Customer Touch – Lifetime Value Cycle

In Customer Touch Strategies, the key to realizing the complete lifetime value of a customer is to enhance the experiences between your company and the customer through a four stage customer development process that reflects the customer’s commitment to your mutual relationship.

The first stage is the First-Time Customer. First time customers have not yet established a trusting relationship with you, your services and your firm. In this initial stage they can decide to buy elsewhere if you are not careful.

After a period of time with the customer you move into the second stage of the customer development process called the Repeat Customer. Repeat customers not only buy from you again but are open to other products/services you provide and are less price sensitive (provided that you delivered high value in the First-Time Customer stage).

Once you establish some company or product/service trust with the Repeat Customer, you have the opportunity to move them into the third stage called the Brand Loyal Stage. Here the loyalty for your company and its products is fostered and expanded.

Finally, the very best customers move into the Advocate Customer stage. Here customers become advocates for you, referring other customers and serving as references for your company.

Let’s look at each stage in a little more depth.

First-Time Customer Stage

First time customers have not yet established a trusting relationship with your company or its products/services. In this initial stage, it is easy for them to buy elsewhere because they have no loyalty to you yet. In this stage, focus on those points that support the customer’s initial buying decision.

Build trust. Go beyond what you promised them in your marketing messages. Exceed expectations. Where possible, have someone from outside the sales department, contact them and listen to what they have to say about why they bought from you, perceptions and their expectations.

Make them believe that they made the right decision and open them up to additional communications from your company. In the first stage you are trying to position the first time customer to buy from you again.

Repeat Customers Stage

Once a customer decides to make an additional or second purchase from you, they have reached a minimal level of trust in you. They have a track record of experience with your company or product/service. They can assess your performance (the outcomes and process of dealing with you). If this assessment is positive for them (benefits outweigh costs), they are open to expanding your relationship both in terms of emotional ties as well as financially.

At this stage, they become receptive to additional purchases and open to messages concerning other products/services of your company. Your goals is to build on this initial relationship to create brand or company loyalty in the customer. Focus on those points of contact that can enhance and facilitate the growing loyalty.

Brand Loyal Customer Stage

In this stage the customer moves from a short-term relationship where a short-term history and limited experience to a long-term loyalty. In the prior two stages customer loyalty had not yet been established and decision to change to another provider is rarely emotional. In this stage, you spend time and effort focused on building emotional ties and loyalty to your brands or company. The purchase decision essential goes away. When the customer needs what you sell, they buy it from you without any further question.

Coca-cola has one of the world’s most recognized brands. For most of their customers, they remain loyal to the brand each time they buy a soft drink.

Advocate Stage

Up to this point, the focus was on customer retention. Now your goal is to make your customers advocates for you. Advocates tell others about your company and/or its products/services. They refer friends to you, join social networking communities for your product and generally paint a positive picture of your company or products/services in the marketplace.

A great example is the Walt Disney Company who has one of the most vocal and active customer advocacies. Customers buy their products, wear their clothes, bring friends to their websites and generally tell others how great Disney is.

Many companies, in an effort to keep costs down, spend minimally in customer service. The problem is that the cost of high quality customer service is tangible, but the cost of going the extra mile is intangible.

What you can’t see doesn’t hurt, right? Wrong. While profitability is the consequence of high productivity and cost containment, real gains in profit growth over time is only achieved by focusing on attracting and retaining customers.

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