Customer Lifecycle Segmentation: What Is It, How To Collect Data To Conduct Lifecycle Segmentation and Increase Engagement?
How can customer lifecycle segmentation help you boost user engagement and drive retention?
Customers not only need to experience the core value of your product but also get repeated value from it. This increases retention by strengthening customer relationships with your brand.
This is where lifecycle segmentation comes in. Let’s find out how a customer lifecycle marketing approach can deliver the highest value at each stage and improve product growth.
- Customer lifecycle describes how customer relationships strengthen over time as they consider, purchase, use, and become loyal to a product or service.
- The customer lifecycle consists of 5 stages: reach, acquisition, conversion, retention, and loyalty.
- Customer lifecycle segmentation is the process of dividing customers into groups based on the stage of the customer lifecycle they are in.
- The benefits of lifecycle segmentation include customizing different marketing messages for each segment, implementing lifecycle marketing strategies, and catering to the most valuable customers.
- The six lifecycle segments are prospects, free trial users, paying customers, retained users, loyal users, and churned users.
- You can collect data for lifecycle segmentation by tracking feature usage, checking goal completions, using NPS feedback to find loyal users and detractors, and sending churn surveys to know why customers leave.
- Userpilot lets you monitor in-app user interactions and use advanced segmentation to improve user engagement and loyalty.
What is customer lifecycle?
The customer lifecycle is a term used to describe the steps that a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service.
Customer lifecycle stages
According to marketing analysts Matt Cutler and Jim Sterne, the customer lifecycle can be divided into 5 different stages. It consists of these stages:
Reach: This is the stage where you reach out to your product’s prospective customers. Your target audience becomes aware of your product and researches it to check whether it can solve their problem. They compare your product with competing businesses and check existing customer reviews.
Acquisition: The acquisition stage deepens your target market’s association with your brand. This stage officially starts when a user contacts your company to know more about your product offerings by booking a demo call, visiting your website, or trying out your product using a free trial.
Conversion: This is where a user has experienced enough value to make a purchase. They’ve officially converted to a paying customer and begun a customer relationship with you.
Retention: Now, it’s time to offer continuous value to customers to make them stick around. This starts by knowing how customers feel about your product and then making improvements. Keep in mind that it’s less expensive to retain existing customers than acquire new ones.
Loyalty: Loyalty is nurtured throughout all the previous four stages. Customers reach this stage when your retention efforts pay off, and they become the most valuable assets to your business. This reduces the risk of customers switching to a competitor.
Loyal customers tend to sign up for higher-priced subscription plans and spread the positive word among friends, family, and colleagues.
What is customer lifecycle segmentation?
Customer lifecycle segmentation is the process of grouping customers based on the customer lifecycle stage they are in. It helps you learn the proportion of customers at every stage and discover trends in how people move between the stages.
What are the benefits of lifecycle segmentation?
Let’s see how life cycle segmentation can help your marketing team enhance the customer experience and achieve product growth.
Create relevant marketing messages for each segment
Effective marketing communication is key to pushing customers forward in their journey with your brand. The messages should be relevant and contextual to reach the right users at the right time.
Moreover, life cycle segmentation lets you set up integrated marketing communication across multiple platforms and channels.
An effective marketing messaging strategy sets you apart from competitors. You should collect user feedback and use social media listening tools to understand customers’ problems. Otherwise, you won’t be able to craft messages that are relevant to their use case.
Implement customer lifecycle marketing strategies
You should always offer more value to your customers and meet their needs. This is possible through designing and implementing customer lifecycle marketing strategies that address each stage of the lifecycle.
There are no static lifecycle marketing strategies. Different customer segments will have different needs at any given point in the user journey. Your strategies should be oriented towards improving each of their experiences.
For example, you can’t afford to offer discounts to new users who are on a free trial and also considering your competitors. Rather, you should equip them with valuable resources that will show them how they can get solve their problems.
Identify the most valuable customers
Segmentation will help you identify who your loyal customers are, so you can replicate their customer journey and improve customer success.
Loyal customers tend to sign up for higher-priced subscription plans and spread the positive word among friends, family, and colleagues. You should implement loyalty programs to acknowledge their loyalty and retain them as power users.
6 Customer lifecycle segments you should focus on
There are 6 customer lifecycle segments you should cater to. These include:
- Free trial users
- Paying customers
- Retained users
- Loyal users
- Churned users.
This segment covers your target audience, who are likely to become your customers. Your aim here is to make them realize that your product is the right fit for them so that they sign up for a free trial or request a demo to know more.
Get to know as much as you can about them, and use that information to make relevant offers that would make them see the value in your product.
