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RSSIf you are a legacy brand that has evolved in the 20th century, you have likely reinvented yourself several times over. I wrote an article on the "The Generation Changes" that spoke to the differences in the generations and the influence of technology in their lives. What makes this such a fascinating topic, along with lifecycle management, is that each product or service on the market caters to each of these generations, yet many support a linear view of a customer lifecycle.
A customer lifecycle is just that. It is the foundation of consumer involvement with your brand over time. A customer lifecycle can shift over time, as consumers come in and out of different lifestages.
The key to marketing exactness in developing a lifecycle program is to identify "switch points" when a customer is likely to shift away from your brand, consider new alternatives and potentially develop some brand affinity with your competitor. Many in the marketing space trigger off of key income milestones. We graduate from college, we get married and have dual incomes, we start a family, we invest in our first home, we buy our first automobile, we consider life insurance as a means of protecting our family, we look more closely at investment options. All are viable triggers.
Consider the telecommunications industry, which has the art of switch points down: it is when you move. These folks have insight into the type, size and value of the home by DMAs and they market to the homes, and when people move they bundle their services to cater to the market and lifestage of the consumer, sometimes intelligently and sometimes broadly. Is it really lifecycle management?
Consider the automotive space: consumer lifecycles move from your first car, to your first business lease, to your first luxury car or SUV. Each represents a lifestage, yet the industry tends to build communication strategies based on your lease and vehicle pattern, not lifestage considerations. As a marketer, you should know there isn't one linear lifecycle. There are key triggers that can allude to key "switch points" -- but do your product and marketing strategies target these key stages?
A few years ago we developed a switch point strategy for a contact lens solution brand. We identified several key customer segments where the decision to purchase multipurpose contact lens solutions changed based on the lifestage. One critical stage is when a child goes to college. They have limited funds and the decision to buy generic over a premium brand was now a competitive situation. We developed a triggered messaging solution and site strategy tied to the age of the consumer, and the key "switch point" where the decision was made: the doctor's office when they renewed their contacts prescriptions. It supported an acquisition stage, a cultivation stage, a redemption stage, a persistency stage, and a loyalty stage.
While this is an example of one switchpoint and one key stage, it was the foundation for how the brand looked at customer acquisition, how it valued the consumer that would get involved electronically, and how it evolved its content strategy to extend the level of involvement even if the consumer wasn't in the lifestage where they represented a great value to the company. This long-term view is what makes a power brand.
Don't purge that consumer from your database or program if they don't respond; don't purge them if they don't buy. Look deeper and see if a lifestage is influencing their involvement with your brand. That's the essence of marketing!
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The question is why have they become unprofitable, and as Mark says above, its possible to find out why. A customer on the books is a relationship that should be tended and developed like the orchids in your greenhouse.
Your point is right on, David.
That's some great insight. I didn't think of that. I will definitely not purge non-responders any more.
-David Jang
B2C—A company running an extremely popular online simulation with millions of players paying a monthly subscription fee needed to know when its most active players were most likely to drop their subscription. We discovered a switch point at about 313 days into their online history.
B2B—A leading ERP vendor needed to know which customers were likely to drop their support agreements and which would continue to be active customers. When we made a 3D chart showing revenue, our at-risk score, and retention (the life cycle variable), we saw a switch point at about 24 months where their customers either went on to become steady, loyal buyers of support and additional modules, or just hung in as low value customers. The bifurcation at this switch point was so sharp that we came to call the barren region on the plot between the two groups the “valley of the shadow of death.� There were no customers in that part of the plot. Marketing realigned to focus on the switch point.
So yes, switch points and life cycle analysis are incredibly valuable, and transaction-based analytics can complement demographics and psycho graphics, especially in B2B.
If we are in a recession, your predictions of consumer behavior are likely to be off just a bit. If the lifestage assessment, models, etc. were built on a non-recession dataset, they're going to be "off" if we are--as I believe--currently in a recession.