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Customer LifeCycle
Increased revenue
& reduced cost through the customer LifeCycle
CRM is a
customer value-based approach which, at its core, has the
following objectives:
- Retain the
best, most active customers
- Increase the
value of most customers
A customer
value-based approach has to be profitable. There are three key
components to maximising profits in customer marketing:
- Structuring
offers to get the most profitable mix of response rate and cost
of the offer.
- Creating an
"early warning system" to flag customers who are likely to leave
so they can be targeted for special promotions. This is
accomplished by tracking customer behaviour.
- Identifying
customer acquisition practices that optimise the value of new
customers coming to the business in the first place.
Most of the
opportunity to create high ROI customer marketing programmes and
make the most of an organisation’s customer base comes from one
basic concept - tracking, understanding, and profiting from the
customer LifeCycle.
The Customer
LifeCycle is simply the behaviour of a customer with an
organisation over time. Customers begin a relationship with the
business, and over time, either decide to continue this
relationship, or end it. At any point in this LifeCycle, the
customer is either becoming more or less likely to continue buying
from the business, and demonstrates this likelihood through their
interactions with the company.
Data collected
from these interactions (purchases for commerce, page views or
log-ins for publishing, contacts for service) can be used to
predict where the customer is in their LifeCycle - is the customer
becoming more or less likely to do business with the organisation?
Once it becomes possible to predict where customers are in the
LifeCycle, an organisation’s marketing ROI can be maximised by:
- targeting
customers most likely to buy
- trying to
retain customers who demonstrate a declining interest
- not wasting
money on customers unlikely to continue doing business with the
organisation.
Understanding
and being able to predict the LifeCycle of a customer makes it
possible to answer a lot of other important questions, including:
- How can we
compare the long-term effects on customer value of our different
advertising approaches and product selections / pricing?
- When will a
customer stop buying or visiting and how can we most cost
effectively delay this event?
- How can we
measure the impact on customer value of operationally oriented
changes?
- What is the
Lifetime Value of a customer compared with other
customers and how do we increase it cost effectively?
At LP, we build
and implement LifeCycle-driven marketing management approaches
that significantly increase revenue and reduce customer management
cost.
Understanding and implementing LifeCycle
driven marketing (in other words CRM) enables organisations to
mold their marketing efforts to their needs and available
resources and leave the marketplace noise (and costs) behind.
LP works with companies to build CRM
strategies that get the biggest marketing benefit out of their
customer data for the least cost, ensuring that the proposed
approaches reflect the ambitions and strategy of the business as
well as its level of sophistication and receptivity.
We help companies create and track customer
LifeCycles and
LifeTime Value
- two metrics critical to the success of CRM - in order to rapidly
and dramatically improve the ROI of customer marketing efforts.
This approach paves the way for any CRM efforts a business may be
considering, and enables to “practice” analytical CRM before full
rollout. Call it “simple CRM”... |
