5 Lessons on Customer Lifecycle Framework and why it’s important for your startup
Whether operating in B2C or B2B field, in digital business or a brick-and-mortar, certain aspects of sales and business growth are likely to be the same: A) you have potential customers, B) there is a certain flow of how they come to you, C) how they engage with your business, and D) how they convert into sales and stay with you. Regardless of how this flow looks to your business, we’re talking about the customer lifecycle framework.
In practice, setting up your customer lifecycle framework involves a data-driven approach to pinpoint the key touchpoints where and how your (potential) customers interact with your company and its product and service offering during their customer journey.
Read below the 5 most important lessons on building your customer lifecycle framework
1. Find your Key Performance Indicator aka KPI
Finding a single analytical framework that can be applied to all organizations across industry verticals is impossible as each company has their unique business and operating model. Thus, the first step in customer lifecycle analytics is to have a solid understanding of how your business works.
This involves defining the KPI for your business. In the customer lifecycle framework, the KPI needs to reflect the most important value your company wants to achieve from customers. Improving this metric will allow your business to achieve growth overall.
2. Map your stages
In essence, this means identifying the key stages that your customers and prospects go through during their end-to-end journey to experience the core value of your company’s products and services.
There are several different frameworks available, and the phases depend very much on the type of business you are operating. For example, Phiture’s RARRA model is designed to find the focus areas to build growth for mobile apps and outlines five critical stages: retention, activation, referral, revenue, and acquisition. Pirate funnel, envisioned by Dave McClure, also identifies five main phases but arranges them to start with acquisition followed by activation, revenue, retention, and referral. Furthermore, the framework is often supplemented with an initial awareness phase.
Although the existing models offer a convenient starting point for your mapping work, it is important to take time and reflect these against your business.
Tip! This Customer Journey Mapping play by Atlassian is a great tool to gain a better understanding of how your customers experience your product or service at any stage of the customer lifecycle.
3. Define what success looks like at each stage
After you have identified the KPI for your business and mapped the key stages, you need to figure out the success metrics for each of the key stages in the customer lifecycle. What these metrics are exactly, depends on your business, but in essence, we’re talking about sanity metrics that provide concrete information about your company’s business performance at any given point during your customers’ lifecycle.
Typically, success metrics include:
- The number of new customers acquired
- Average revenue per account
- Customer retention cost
- Churn rate
- Customer lifetime value
- Net promoter score
Tip! While defining the success metrics for customer behavior, take a moment to review your marketing strategy too; the same stages provide an excellent scheme to apply qualitative objectives that guide for example your content production and distribution.
4. Plan how you will use the data gathered
Now that you have your KPI defined and the success metrics in place, you will need to establish the appropriate data strategy to integrate the customer data into your transactional system and put it into use.
Having a well-built data strategy in place will enable the growth team to leverage the data to systematically monitor and track the performance of the customer lifecycle success metrics. Also evaluating the effectiveness of the existing initiatives gets easier and your team will be able to better advise future marketing and retention strategies.
5. Work together for growth
Instead of monitoring KPIs and success metrics separately in each team, consider forming a dedicated growth team consisting of experts from all relevant teams. Quite obviously, growth team has one job: to grow the business. To succeed in that, the team also need to have the mandate to steer to boat to whichever direction is deemed necessary based on the customer lifecycle analytics.
Understanding the behavior of your customers at each stage in their journey will enable your business growth team to make informed acquisition and retention plans to increase revenue and reduce customer churn. A well-defined customer lifecycle also provides directions for marketing and product development to ensure the desired customer experience.
Once your startup has these pieces in place you seem very appealing to any investor!
Do you have a promising idea and an excellent team? We are interested in hearing about you!
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