The Customer Loyalty Lifecycle!
We’ve all heard of the business life cycle, however today I wanted to introduce you to a different type of life cycle, i.e. the customer loyalty life cycle. When managing a business it is imperative to know what sort of a life cycle the business is likely to go through, and hence we can make appropriate strategies. Similarly, when wanting to manage loyalty, it is important to understand what type of a life cycle a loyal customer is likely to go through, so that we can make appropriate plans.
Going back to one of my earlier blogs, we must remember that there are three distinct types of loyal customers (http://blog.cibmp.org/?p=32). Keeping this in mind, we know that the most profitable ones are the emotionally attached customers, and the least profitable are the behaviorally loyal customers. Moreover, the longevity of the relationship also differs from one type of loyal customer to the other. Based on research into these types of customers, I have developed a customer loyalty life cycle.
As you can see from the figure, the life cycle is based on two main factors, time and profitability. While my drawing skills are not great, you can make out the basic concept behind this model. Customers that are behaviorally loyal will stay lesser time with a firm and not be very profitable. Attitudinally loyal customers will stick for longer, and eventually they will leave the firm. Emotionally loyal customers will stay with the firm for as long as they are alive, or as long as they remain to purchase from that product category. These customers are the most profitable for a firm. The time factor differs from one industry to another. However we can now put time figures to this graph. We can estimate the number of years it will take a customer to become emotionally attached! The numbers written in the figure above are only for illustration purposes. My research into this continues, and hopefully in the near future I will be able to publish the time scales, along with estimated profitability figures.
What is important is that we need to realize that all customers start from the same place. It is up to us to ensure that they end up in the right place. For example, companies that are committed to providing better customer service and quality will be the ones that will get more customers to go further on this life cycle. Those that ignore the customer’s true needs will be the ones that see most of their customers end up in the behavioral loyalty sector.
As always, please do let me know what you think about this. Your comments here, and in various linked in groups are always appreciated.
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By Arthur Black, February 28, 2020 @ 9:31 pm
life cycle phases ??
By Osman, February 28, 2020 @ 9:50 pm
These are the phases through which a customer may go through. All customers start up in behavioral loyalty, but then with a greater level of attachment move up to the higher levels.
By azam, March 1, 2020 @ 9:57 am
nice article! it would also merit if you could possibly write something on the subject of lost customers or/and how a loyal but churned/lost customer can be win-back/revived. this loyalty is a lot lesser in the telco sector that too in pakistan where there is cut-throat competetion and subscribers posses multiple SIMs/connections that they occasionaly use just to the get the rewards/offers thrown to win them back - cheery pickers is what we term them.
By Osman, March 1, 2020 @ 12:59 pm
Thanks Azam. There are a number of industries across the globe where you get these types of customers. Will try to write a blog on this in the near future.