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Article: Get Better Business Results from the 4 Stages of Your Customer Lifecycle -- Retention by Karin A Ferenz
Published 11/29/2018

Build in Retention and Profitability at Each Stage of the Customer Lifecycle

Each stage in the customer lifecycle — acquisition, service, growth, retention — has its own unique customer needs, attitudes and behaviors. This creates the opportunity to identify and measure competitive performance requirements and metrics for both a particular stage and its relationship to the entire lifecycle.

Acquire, the first paper in this Acquire, Serve, Grow, and Retain series, examines factors driving customer acquisition and outlines a systematic process to attract and build a profitable customer base. With that information an organization can develop a targeted customer acquisition and retention strategy and up-selling programs as well as leverage the desired communications channels in order to improve lifetime value.

Serve, our second paper, discusses approaches to identify how well you meet customer needs with service that meets or exceeds customer expectations and whether the targeted customers you have secured will remain satisfied and loyal or will leave due to dissatisfaction with what you are providing.

Grow is the third paper in the series. It discusses tools and techniques that can be used to create a practical process that focuses on improving the financial results from all customer groups.

Retain, the final paper in the series, discusses how to retain the profitable customers your organization has created by following the steps outlined in the three preceding papers. We suggest that the best way to accomplish that is through a dual perspective—aligning the perceptions of employees with the requirements of customers.

The fight for loyalty, share of wallet, and customer retention has reached a fever pitch. According to the Wall Street Journal, it is not enough for a company to merely know the number of customers it has. Investors on Wall Street now want to know the value those customers represent and what the organization is doing to retain them, especially most profitable customers.












      Fig. 1 – The Customer Lifecycle

How to Retain Your Profitable Customers

Probably everyone working in the areas of customer satisfaction, loyalty, and retention is all too familiar with the fact that it costs a lot more to gain a new customer than it does to keep a current one, particularly if the current customer is profitable. Hundreds of studies and research reports have established beyond a doubt that it is far easier, more cost-effective, and much more beneficial in the long run for companies to work toward preserving their customer base as well as attracting new customers.

By consistently applying the proven tools and techniques discussed in our papers on the Acquire, Serve, and Grow phases of the Customer Lifecycle, a company should now have a growing base of customers that are satisfied, loyal, and profitable. Now the challenge is how to keep them.

Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers do, while having engaged employees and engaged customers returns a revenue gain of 3.4 times the norm. A company’s ability to attract and retain new customers is not only related to its product or services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace.

Customer Retention Should Be a Process-Driven Strategy

Notwithstanding the significant impact customer retention has on business results, many companies still approach the issue of customer retention on a reactive basis. Unfortunately, many of these reactive responses address the symptoms, not the root causes.

Successful and enduring customer retention initiatives require functional alignment throughout an organization. This alignment is driven by a senior management-championed commitment to:

  • Establish customer retention as a major corporate objective
  • Achieve the objective by the development of an effective retention strategy
  • Develop implementation tactics to operationalize an enterprise-wide strategic customer retention process
  • Link the outcomes of the retention process with other key processes to ensure that internal process metrics are fully aligned with external customer requirements for retention
  • Align employee perceptions with customer requirements beyond the usual Human Resources employee satisfaction surveys
  • Manage the process to effectively balance internal process performance metrics with external customer retention requirements

Two of the most critical parts of an organization are its customers and its employees. The better aligned the perceptions of the two groups, the better the company will perform. There is compelling research examining the benefits of identifying and correcting disconnects between customer and employee perceptions of importance and performance. Companies with a clear understanding of the views of each group and what it takes to resolve those disconnects outperform their competitors by substantial margins.

  1. Creating a Successful Retention Process

An objective to improve customer retention needs to be quantified. Based on internal data, what percent improvement is reasonable? The degree of improvement needs to be achievable and should be determined in the context of available resources, market conditions, and economic environment. And once a measurable outcome has been defined, what is the appropriate strategy to achieve it?

One of the first determinations that need to be made is which customers you want to retain. Not all customers are created equal, and the focus should be on retaining the most profitable. Acquire, the first paper in this series, provides a detailed discussion of how to identify the most profitable customers using a combination of predictive segmentation and lifetime customer value.















If you would like a copy of Acquire, or any of the other whitepapers in the Get Better Business Results series, they can be found in the reference section of our website at, or feel free to contact us for assistance.