Back to Parative

The Importance of Customer Lifecycle Management

November 14, 2022
August 8, 2022
October 3, 2022

Wouldn't it be great if you could get customers to find your products or services, buy them once, and become loyal customers for life?

We all know it doesn't quite work that way back in the real world. It takes excellent products, great customer service, and a commitment to managing the customer life cycle to grow and retain a customer base.

In this article, we'll cover the customer life cycle stages, how to best manage them, their success metrics, and ways to improve your customer life cycle management.

Ready? Let's go.

What is the Customer Lifecycle?

The Customer Lifecycle defines the process from when a customer first interacts with your product or service all the way to becoming a retained and loyal customer. 

In the SaaS world, the customer life cycle is not a straight line as purchases are not a finite moment in time but a subscription for an extended period (monthly or annual, for example). Therefore, while a product or service-based business would look to optimize its customer lifecycle for a repeat purchase or repeat customer, a SaaS or subscription-based business is focused on retaining customers and expanding its contract values. 

What are the Stages of the Customer Lifecycle?

The customer lifecycle in customer life cycle management is similar to the buyer's journey but continues after a customer has made a purchase and extends throughout their life. Here are the six lifecycle stages:

  1. Reach
  2. Acquisition
  3. Conversion
  4. Retention
  5. Loyalty
  6. Advocacy

The impact of Customer Success is that it helps you meet prospect and customer needs at each stage of the customer lifecycle.

1. Reach

The reach stage of the Customer Lifecycle is when a prospective customer has become aware of a problem or need.

They begin to search for the solution to their problem; this is the top of the funnel, where consumers are just becoming aware of who you are and what you do.

The customer may be comparing products from your competitors, researching online, and looking at reviews. 

Good strategies at this stage include:

  • Search engine optimization.
  • Search engine marketing.
  • Inbound marketing.
  • Social media.
  • Digital advertising targeted to buyer personas.

2. Acquisition

When customers connect with you - whether by going to your website, product page, or landing page or by calling you - they have moved to the acquisition phase.

The strategy at this stage of the customer lifecycle is to answer their questions by providing educational information while anticipating and meeting their needs. Content that answers common questions or demonstrates the usage of products or services is effective.

The content should help prospective customers facilitate purchase decisions. Offers, blog posts, videos, and pricing pages can help provide this information. Live chat and phone support can also be helpful, especially if customers are at the decision stage.

3. Conversion

In the conversion stage of the customer experience, the prospect officially turns into a customer and makes a purchase.

At this stage, the customer is ready to dive in and get started with your product, so you want to reinforce your value proposition. 

If there's no smooth, tailored process between the sales and onboarding cycle, customers may become confused or frustrated and stop using your product before they even start.

4. Retention

Once the sale is made, you're only partially through the lifecycle process. Your next phase is aimed at customer retention and satisfaction.

Besides an initial welcoming of a customer, the Customer onboarding really acts as a customer's first impression of your product and sets the tone for the customer relationship moving forward. 

But after onboarding, a customer needs to be retained long-term. This can be tough when account managers and customer success managers are responsible for a portfolio of accounts. So how can they identify a customer at risk and take the correct action?

Parative was built for this exact challenge. 

With Parative, front-line revenue and success teams can break through the noise of customer behavior data and identify the signals they need to do their jobs. 

5. Loyalty

When you create loyal customers, they become an essential asset. Brand loyalty keeps customers coming back for more.

Brand loyalty doesn't just happen; you have to nurture your customers to create that loyalty. Once you get there, you can build repeat business; your best customers purchase more often and spend more money when they do. A returning customer spends an average of 67% more than a new customer.

6. Advocacy

Customer advocacy typically refers to customers who are so satisfied with your product that they also refer others around them to sign up for your product. 

Having a clear metric for Advocacy can be a little tricky, but Net Promoter Scores, online reviews, and CSAT scores are good ways to measure advocates. 

Free Customer Health Scorecard Template

What Is Customer Lifecycle Management?

Customer lifecycle management is about managing your customers' processes as they move throughout their customer journey. As a result, you can turn prospects into lifelong brand advocates by creating awareness, nurturing customers, and creating exceptional customer experiences at each stage of that journey.

Managing the customer life cycle today means you have to be customer-centric, relying on not only explicit feedback from users but their implicit behaviors and signals. 

The "AARRR" Framework for Customer Lifecycle Management

We live in a new age for sellers and buyers of software products. As a result, the "old" models can no longer be relied upon.

