Managing Customer Lifecycle: Implications for Business Organizations

Running head: MANAGING CUSTOMER LIFECYCLE
MANAGING CUSTOMER LIFCYCLE
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MANAGING CUSTOMER LIFECYCLE
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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MANAGING CUSTOMER LIFECYCLE
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,