What Is a Customer Life Cycle?

The customer life cycle refers to the period from when a customer starts to understand the enterprise or the enterprise wants to develop a customer, until the customer's business relationship with the enterprise is completely terminated and the related matters are completely processed. The customer life cycle is the evolution of the product life cycle of an enterprise, but for a commercial enterprise, the life cycle of a customer is much more important than the life cycle of a product. The customer life cycle describes the overall characteristics of a customer relationship moving from one state (one stage) to another state (another stage).

Customer life cycle

The so-called customer life cycle refers to the process of a customer's life-like birth, growth, maturity, aging, and death. Specific to different industries, there are different detailed definitions for this. For example, in the telecommunications industry, the so-called customer life cycle refers to the telecommunications customers from becoming a customer of a telecommunications company and starting to generate business consumption. The process of descending and finally leaving the net.

More precisely: the so-called "customer lifecycle management" refers to the management of the revenue contribution and cost of the operator after the customer considers which operator's services to purchase, the early warning and retention of the tendency to leave the network until the customer leaves Perform the entire process of winning back. This process includes 11 key value creation links, namely customer purchase intention, acquisition of new customers, stimulation and improvement of customers' monthly revenue contribution, management of customer daily service costs, cross-selling / overlay sales, call charge adjustment, Renewal of contract for contracted customers, management of customer transfer between brands, early warning and retention of off-grid, management of bad debts, and winback of lost customers. These links actually include all the key points of the operators' daily operations. The 11 links are linked together to form a marketing value chain, which is also the starting point for operators to formulate customer strategies. Customer life cycle management is based on these 11 key value creation links, using in-depth customer data for in-depth analysis, designing personalized strategies for individual customers, and then implementing these strategies through a large number of contact points between operators and customers.

The development of customer relationships in the life cycle is phased, and the phase division of customer relationships is the basis for studying the customer life cycle. At present, there have been many studies in this area. Some scholars have proposed a five-stage model for the development of buying and selling relationships, and some scholars have divided the customer life cycle into four stages. Personally, it is more appropriate to divide the customer life cycle into five stages The actual situation of telecommunications companies.

Phase A: Customer acquisition. Identify and acquire potential customers and provide appropriate value propositions to acquire customers through effective channels.

Phase B: Customer promotion. Cultivate customers into high-value customers through a product or service portfolio that stimulates demand.

Phase C: Customer maturity. Enable customers to use new telecommunications products and cultivate customer loyalty.

Phase D: Customer decline. Establish a high-risk customer warning mechanism to extend the customer's life cycle.

Phase E: Customer is off the grid. This stage is mainly to win back customers.

In related marketing, the theory involved is CRM. According to this theory, a scientific method can be used to calculate the customer life cycle value, and then analyze the business decision-making of the enterprise.