Customer Life Cycle

If in an organization, many customers diverge their way to other organizations and customer acquisition program shows less aggressiveness then the organization faces terrible cash flow problems. This is the time when tracking the number of customers in each stage of customer life cycle becomes essential. This helps the organization to determine the purchasing power and pattern of customer and coping up the cash flow problem. There are basically following stages of customer life cycle:

  1. Prospects- Prospects are the people who are not actual customers but could be converted into one. These people should be treated like initial customers as they have the potential value same as that of a customer. Initially the prospect makes a set of expectation regarding the products and services towards the supplier. If supplier wins to meet the expectation of the customer, the supplier has the golden chance to convert the prospect into liable customer. During the process it is very important for the supplier to meet all the cut off’s of the prospect by providing efficient marketing communications and explaining the value of having business with them.

  2. First time buyers- After making the first buy, the customer enters this stage. Such customers probably have the lowest retention rate as they have not yet explored all the facets offered by the supplier. They may fall in satisfied customers’ category but have not yet evaluated the product features. Hence it is the duty of supplier to convince them more on the product value and services to meet their second level of expectation. If they succeed in doing this then customers would continue to buy the products and could be retained as long as they are overall satisfied. During this process the failure of meeting even one aspect of customer could cause the customer to defect.

  3. Early repeat buyers- Customers will fall into this stage when they make at least one repeated buy. These customers are more tended towards regular buying as compared to the first time buyers. Suppliers have chance of getting more and more business out of them as they have already created influence on them. However, these are the satisfied customers but still they are in process to evaluate the relationship between the two parties, hence a small mishap could lead to defect these valuable customers.

  4. Core Customers- Customers are said to be core customers when they are fully satisfied with the product value and services provided to them as well as when the supplier is able to maintain a quality relationship with them. These customers are flexible and considerable as they ignore small mistakes which they know, will be efficiently and quickly resolved. Having highest retention rates these customers are the most valuable assets for an organization and it is important to give special treatment to these customers. Unless and until there is major problem, these customers do not defect.

  5. Core Defectors- There comes a stage when the core customers tend to switch to different supplier due to some specific reasons. These reasons include availability of more efficient and competitive products and brands in market, any of the important service not entertained or any defect not rectified within a given time-frame, boredom due to same product usage repeatedly etc. It is difficult to retain customers if above reasons are pertained. But strategically coping up with the situation could result in retaining them.


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Customer Relationship Management