many customers are active, at risk of getting dropped off, and have already dropped off.

Defining Lifecycle Stages

let’s quickly understand what each stage means.

1. At-Risk  — Customers who are at high risk of becoming lapsed customers in the future if not taken care of. The CDP uses various factors to define “At Risk” customers. You can create multiple cohorts of “At-Risk” customers and personalize your engagement to ensure you can retain them into the loyalty stage. 
2. Drop Off — Customers who have already lapsed and have not responded for a long time. A Drop Off customer has not purchased for long enough that we can consider them to be lost.
3. Repeat – Repeat customers are the ones who have placed more than one order over some time. They are the most loyal customers and the most profitable segment of your customer base. 
4. One-time purchaser – customers who have visited and purchased only once from the brand are considered one-time purchasers. It becomes imperative that brands create an engagement strategy to quickly convert one-time purchasers into repeat customers before they are lost. 

Customer Engagement Metrics that matter

Customer engagement metrics measure how your audience is interacting with your marketing activities.

At Mitigo we believe in a strategic view of customers. We widely use these customer engagement metrics.

1. Repeat Ratio – Trend of converting a single-time customer to a repeat customer.
2. Activation – Trend of reactivating drop-off customers to loyal customers.
3. Net Promoter Score – Used to measure customer loyalty, how likely your customers are to recommend your brand to others.
4. Frequency Ratio – Improving the number of times an average customer buys a product in a given period.
5. Customer Lifetime Value – Improving the average ticket size of the customer.

Mitigo Consulting offers major advantages for traditional stores. By boosting footfall and enhancing the in-store customer experience with new digital technologies intertwined with the customer lifecycle stages, you can achieve wonders with your existing customer base and also expand it through various strategies and tactics. 

To know more about Customer lifecycle management please reach out to me at sachin@mitigoconsulting.com.