Customer lifecycle management
ustomer Lifecycle
Management (CLM) is both an attitude about wanting to serve
customers and their individual needs and an excellent marketing
approach. It requires you, as a business owner, to think about
how to communicate, as well as exactly what to communicate to
customers and prospects.
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A strategic business plan defines the
company and its overall mission and business objectives. This
should include both financial and operating objectives.
A strategic marketing plan defines how
your cleaners will position itself in the marketplace, and
differentiate itself in order to meet its business goals.
A strategic customer plan defines how you
will communicate with each customer, as an individual, in order
to create value to the customer, and therefore increase their
loyalty to your business.
Customer Lifecycle Management is a
critical component of your strategic customer plan because it
outlines exactly how to treat people as individuals, based on
their current relationship with your business, in order to
acquire and retain them as long-term, profitable customers.
Stages of the customer lifecycle
To begin the CLM process, you need to know
what the five stages of every customer’s lifecycle are:
Prospect; First Time Buyer; Limited Buyer; Full Buyer; and At
Risk.
Prospects are
non-customers, yet they fit the profile of a target customer.
Prospects fall within varying degrees of interest and
involvement — anywhere from “never been
contacted” to “about ready to buy.”
First Time Buyers have actually used your services. They are in a
trial stage, and need to have a good experience with your
cleaners in order to maintain a long-term relationship with
your business. Remember: you are the CEO (Chief Experience
Officer) of your company.
Limited Buyers have
made repeat purchases of your services. However, they do not
always use you exclusively. There are many possible
explanations for this: trust, not realizing the full line of
services that you offer, or not really knowing what their own
needs are, are all possible reasons why customers continue to
use the services of other cleaners.
Full Buyers are
customers who only buy from a single provider. They might spend
$10 or $1,000 per month, yet their buying patterns are
consistent and predictable.
Full buyers have complete trust and
confidence in their preferred cleaner and most importantly,
they speak highly of their drycleaner to their friends and
associates. When used correctly, full buyers are your best
salespeople. Wouldn’t it be nice if all your customers
were like this?
At Risk Customers have
become dissatisfied or no longer feel they are getting a good
value from your business. As such, they have the potential of
defecting, and moving their business elsewhere.
These customers fall out of the First Time
Buyer, Limited Buyer and Full Buyer categories.
Some At Risk customers become obvious
because they have let their dissatisfaction be known. Some will
significantly decrease their spending. But the majority will
simply, and suddenly, be gone!
Knowing which of these five stages each
customer is in will let you develop the right marketing and
communication strategy to better manage your relationship with
that customer.
Sales and marketing strategies
Each of the five stages within a
customer’s lifecycle is the result of that
customer’s unique experiences, expectations, needs and
desires.
In order to fully maximize the revenue and
profit potential from each customer, different sales and
marketing strategies should be used for each of the five
customer types.
Match these strategies to the lifecycle
stages:
1. Acquisition Strategy includes all sales and marketing ideas used to acquire
new customers. The goal here is to encourage prospects to try
your services and become first-time buyers. Direct mail,
coupled with a strong incentive, is one of the most effective
ways to accomplish this.
2. Activation Strategy is used to move first-time buyers to limited
buyers. The objective here is to welcome new customers, educate
them to the many services you have to offer, and encourage them
to become repeat purchasers in order to build a consistent
buying pattern.
3. Up-Sell and Cross-Sell Strategies are used after the customer has
established buying patterns in order to move them from limited
buyers to full buyers. At this point, you should begin
encouraging them to try new or additional services by providing
incentives to customers for higher spending levels.
The more reasons you give a customer to
use your services, the stronger the relationship between your
business and that customer.
4. Loyalty Strategy is designed to recognize, reward, and say
“Thank You” to your most valuable customers. Keep
in mind, “most valuable” doesn’t necessarily
mean biggest spending. Customers who regularly refer other
customers to you can be “most valuable,” even if
they don’t technically spend the most money.
5. Retention strategy is a recovery effort needed to reinforce or
restore value to a customer when it has been lost. Key warning
indicators such as declining sales volume or customer
complaints are usually signs of customer dissatisfaction and
predict the likelihood of attrition.
Armed with this information, a drycleaner
can handle problems early, save the customer, and bring them
back into the fold.
Utilizing these five types of sales and
marketing strategies, businesses can create customer focused
programs designed to build better relationships that will
increase sales and protect them from unwanted loss of
customers.
Combining the five “Stages of the
Customer Lifecycle” with the five “Sales and
Marketing Strategies,” completes the Customer Lifecycle
Management picture.
It has often been said that it costs a
business five to 10 times more money to acquire a new customer
than it does to keep an existing one. With this thought in
mind, drycleaners should spend more time, money and effort on
retention strategies than on acquisition strategies.
Treating all customers the same, without
regard to their stage in the customer lifecycle, is a sure-fire
way to limit the potential revenue and profitability of all of
your customers.
The more value that you can provide to
your customers, the stronger the relationship those customers
will have with your company. Along with strong relationships
comes customer loyalty, and with loyalty comes tremendous gains
in sales and profitability.
Dennis McCrory is president of The
Golomb Group Inc., a firm that
designs marketing programs for drycleaners. Contact him at The
Golomb Group Inc., 7664 Plaza Ct., Willowbrook, IL 60527.
E-mail: dennismccrory@golombgroup.com
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