Free trial users
At this stage, you need to convince your free trial users that your product is worth their money. Your primary onboarding should easily drive them to the activation point and make them experience your product’s value.
You can break down this segment into specific groups based on your customers’ roles, business types, or goals to personalize the onboarding process.
Once users find value in your product, they are likely to make a purchase and convert to paying customers. Now, they need to experience continuous value to make repeat purchases in the future.
You should focus on secondary onboarding to introduce users to secondary features relevant to them. In addition, you can prompt upgrades contextually or offer a trial to primary features.
Customer retention is vital to the sustainable growth of a SaaS business. Your retained users are the ones who keep renewing their subscriptions at the end of every month or year. They have the potential to be converted to power users.
At this stage, you can make personalized offers to retained users to make them feel valued and motivated. The more engaging your product is, the more likely they are to stick around.
Loyal customers are your power users. They are so satisfied with your product that they are willing to recommend it to other people.
Communications with them should be highly personalized and relevant. You should also start a loyalty program and offer customized rewards to appreciate their loyalty and further strengthen the customer relationship.
Customers who churned from your product no longer found value in it. This may be due to their priorities changing or to a serious issue that was left unresolved.
While churn is natural, it is important to analyze each churned user to understand their reasons for leaving. Use the insights to proactively improve the user experience for new and existing customers and reduce churn.
How to collect data for lifecycle segmentation?
You can’t group customers into lifecycle stages without sufficient data on hand. Here are the 4 ways you can collect the data.
Track feature usage to understand what your customers are doing in product
Tracking feature usage is one way to discover which lifecycle stage a customer is in. It also provides more in-depth insights into how your product is being used.
You can learn the number of customers who are using a particular feature and check exactly what they are doing inside your product. This allows you to know which features may need improvement or which ones to market the most.
Set up goals to track what percent of customers are completing them
Goal-setting pre-defines the road users need to take to go through in their entire user journey. These goals can be as simple as completing a checklist or more complex tasks.
With Userpilot, you can set custom goals and track the percentage of users who have completed them. A low percentage can suggest the presence of friction in the journey that’s preventing them from moving forward.
Use NPS surveys to identify loyal customers
Net Promoter Score (NPS) is a great way to measure user sentiment and loyalty. NPS surveys simply ask customers how likely they are to recommend your product to others on a scale of 1 to 10.
This gives you three sets of customers.
- Promoters – who rate you 9 or 10
- Passives – who rate you 7 or 8
- Detractors – who rate you 6 or below.
You should also add a qualitative follow-up question to the survey and understand the reasons behind each score.
Moreover, you should use NPS tagging to add more context to the responses. Suppose a user stated the reason is “needs to support PDF”. In that case, you can tag this response, drop them in the “missing features” category, and perform further analysis.
Identify your loyal customers and replicate their good in-app experiences. Furthermore, find areas of improvement and act on them. This is particularly useful in swaying detractors away from the verge of churn, as well as converting from passives to promoters.
Use churn surveys to understand which customers are leaving your product
To understand the reasons behind customer churn, you can implement churn surveys. These microsurveys are sent right after customers cancel their subscriptions.
The gathered feedback helps you understand customers’ issues and you can proactively take measures to improve customer satisfaction and retention. You can even observe whether churn reasons are a common trend between detractors so you can act on it.
Furthermore, churn surveys allow you to win back some customers by offering them alternative options. For example, you can suggest they pause their account while you work on meeting their demands.
How to create lifecycle segments and increase customer engagement with Userpilot?
Are you already looking for a tool to perform customer lifecycle segmentation? Let’s see how Userpilot can help you with it.
Monitor your customers’ actions in the app
Feature tagging allows you to monitor how customers are interacting with specific features. It involves tracking the in-app feature usage to know what customers are doing in the app.
You can tag any UI element that will trigger any time a customer clicks on it. This will let you track feature engagement without any coding and custom events.
You may find some underperforming features because a) customers don’t know how to use them to their benefit or b) they don’t even know these features exist. Based on the results, you’ll have to promote feature discovery or drive engagement and feature adoption.
Use advanced segmentation to group customers into segments
- Use case
- Lifecycle stages
- In-app behavior
- User activity
- NPS responses
- Survey feedback responses
- Location or technographics.
Get real-time data on these segments and analyze them to gain a deeper understanding of your customers. Then, feed the insights into your strategies to improve your user engagement and loyalty.
Customer lifecycle marketing is the key to building strong customer relationships by personalizing communications at every stage of the user journey. This is made possible by collecting data and using the insights to divide customers into different lifecycle segments.
Want to get collect customer lifecycle segmentation data and create personalized experiences? Get a Userpilot demo and see how you can increase customer engagement and drive product growth.