Customer Relationship Management (CRM) is an approach to managing these interactions, either with existing or potential customers. Typically this is achieved with software that tracks, monitors and analyses each step in the relationship, enabling you to understand and nurture your customers’ life cycle.
The Five Stages of Customer Life CycleSpeaking broadly, the customer life cycle is the different stages of a customer’s relationship with your business. The stages are:
On a simplistic level, the value of CRM to a business is being able to manage each stage, so that you can first grab their attention, teach them what you have to offer, convert them into a paying customer and finally keep them as a loyal (and profitable) customer.
Customer life cycles depend heavily on the type of service or products you offer and as such the way you approach CRM needs to take this into account. For example, you may have a long customer life cycle, like a child who sets up a bank account, grows up with the same bank, uses them for their mortgage and pension right up until the end of their life. In contrast not all customer life cycles are that long, if you are a book retailer it may simply be a case of advertising a new release, converting the sale and then following up with marketing around similar books over the space of three months.
It’s important to realise that CRM systems can be relevant to any customer life cycle, helping you to track the progress of sales deals, record particular customers and track the action in relation to the deal, using this data to then build on customer relationships. Customer insight of previous customer data can also help you map out exactly the next steps your customer will take, such as the products they are more likely to choose over other products and how long their relationship with you might last. By having such an understanding of your customers’ life cycle, CRM systems can also allow you to plan ahead, using data gained to forecast the number of new customers required if your business is to remain sustainable.
Ultimately, CRM solutions are crucial in managing each step of the customer lifestyle cycle but are also fundamental in ensuring customer relationships progress smoothly as part of your wider customer service objectives. Blended with effective marketing messages CRM has the potential to nurture customers throughout their life cycle, maximising the profitability of each and every relationship.