Traditionally, the software sales model was entirely 'Sales-Led' - the sales team would either get an inbound or a marketing-generated lead, work that lead, go through a sales cycle and demo, and close a deal.

While that model still exists, a new Go-to-Market model has been emerging in the world of SaaS.

Today, buyers want to touch and feel the products they purchase; they want to discover value upfront, usually before they even talk to anyone at the company. This is true not only for potential customers, such as those on a free tier or trial, but an existing customers who could potentially expand their usage as well.

Customers expect their overall experience to be optimized based on their behavior and intent. Therefore, the lifecycle by which we look at these customers has shifted.

Enter the AARRR framework.

What is the AARRR Customer Lifecycle Framework?

AARRR - or Acquisition (and/or awareness), Activation, Retention, Referral, and Revenue - is a model for customer lifecycle management that focuses more on today's buying process and how the product itself is the most significant driver of customer acquisition and expansion. 

While the stages are similar, there are key differences as well. 

Acquisition (or awareness)

The channels or behaviors through which people discover your product. Some models will include an extra "a" in their framework to include awareness as its own stage, while others focus acquisition of a new user as the first stage. 


The action or set of actions users take to find value in your product. Activation is what pushes a potential customer to become an actual customer.


Acquiring a new user, having them activate in your product, and then becoming a paid customer does not mean the job is done. In a recurring revenue model, you need to retain customers from one contract period to the next or risk the dreaded churn. A retained customer goes back time and again to your product and is actively using it. 


The most valuable form of customer loyalty is getting a referral. Referred customers have all sorts of benefits, the greatest being that their cost of acquisition can approach zero.


The fundamental test: is your customer lifecycle management strategy generating revenue. This not only refers to net new revenue but expansion revenue as well. Optimizing for this customer journey stage would mean focusing on retaining customers and increasing their Customer Lifetime Value.

Why Customer Lifecycle Management Is Important for Customer Success Manager

A Customer Success Manager (CSM) helps manage customer relationships to provide a strong customer experience. Customer Success Managers are essential in creating customer engagement to promote customer health, leading to happy customers. 

Customer Success Manager may work directly with large accounts using customer data and Customer Success software to help onboard customers and enhance the customer experience.

Customer Success teams focus on customer relationship management rather than on product features or lifecycle marketing; they work to align customers' goals with those of the company to produce better outcomes and robust customer lifecycle management.

When the team focuses on building an organization that prioritizes Customer Success, it becomes obsessed with meeting customers' needs.

Often, this means providing additional support services beyond problem-solving - for example, providing an exceptional onboarding and deployment process, continuing to engage and nurture customers, and reinforcing the value proposition to encourage additional sales.

Customer Lifecycle Management is vital for the Customer Success team because it frames the customer's journey. 

While the marketing team focuses on Customer Lifecycle Marketing, customer success teams are still measured against how well they optimize for the entire customer life cycle. 

A lot can go wrong, even when customers are happy with their purchase decision. 

According to research conducted by 123 Form Builder, 61% of customers would leave for a competitor after just one negative experience. That number is up from 40% in previous years!

Customer Success helps you provide that support, helps sales and marketing teams collaborate to send a consistent message, and helps create better internal alignment.

5 Essential Customer Lifecycle Management Metrics 

The most successful organizations consistently measure customer satisfaction for both new and existing customers. That's not all, however. They also measure the customer experience at various lifecycle touchpoints.

Here are the five key categories CSMs and other revenue and retention managers need to measure to reduce their churn rate and increase their retention rate to build recurring revenue:

  1. Customer Acquisition Cost (CAC)
  2. Customer Retention Rate
  3. Customer Churn Rate
  4. Net Retention Rate (NRR)
  5. Customer Satisfaction Score (CSAT)
  6. Customer Lifetime Value (CLV)

Customer Acquisition Cost

Customer Acquisition Cost, or CAC, is the average amount of money a company needs to spend to acquire a new customer. 

One of the most significant expenses for any business is its CAC, and many startups with great products and services have failed because they couldn't control it.

However, it's not as simple as tracking spend for a new customer. 

First, you need to know where your efforts are providing the best ROI. This means tracking individual campaigns and strategies by approach and channel across each customer lifecycle stage.

How do you Calculate Customer Acquisition Cost?

