How we do business is changing faster than most people realize. The marketing strategy that got your business to its current level won't take it to the next one. There's more competition, less confidence, and a completely new technological world. Your customers have already changed and will continue to do so at they adapt to the environment.
Every customer follows a path from first contact until the end of the life cycle. When the path is pre-defined and you know where each individual fits, it allows you to match your marketing to specific needs and expectations. This is advantageous to your business because it increases revenue, reduces marketing costs, and improves customer satisfaction.
While each company has unique conditions that affect the customer life cycles and lifespans, a universal path applies to all. There are nine basic customer types in your database. Each one has value and will help you grow your revenue and profits if you don't over-invest in marketing. They are:
Newbies - Have ordered less than three times
Discount - Only orders when there is a sale
Hit & Run - Orders once or twice, then doesn't order again
Active - Has ordered three times with the last order date within three months
Rising Stars - Have ordered three or more times within the last twelve months
Platinum - Consistently orders with a predictable pattern
Falling Stars - Nearing the end of their lifespan
RIP - Has completed their lifespan
Social - Has never ordered, but promotes your brand online
Tailoring your marketing to match your customer's type increases the likelihood that he or she will respond. It also significantly reduces your marketing costs. In my world, that's a win-win situation.
This is the beginning of a twelve part series. Next: How to Manage Customer Expectations
Related posts:
- Customer Life Cycle Part 3: How to Keep Newbie Customers from Eating Your Profits
- Customer Life Cycle Part 5: Getting Value Out of Discount Customers
- Customer Life Cycle Part 4: How to Identify Hit & Run Customers Before They Kill Your Business