Understanding customer lifecycle stages and improving sales

For many small businesses, marketing is something of an afterthought. It can get pretty expensive pretty quickly, and it might seem unnecessary to some, but marketing is a vital part of growing your business.


There’s often a sense that small companies don’t need flashy marketing techniques, particularly when they are selling non-discretionary products and services. While this can be true, once you take a look at your customer lifecycle, you may get a better sense of why marketing is important, and how you want to go about doing it.

Why customer lifecycle management is essential

Today’s climate is so fiercely competitive that such a plan may well be necessary for survival. In order to succeed, you need to fully understand your market, and processes involved in converting potential punters into loyal customers.

Looking at your customer lifecycle is a vital first step towards developing this understanding and, ultimately, improving your sales.

What is a customer lifecycle?

Customer lifecycle is a term used in marketing, and specifically in customer relationship management (CRM), to describe the progression of steps a customer goes through when considering, purchasing, using and maintaining loyalty to a product or service.

Customer lifecycle stages

The customer lifecycle can be divided into four basic stages:

  1. reach
  2. acquisition
  3. conversion
  4. retention

Customer reach

Reach describes your business’s ability to get the attention of your potential customers.

There is a wide variety of ways you could do this, but the ones you choose will depend on you, your business and your product. You may choose to purchase advertising space in newspapers or magazines, send out direct mail, rent billboards, buy advertisements through Google, or any number of other methods.

While reach is important, it can be very difficult to know how much reach you have. For example, if you bought an ad in your local newspaper, you can easily find out how many copies usually sell, but you can’t know who actually looked at your advert. People may have skipped over it or, on the other hand, it could have been read by loads of different people if it was placed in a waiting room or library.

Similar principles apply to virtually every method by which you hope to increase your reach. While that can be frustrating and off-putting, you should keep in mind that if people don’t know about your business, then there’s no way for them to buy from you.

Customer acquisition

Acquisition involves persuading an individual to do something once you have caught their attention during the reach phase.

What exactly you want them to do will depend on your business. For example, if you run an online business, you would probably judge your acquisition rate by the number of visitors to your website. Alternatively, if you run a shop, your total acquisitions might be equal to your footfall - the number of people entering your premises.

Your total number of acquisitions is a useful metric for gaining insight into reach. Though it’s very difficult to judge how many people see your adverts or read your direct mail material, if you take out an ad and then see more people visiting your website or premises, you can tell that it’s succeeded.

Unfortunately, acquisition is not enough on its own. In order to have a positive effect on your business (and to offset the costs of any marketing you’ve done to increase your reach), acquisitions must become sales. This is the conversion period of the cycle.

Customer conversion

Conversion is arguably the most important task for any business – if you don’t make any sales then your business will quickly fold. To some extent this is a numbers game; the higher your acquisition rate, the more conversions you would expect to achieve.

In order to convert as many customers as possible, there are a few basic steps to take. Firstly, you should make the buying process as easy as possible. If your customer gets lost in your website when trying to get to their basket and pay, then they’re going to give up.

Even if your business is not web-based, there are a few techniques you can nab from online marketing. For example, you could try ‘usability testing’, which is where you hire someone to test out your process and evaluate it from the point of view of a potential customer.

Customer service is also really important, especially given how much competition is out there. A great customer service experience can make the difference between converting a customer or sending them running to your competitors.

Customer retention

Making the sale might be the most important part of the customer lifecycle, but the best way to ensure your business prospers is retention.

Retention is where you turn your successful conversions into repeat customers, rather than defecting to another provider. For many businesses the cost of acquisition and conversion is high, so it’s important you retain as many customers as you can. That way, you get the most money out of each conversion.

In some markets there’s very little difference between providers – customers might be able to get very similar products of the same quality from other businesses. In cases like this, the biggest part of your retention strategy will be pricing.

However, you should also think about developing loyalty to your business through other means. This might include some form of discount scheme or access to exclusive special offers. Good examples of this type of scheme are loyalty cards offered by the larger supermarkets – just think about how many people have a nectar card on them whenever they leave the house.

Marketing can often seem like something of a dark art, particularly when we are constantly subjected to selling practices that are at best manipulative and at worst misleading. However, a basic appraisal of your customer base and your business model, along with an honest attempt to offer a better and more efficient service, can help to grow your business and keep your customers happy.

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