Marketing to the Customer Life Cycle

The direct marketing industry made capturing information about customers a science. Good marketing teams projected response rates and sales within 20% of the final results. Great marketing teams narrowed their analysis down to less than 10%. Campaign projections provided bankable results before ecommerce became a viable channel.

The Internet changed everything. It turned the world into a global marketplace, allowing companies to economically expand their territory. The mid to late 1990’s were an exciting time as direct marketers jumped into the new channel. Imagining an endless supply of customers was exhilarating.

While conducting a routine customer retention audit for a client in 1998, I noticed some anomalies that required further investigation. Customer acquisition was at an all-time high due to aggressive online marketing. Retention rates were decreasing at an alarming rate. Lifetime value was also declining.

The company was one of the early adopters to Internet marketing. Their website launched in Spring of 1994 (six months before Amazon.) Four years later, their business was growing but the growth was not sustainable. The customers acquired via the Internet were hit & run shoppers, ordering once or twice and then disappearing.

It turned out that the problem was even larger than reduced retention rates because the people who were leaving were treated the same as customers acquired via traditional direct marketing targeted strategies. This meant that they received twelve to fourteen catalogs and postcards before being cycled out of the active file. Profitability was declining too.

When I first saw hit & run shoppers, I thought they were created by internal service issues. After all, it was unusual to see a large segment of new customers stop buying after one or two orders. We looked at service and product quality issues. Most of the people leaving didn’t have either. A review of products purchased found that there weren’t any clearly defined patterns. We sorted through all of data available without finding any commonalities except the acquisition channel.


Prior to the Internet, prospects were carefully targeted. Customers acquired typically stayed for a full lifespan. This is one of the reasons that the marketing teams could project sales with such accuracy. Online marketing changed the playing field. Instead of companies identifying prospects likely to become long term customers, people found products to fulfill immediate needs. Some become the customers of yesteryear, but many are hit & runners. They have limited needs for the products or services.

Identifying customer types as soon as possible improves profitability because it reduces the money invested in non-performing shoppers. After finding the hit & run shoppers in other audits, I started looking for other oddities in buy patterns. It is this research that lead to identifying the different types of customers and how they move from first purchase to last. The research was conducted over decade with a variety of clients across multiple industries. Product lines and services change but customer types remain consistent.

"Marketing to the Customer Life Cycle" is a guide for identifying customer types before they break the bank.