Managing Customer Lifecycle: Implications for Business Organizations

This paper discusses the five stages of customer lifecycle management and its practical implications on revenue generation, manufacturing processes, capital generation, and competitive advantage. It emphasizes the importance of customer retention and satisfaction in generating revenue and attracting investors.

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MANAGING CUSTOMER LIFCYCLE
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Introduction:
Customer lifecycle management aims to achieve long term association between
business organisations and customers. Wiesner et al. (2015) defines customer lifecycle
management as the matrices which, indicate the performances of business organisations
in terms of acquisitions of customers. The term embraces the various steps which business
organisations pursue to serve customers and generate revenue. Customer lifecycle takes into
the time when the business organisations acquire customers and offers those customers
appropriate goods, services or both. The second parameter which business organisations take
into account in customer lifecycle management is, the rate of cross-selling which can be done
to the acquired customers to generate further revenue. If the companies are able to retain
customers for long time and generate business from, the customer lifecycle is considered to
be long while if the organisations lose their customers to their competitors, the customer
lifecycle is considered short. Khodakarami and Chan (2014) point out that this customer
lifecycle is heavily dependent on the power of the business organisations to build long term
relationship with customers by offering them appropriate products and maximise their
satisfaction. Larsen and Jacobsen (2016) in this respect point out that management of
customer lifecycle have tremendous significance when it comes to generation of revenue and
maintaining competitive advantage in the extremely competitive market context. That is why
management of customer lifecycle holds high importance of to business organisations and has
strong implication in the ‘real world context’. The aim of the paper would be delve into the
concept of customer lifecycle management in business organisations in the ‘real world’
context and its strong implications on the business organisations.

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Analysis:
Management of customer lifecycle can be defined as a combination of five stags which the
organisations go through in creating a loyal base of consumers to generate business from
them. Spiess et al. (2014) point out in this respect that these five steps hold extreme
importance for companies because the customers are the sources of revenue the business
companies earn. This means that the customer lifecycle also reflects in the financial
statements of business organisations. Long customer lifecycle means that companies are able
to retain more customers by continuous selling products, thus increasing their sales and net
profit. Shorter customer lifecycle means high customer turnover or customer attrition which
means the companies incur more marketing expenses to acquire new customers rather than
generating more revenue by cross selling of products. Mishra, Pradhan and Bisht (2018) in
this respect point out that shorter customer lifecycle means companies lose their revenue and
ultimately end up paying their investors with lower returns. Thus, customer lifecycle
management in the long run impacts the very capital generation, thus effecting the balance
sheet. This tremendous effect of customer lifecycle management has led the companies
manage each step of customer lifecycle management very strategy to ensure high rate of
customer retention and minimise customer attrition.
The first step of customer lifecycle management is reaching out to prospective
customers to attract them to consume the products business organisations have to offer.
Datta, Foubert and Van Heerde (2015) mention that business organisations in order to reach
appropriate customer segments have to promote their products in the market. Promotion
enables the firms to segment their customer bases and choose the appropriate segments which
can buy their products. Bernabé-Moreno et al. (2015) sheds light on the role of segmentation
of market and points out that appropriate segmentation strategies enable business
organisations to position themselves ideally to attract their target customers. For example,

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business organisations marketing premium products position themselves at marketers of high-
end products like wearables made by international designers. This positioning allows them to
attract their target customers, the upper class customers. This appropriate STP (segmentation,
targeting and positioning) strategies enable the business organisations to reach out to
appropriate customer bases which paves ways to the second stage of customer lifecycle
management, acquisition.
Berman (2016) points that acquisition stage enables business organisations attract
customers to their products. The business organisations at this stage must gain deeper
knowledge about the needs and expectations of customers. Min et al. (2016) point out that the
business companies in order to convert acquired customers to actual consumers must
incorporate the needs and expectations of customers while framing the product strategies.
The third stage consists of customers building relationships with business
organisations by purchasing products from them. Bhaskar and Kumar (2016) in this respect
point out that it is at this stage creation of satisfaction comes into play. The companies should
create high level of customer satisfaction by offering superior quality products. They can use
strategies like using product bundling and appropriate pricing to create value addition of the
purchase of the customers. Bilgihan, Kandampully and Zhang (2016) lend an entirely new
level to the discussion in the present context when the market is extremely competitive mere
selling of products is not sufficient to satisfy. They point out is equally important to create
strong perception about the company among customers. The business organisation today give
continuous support to customers using the customer care support systems and official
websites. Satisfied customers can view their product details on the official websites and order
for more products on real time base. This strong perception created among customers lead to
the next stage which is retention of customers.

