Lifecycle Marketing

What is Lifecycle Marketing? 

In lifecycle marketing, you cater to each user by meeting them at their specific customer journey.

The "customer lifecycle" concept is predicated on the assumption that the customer's experience with a SaaS provider should be continuous and ever-evolving. In this approach, lifecycle marketing guarantees that teams are always prepared to offer additional value of some form to each individual customer based on their unique requirements at any given time. As a result, the buyer has every incentive to keep purchasing the product or service being promoted.

Lifecycle marketing isn't a "one size fits all" strategy.

One reason is that you'll need to interact with users at different stages of the customer journey and for various purposes. While encouraging users to "take the next step" with your brand is always a goal of lifecycle marketing, the "next step" in question will vary based on the user's past interactions with your brand and the services you provide.

Throughout the course of a user's lifetime, you will interact with them in a variety of ways. This necessitates producing a wide range of content types and marketing messages suitable for dissemination in various ways. As a result, you'll boost the likeliness that your user will respond positively to your message and perform the desired action.

The four stages of the marketing lifecycle stages are:

1. Reach & Engage

2. Nurture & Educate

3. Convert & Close

4. Support & Grow

Why is Customer Lifecycle Marketing Important in SaaS? 

Now that you have a better understanding of the client lifecycle process, it is essential to understand why it is so vital for software as a service (SaaS) organizations. Gaining an awareness of and making improvements to your company's customer lifecycle can help to increase revenue and decrease the number of customers that leave. You can boost customer loyalty to your brand and keep your SaaS customers coming back for more if you ensure that your consumers are engaged before and after purchasing your product or service.

How to Calculate Lifecycle Marketing? 

Determine the worth of a customer lifecycle in a few ways. Depending on which data you utilize in your calculation, you can employ either a straightforward or a conventional formula in conjunction with a retrospective or a prospective method.

Historic approach

To put it in layman's words, a historic method takes into account the aggregate of all profits made from a single customer's previous transactions based on information already gathered about that client over a predetermined amount of time.

Predictive approach

On the other hand, a predictive method estimates how much money a specific customer will bring in throughout the course of the partnership. Looking at past deals and client habits can help you anticipate their future worth, which is helpful for planning purposes.

Simple customer lifecycle value formula

Calculate client lifecycle value using a straightforward formula:

1. Tally up all money earned from a customer in a single year.

2. Multiply that number by the average customer lifespan.

3. Deduct the cost to acquire that customer.

So, to put the formula into practice, consider the following:

(Customer’s annual revenue x customer average lifespan) – cost of customer acquisition = customer lifecycle value

If your consumers often make the same annual purchase, you can use this technique to your advantage. Businesses that rely on recurring payments from customers, such as memberships or subscriptions, or those that offer a limited number of service packages would do well to use this method.

Traditional customer lifecycle value formula

The standard customer lifecycle value calculation requires the following additional information to arrive at a final number:

1. Average gross margin for individual customer’s lifespan

2. Retention rate

3. Discount rate

Here’s the formula in action:

Average gross margin x (customer retention rate / [1+ discount rate – customer retention rate])

You should utilize a conventional formula, which can adjust for swings in revenue if you sell a wide range of products at varied prices.