CRM and the Customer LifeCycle
The addition of the Internet as a commerce and
communications channel has forced many companies into direct contact
with their customers for the first time, and kicked off the
accumulation of transactional information companies have never
had access to before.
situation spawned a tremendous amount of demand in the marketplace
for “solutions”, including analytical CRM, the newer CLM (Customer
LifeCycle Management), CRP (Customer Relationship Planning), and all
the related approaches for implementing data-based marketing
programs such as 1-to-1 Marketing, Relationship
Marketing, Customer Retention, and Customer Loyalty
What's Really Going On
This is a very confusing situation for most
people, because they generally lack experience using customer data for
anything but personalizing mailings, and have been led down the wrong path before.
For example, the rush to capture demographic data completely ignored
what experienced database marketing people know - behavioral data is
much more powerful as a marketing tool than demographics ever will
be. If you
want to know the answer to behavioral questions like "will they
buy or visit again?," demographic information won't help you
This fact may make
things clearer for you: if
you strip away all the black boxes, marketing dreams, and data
analysis acronyms, most of the opportunity to create high ROI
customer marketing programs comes from one basic concept - tracking,
understanding, and profiting from the customer
can understand this root LifeCycle idea, you can
mold it to your needs and available resources and leave the marketplace
noise (and costs) behind. If your company has not been
actively involved in profiling customer behavior before, taking a gradual
approach to learning the basics of how your customers behave
with some simple tools will end
up saving a tremendous amount of time and money down the line for
The better you
understand customer behavior before you jump into full-blown CRM,
the more likely it is your final CRM solution will have the right
functionality - build or buy.
And that is
what this site and the book are all about - showing you how to get
the biggest marketing benefit out of your customer data for the
least cost. Simple CRM.
What is a customer LifeCycle? It is simply the behavior of a customer with your company
over time. Customers
begin a relationship with you, and over time, either decide to
continue this relationship, or end it.
At any point in this LifeCycle, the customer is either
becoming more or less likely to continue doing business with you,
and demonstrates this likelihood through their interactions with
If you collect data from these interactions
(purchases for commerce, page views or log-ins for publishing,
contacts for service) you
can use this data to predict where the customer is in their
LifeCycle - is the customer becoming more or less likely to do business
with you? If you can predict where customers are in the LifeCycle, you can
maximize your marketing ROI by targeting customers most likely to
buy, trying to “save” customers who have declining interest, and
not wasting money on customers unlikely to continue doing business
Remote selling companies like TV Shopping
channels and catalogs have been using a LifeCycle approach for
years, and have developed methods for using LifeCycle information to
increase profitability by driving customer sales higher while reducing
marketing costs. It’s a proven
method, and it works with interactive customers very
well. I should know; as VP of Marketing and Programming for Home
Shopping Network, it was my responsibility to maximize the value of
TV, Internet, and Catalog customers while minimizing marketing
you understand and can predict the LifeCycle of a customer, you can
answer a lot of other important questions, including:
How can we compare the long-term effects on
customer value of our different advertising approaches and
product selections / pricing?
When will a customer stop buying or
visiting and how
can we most cost effectively delay this event?
How can we measure the impact on customer
value of operationally oriented changes such as the
implementation of CRM or changes in web site design?
What is the Lifetime Value of a customer
compared with other customers and how do we increase it cost
You Can Do It Yourself
My book (with free software application, more
on this below) outlines a very simple method
for creating and tracking customer LifeCycle metrics, and using
these metrics to increase sales while reducing costs.
There are no special requirements for implementing this
method; you can use an Excel spreadsheet as the tool, and no
programming skills are required. All you need are dated customer transactions, each having a
The book explains in very simple terms exactly how to take
your customer transactions, create a database of them in an Excel
spreadsheet, and “score” each customer with LifeCycle metrics.
These scores literally tell you where the customer is in
their LifeCycle relative to all the other customers.
Then the book shows you how to use these scores to
dramatically improve the ROI of your customer marketing efforts by
choosing customers to target and customizing offers based on their
Small companies (under 65,000 customer
transactions, the limit of an Excel spreadsheet) can score
all their customers by hand in under 30 minutes using an Excel
spreadsheet. For larger companies (up
to 100,000 customer transactions) or smaller companies with light
technical capabilities, a MS Access application is included free with
the book. The
application will import all your customer transactions and create
the LifeCycle scores for each individual customer. You can then view the scores for each customer, choose
customers to target for a campaign, and export the targeted
customers for campaign execution.
If you run a larger business (over 100,000
customer transactions in the database), you probably won’t be using
Access for scoring your customers, so the business rules for scoring
customers are described in detail and can be put into action with a
simple query system. Customer LifeCycle scores will help you solve
the “drowning in data” problem by allowing you to organize your
customer data and reporting around the LifeCycle and future value of
approach paves the way for any CRM efforts you may be considering,
because the scores allow you to establish LifeCycles and project
Lifetime Values for your customers, two metrics critical to the
success of CRM and forecasting the ROI of CRM implementation.
Using the methods in this book, you can get your company
“half-way there” and “practice” analytical CRM before you
install it. No
vaporware, no compatibility issues, just a proven behavior-based
profiling method you can implement yourself and use to start making
more money with customer marketing.
Call it “Simple CRM”.
For years TV Shopping and catalog companies
have organized their marketing activities around the LifeCycle of a
customer, and now they are paving the way on the Internet with very
high success rates and profitability.
Find out how they are doing it (and start doing it yourself)
with this site and book.