Thinking beyond the purchase: The dynamic customer life cycle
The dynamic customer life cycle
The management consultancy Gartner recognised early on that it is not enough to focus on the pure purchasing cycle. Since it is no longer enough to simply win orders, the focus must be on the entire customer life cycle. Here is a summary of the Gartner ideas from 2016.
The model is based on research Gartner conducts on a regular basis to understand what factors drive purchase decisions.
Gartner has recognised that it is not enough to focus on the pure buying cycle. Since it is no longer enough to simply win orders, the focus must be on the entire customer life cycle. Companies need to work on providing added value to the customer, then you will be in his favour, increase the share of sales and ideally build a long-term relationship with the customer.
In this context Gartner has developed a model for the customer life cycle. This model shows many possible nuances of the life cycle for a variety of scenarios. It focuses on what’s going on in the customer’s world – not on the supplier’s world.
According to Gartner, the dynamic customer life cycle is made up of the buying cycle and the owning cycle:
The customer life cycle according to Gartner
The customer life cycle according to Gartner – the most important points:
Activity Streams
The Activity Stream Concept does not stop with the purchase. The core idea is that customers do not carry out their decision-making process sequentially, but make and analyse many decisions in parallel. With easy global access to product and supplier information, they can simultaneously explore (consider buying), evaluate (consider alternative options) and engage (decide from whom to buy), with one stream being more important than the other at certain points in time (represented by the width of the stream). The exact “flow” is different for each buying situation.
The following picture should convey this dynamic:
The dynamic of the Activity Streams
Owning cycle
The purchase is only a small part of the story, the “ownership cycle” is potentially more important. If the experience with the product or service is good and the benefits for the customer are high, then it is less likely that the customer will look for alternatives. When he reaches the point where he decides where to buy again, this becomes particularly important. The ownership cycle has the potential to be cyclical, as customers keep making decisions whether to buy again, buy more, etc.
The overall experience across all cycles is a key aspect in motivating a customer to positively evaluate the current customer relationship.
Time is relative. This life cycle can be completed in 2 days or 20 years. The buying cycle can be long and the holding cycle short. Or vice versa. This depends on the product or the service. As with activity streams, this cannot simply be represented in a static picture.
The overall experience across all cycles is a key aspect in motivating a customer to positively evaluate the current customer relationship.
Often customers decide to do nothing (abandonment during the purchase process) or they stop using a product and decide not to buy anymore (abandonment during the ownership cycle). This happens when they are not sure that they will receive value or when something else inspires them to move in a new direction.
Moments of Truth
During this lifecycle there can be many “moments of truth” – cases that lead to products being added to or removed from the mix sold, situations that accelerate decisions along the lifecycle or that lead to abandonment. These situations are critical because they are often difficult to detect. Sellers should be aware of this and try to recognise when such a moment of truth occurs through regular communication with the customer and seek ways to generate new business from it.
Sellers must recognise when a moment of truth occurs through regular communication with the customer and generate new business from it.
Source: Hank Barnes, Gartner
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