analytics

Life-cycle segmentation

The customer lifecycle refers to the process of passing through the different stages of the relationship between the customer and the company. In this relationship there are 4 main phases:

  • Potential customer is a person or organization that is not yet a customer, but belongs to the target group.

  • Respondent is a potential customer who is interested in the company's products and services.

  • Existing Customer is a person or organization that is currently using the company's products or services.

  • Churn Customer is a customer with whom the relationship has ended for one reason or another.

To achieve better customer retention, it makes sense to divide existing customers into additional customer segments. Five important segments can be defined:

  • The new customers are those who have recently made their first order

  • One-timers are those who, after their first purchase, do not place another order for a long time (relative to other customers).

  • Active customers have recently made a repeated order.

  • Dormant customers, are the former active customers who have not made a purchase for an unusually long time.

  • If a One-Timer or Dormant customer does not place an order for further time, this customer is considered as churn.

You can see the segments and transitions on the graphic below:

The customer lifecycle