Every entrepreneur wants to organize their activities so that they ultimately bring profit. For business development, it is very important to acquire regular customers. They are the ones who provide the company with the main income. In order for a potential consumer to become interested and then purchase a product/service, become a regular customer, a certain amount of time or customer life cycle must pass. A clear understanding of what life cycle the client is in right now allows the business to determine what marketing tools to use to push the potential consumer to a certain action.
Thus, the customer life cycle is the process of interaction between a consumer and a brand over a certain period of time.
Customer Life Cycle
Customer Life Cycle Stages
In marketing, there are five stages of the customer life cycle:
Attraction.
Interest.
Grade.
Purchase.
Loyalty.
At each stage of the cycle, certain approaches and argentina email list solutions are used, in other words, communication channels that create a positive impression on the client, encourage him to make a purchase or conclude a deal taking into account the benefits offered to him.
The life cycle can be complete or partial. It is considered to be correctly formed when at each stage all the client's needs have been satisfied and he has a desire to move on to the next stage. The effectiveness of the applied marketing actions in promotion is measured by the number of clients who have repeatedly contacted the company to purchase a product/service.
Knowing what stage customers are at now helps optimize the costs of attracting new consumers and increase the loyalty of regular ones. To achieve long-term and mutually beneficial cooperation, it is necessary to constantly invest in relationships with the consumer, communicate regularly, and not let yourself be forgotten.
How to Calculate Customer Lifetime Value (LTV)
LTV is the income that a client brings in during their interaction with the company. Both simple and more complex formulas are used to calculate LTV:
Method 1. To calculate the life cycle of one client, it is necessary to take into account all the orders that he made during his cooperation with the company, including the last one: LTV = the sum of all purchases (first purchase + second purchase +…). For example, the client bought $100 for the first time, $33 for the second, and $200 for the third. His LTV is $333.
Method 2. Net profit is calculated using the formula LTV = (sum of all purchases) × AGP (average gross profit) .
Method 3. LTV = average check × number of purchases .
Method 4. LTV = the sum of all customer purchases – the cost of attracting and retaining customers – the cost of products .
The more complex the formula a company uses, the more accurate the result it gets.
How to Calculate Customer Lifetime Value (LTV)
Customer Life Cycle Analysis
Calculating the LTV net profit along with analyzing each interaction with the client provides reliable statistics that serve as a basis for making further adjustments to the development strategy and marketing activities of the business. In addition, statistics help clarify the following points:
find the most solvent clients;
find out what stage of the life cycle buyers are at;
even if a client has become a regular, you need to communicate with him, that is, attract him with additional advertising;
determine which direction to move in to avoid mistakes that reduce sales volume.
In order for a company to be able to track the life cycle of each client and its impact on revenue, it is necessary to create a client base . It includes regular customers and those who are just about to make an application or are just looking around. The work of the company's marketing department is focused on each of these groups. In addition, the development and expansion of the base must be ongoing so that buyers do not choose a product/service from competitors. Continuous communication with your audience is necessary for the enterprise to operate without failures and have a stable income.
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Categories: Blog , Marketing , Useful articles
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