When most people think about web analytics it's in the context of pageviews, visits, or bounce rates. While such metrics are certainly important components of online measurement, they are very small brushstrokes in the painting that is your customers lifetime. Good analyses may require elements of goal setting, lean testing, segmentation, or iteration. But the most critical element is the relationship between what you're measuring and the customer life cycle of your business.
The concept of the customer life cycle funnel was first discussed in a white paper by Jim Sterne and Matt Cutler, as a method to "quickly determine the roadblocks and bottlenecks that your customers encounter." You may have different phases in your own funnel, but the message is the same: in everything that you measure, ask yourself how it influences your customer life cycle.
This is true if your focus is growth, revenue, or any other top-line metric that can be tied to your digital presence. Considering your customers in these stages will help simplify your measurement, and help your team create products and marketing initiatives to address challenges indicated by your customers behavior.
A brief overview of each stage in this funnel:
This is the "top of the funnel" where customers first experience your online presence. The more work you put in, the wider the funnel. But acquisition is useless unless you've activated a customer by providing value in some form. If you have enough money you can drive infinite traffic, but do those visitors continue down the funnel? Probably not. No matter how visitors arrive on your site, you can always optimize value over time by measuring each channel's ability to break into the next stage of the funnel.
Think of this as persuasion; can you persuade a visitor to accomplish what you'd like them to? This stage will help you evaluate both the acquisition sources and the tools you have in place to convert those visitors into customers.
There's a saying that it's cheaper to retain a customer than to acquire a new one. I don't universally agree, but the lower your retention rate falls the more effort you have to put into acquisition & activation to break even. This ultimately comes down to the value you provide to your customers. The greater the value, the more likely they are to return. And depending on how "sticky" your brand is, you may need to tactically remind your customers that you're still there.
Just because they're gone, doesn't mean they won't return. When a customer churns, it's a learning moment. Understand why they left, and attempt to bring them back to the activation stage.
With the mountains of data available these days, it's easy to get lost in minutia. The customer life cycle funnel exists to maintain focus on the big picture. As you create experiments, set goals, or just start to review a new site feature, keep this framework in mind to simplify your analyses.
Simplify analytics with the customer life cycle. Big picture context means more effective measurement. [tweet this]