Generally, Customer Acquisition Cost is calculated as:

Sales and Marketing Spend/# of Acquired Customers = CAC

Customer Retention Rate

To build a sustainable business, you've got to keep customers. Customer Retention is one metric you can use, as it indicates whether there's a problem somewhere in the value chain or your products or services aren't meeting customers' needs.

Your retention rate correlates closely with your ability to generate recurring revenue, making it a key performance indicator (KPI).

How do you Calculate Customer Retention Rate?

The calculation for Customer Retention Rate is:

((# of Remaining Customers at the end of a Period - # of New Customers During that Period) / # of Customers at the Beginning of the Period)*100 = Customer Retention Rate

Customer Churn Rate

The inverse of Customer Retention is Customer Churn, or the rate at which you cannot retain existing customers over a given period. 

In reality, Customer Churn Rate and Customer Retention Rate tell the same story: how well are you retaining existing customers. Looking at your churn rate is just a different view that will help the teams who are incentivized to reduce churn understand if there is a problem. 

How do you Calculate Customer Churn Rate?

The calculation of Customer Churn Rate is simply the inverse of Customer Retention. Therefore, at it's basic level, Customer Churn Rate is calculated as:

((# of Customers at the Beginning of the Period)-(# of Remaining Customer at the end of a Period - # of New Customers During that Period) / # of Customers at the Beginning of the Period)*100 = Customer Churn Rate

Customer Satisfaction Score (CSAT) and Net Promoter Score (NPS)

Customer satisfaction is an essential part of customer lifecycle management. The most common metrics are customer satisfaction score (CSAT) and Net Promoter Score (NPS).

CSAT indicates the degree to which customers are satisfied. Of course, most unhappy customers won't tell you there's an issue until they stop doing business with you, but CSAT helps you identify unhappy customers earlier and gauge how well you manage the customer experience.

NPS measures the likelihood that customers will recommend your business to others. This helps you measure the depth of their satisfaction. When referring your product or service to a friend or colleague, customers are putting their reputation on the line.

In both cases, it's all about getting useful customer feedback and tracking your performance over time against baselines.

Customer Lifetime Value (CLV)

Tied closely to your customer lifecycle management will be customer lifetime value (CLV). CLV measures a customer's total value to a business over the entire customer relationship. Knowing this metric is important to determine the appropriate amount of spending you should commit to to acquire and retain customers is important.

When your CAC exceeds your CLV, your business model needs adjustment. Although many companies are unbalanced as they build or launch new product offerings, a business that consistently sees a CAC higher than its CLV over the long term is destined to fail.

How do you Calculate Customer Lifetime Value?

The calculation for Customer Lifetime Value is:

Average Contract Value * Average Customer Lifetime = Customer Lifetime Value

How to Manage Customer Lifecycle With Parative

Parative's Customer Behavior Platform helps organizations build stronger customer relationships across the customer lifecycle. 

Success, Sales, and Marketing teams can accurately track customers' progress across each lifecycle stage and identify the key indicators that may signal churn by creating and monitoring important user segments. 

In this way, Parative enables revenue and retention teams to be proactive in their efforts to improve customer retention.

By measuring key touchpoints in the customer lifecycle, you can monitor the impact of your efforts to attract new customers, improve customer engagement, and build brand loyalty.

Parative is the first-ever Customer Behavior Platform, enabling front-line revenue and retention teams to proactively engage the right users, at the right time, with the right message.

Parative is not another dashboard; it allows you to get these insights and take action with the tools you already use, but you need to do your job with the important behavioral signals. 

This gives insights across the entire customer journey to give you the data you need to enhance your customer lifecycle management and customer experience while maximizing your user lifetime value.

Parative also integrates seamlessly into your workflow and your tech tools like marketing automation, customer relationship management (CRM), and Customer Success Platforms including:

  • HubSpot
  • Salesforce
  • Slack
  • Teams
  • ChurnZero
  • Pendo
  • and much more

Want to learn more about how Parative works and how you can turn potential customers into actual customers? Check out Parative here.


Customer lifecycle management is all about supporting your customers as they move through the buying journey. By creating awareness, nurturing customers, and creating an exceptional customer experience at each stage of the journey, you can turn your prospects into lifelong advocates for your brand.

Get new content delivered straight to your inbox. Subscribe
Mark Lerner

Head of Marketing @ Parative, the Customer Behavior Platform. SaaS enthusiast, B2B Marketing Specialist, Startup Survivalist. Dad x2.

Stay up to date with the
best in customer behavior.