We’ve been talking a lot recently about customer issues and retention so today I thought we’d talk a little about what the Customer Life Cycle is.
There are 3 elements to the Customer Life Cycle, namely acquisition, growth and retention.
Companies are generally very good at the first two steps, and that’s what they focus all of their attention and creativity on but when it comes to retention that is where many of them fall down.
It’s not a case anymore of once you get a customer they are with you for life. Nope. In a market full of choice the Customer Life Cycle is getting much shorter.
Customer acquisition is expensive. Advertising, marketing campaigns, freebies, hooks and glittering prizes are all on offer to draw the potential customer in so is it not cheaper for companies to focus that little bit more effort on the retention end, after all they’ve spent a fortune in the first place to get the customer.
Growth goes hand-in-hand with retention and growth occurs partly because of the relationship that develops between business and customer.
More and more we are now seeing companies offering freebies and the like for customers to stay with them. I recently had an experience with Virgin Media where they bribed me to stay with them by shaving £20 off my monthly bill, upgrading my broadband and give me free phone calls. The problem was that this didn’t happen until I called to make a complaint and now it’s cost them (particularly if every customer is doing the same).
Growth should lead to retention.
A radical idea to extend the life cycle and cost less would be for Virgin Media to call all of their loyal customers and offer them something for their long standing relationship. For example if they’d rang me and offered me a free broadband upgrade for my loyalty, I would have been a very happy customer but because I had to call them it meant I had the upper hand and demanded more because of it.
Even worse for them now I know I can do that there is every chance I will try a similar tactic six months down the line.
It’s time for businesses to take the initiative. Get off your back foot and try moving forwards.