The customer life cycle refers to the process from when a customer comes into contact with a store’s products to when the customer completely terminates the business relationship with the store. Differentiating customer groups according to the customer life cycle can help merchants understand the unique needs of customer groups in different life cycles, so that they can adopt targeted marketing strategies to actively guide customers’ purchasing behavior, conduct store operations more refinedly, extend the customer life cycle, and maximize customer value. The customer life cycle includes the development period, growth period, maturity period, decline period, and loss period.
(1) Development period: The development period is the period from when a customer passively comes into contact with a store’s products to when they complete their first purchase in the store.
(2) Growth period: The growth period is the period from when a customer makes repeated purchases but before reaching a stable repurchase state. During the growth period, the amount of money a customer purchases gradually increases, the time interval between purchases gradually decreases, and the overall trend is to buy more and more.
(3) Maturity period: The maturity period is the period when customers repurchase steadily in the store.
(4) Decline period: The decline period is the period when customers continue to purchase, but the amount of money they purchase decreases, while the time interval between purchases increases, and the trend is to buy less and less.
(5) Churn period: The churn period is the period when customers do not place orders for a certain period of time.
When using the customer life cycle, you need to pay attention to the following two issues.
First, not every customer will go through the entire life cycle process, and the life cycle of a specific customer is not a completely linear development, and it is possible to jump at different stages of the life cycle. Second, different merchants are suitable for different customer life cycle judgment methods. Merchants should establish a life cycle model suitable for their own stores based on actual conditions. Usually, the judgment of the customer life cycle should be based on three dimensions: purchase time, purchase frequency, and purchase amount.