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The fourth stage of customer retention enable companies to generate more
revenue by continuously selling products to the customers they retain. Jiang, Jun and
Yang (2016) point out that retaining an immense customer base attribute the firms several
business advantages. It must be pointed out that the retained customers maintain strong
relationships with the companies. They order more goods and services for the companies,
thus adding to the revenue generation. For example, telecommunication companies can build
relationship with customers by offering high quality mobile connectivity. They, at the
retention phase can offer new variants of mobile connectivity packages or internet packages,
which are entirely new products. Thus, they are able to generate more revenue from these
customers by cross selling more products. Similarly, these satisfied customers may advocate
the products of the companies to their acquaintances, friends and relatives. Thus, retaining
customers enables business organisations gain new customers at no or very little promotion,
thus once again initiating new customer lifecycles. Thus, it can be pointed out that retention
of customers enable to generate repeated business by cross selling and reaching out to new
customers, thus securing future business as well. The customer lifecycle ends with the fifth
stage which attributes companies strong and loyal customer base (Li and Karahanna
2015).
An analysis of the five stages would show that they have immense practical
implications on the business generation of companies. Lehmann (2015) points out to the
first and the direct implication of customer loyalty and retention, revenue generation. He
points out that when companies are able to ensure long customer lifecycle, they are able to
generate immense revenue by selling them products. Adebanjo et al.(2016) point out that the
implications customer lifecycle management is not limited to revenue generation but
encompasses manufacturing as well. The companies in order to ensure perpetual
customer satisfaction and repeated business generation, require to align their

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manufacturing processes with customer requirements like adopting measures like total
quality management and six sigma, which is the second implication. The third
implication of customer lifecycle management is capital generation.
The third implication of an efficient customer lifecycle management is a strong
capital base. The business organisations today have to allocate immense capital towards
development of new products and innovation. This necessitate them to inject immense
amount of capital into the business. Earning high revenue allows these companies give high
returns to their investors (King, Dhameeth and Kim 2017). Thus high revenue earned from
efficient customer lifecycle management acts as a security to investors, thus enabling the
companies attract more market capital.
The fourth implication of efficient management of customer lifecycle management
can be described as the outcome of the three implication which is competitive advantage in
the market. Krajňáková, Navikaite and Navickas (2015) point out that an immense base of
customers provides companies pools of revenue and capital. These revenue and capital pool
enables companies to channelize funds towards continuous innovations and new product
development. These two strategies enable companies to offer new products to customers
which fulfil the need. They as a result remain with these companies. The smaller companies
which fail to manage their customer lifecycle are not able to compete with the multinational
companies. This practically leaves the products from multinational companies very few
competitors. Thus they are able to retain their customers perpetually which literally reduces
the threats of customer poaching by competitors (Chen 2015). Thus, efficient customer
lifecycle management attributes the companies with competitive advantage in the market.
This statement is testified by the immense customer bases of the multinational companies,
their share indices, innovative products and robust revenue structure.

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Conclusion:
It would be worthy to mention from the conclusion that customer lifecycle
management has immense implications on business organisation. It forms the base of
financial strength as well competitive advantage. Management of customer lifecycle cast
shadow on the books of accounts and manufacturing processes as well. It would be apt to
state the customer lifecycle has emerged as a driver to every aspect of the business processes.
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