Many business frameworks argue that there is an evolutionary cycle to customer behavior, much like the natural progression from youth to maturity and old age in human life. Just as people undergo different phases with distinct needs and actions, customers experience various stages in their interaction with products and services. Recognizing these differences is crucial for businesses aiming to better understand how customers perceive value at different touchpoints. One helpful tool for this is the Customer Activity Cycle (CAC), a model that traces how customers think and behave before, during, and after purchasing a product or service.
The Origins of the Customer Activity Cycle
The Customer Activity Cycle was first introduced by Sandra Vandermerwe, a professor of international marketing at the University of London's Imperial College. In her 1993 article in The Columbia Journal of World Business, Vandermerwe explained how businesses can add value by identifying key points in the cycle where customer needs and behaviors change. These insights help businesses align their offerings with customer expectations and build stronger, more loyal relationships.
The model operates on a fundamental premise: customer interactions with products and brands don’t stop at the point of sale. Instead, customers experience a sequence of moments—known as "moments of truth"—that shape their perception of the brand. These moments occur not only during the buying process but also when customers first encounter a product through advertising, when they make a purchase, and when they actually use it.
A key aspect of Vandermerwe's approach is the focus on the end-user, rather than intermediaries like distributors or retailers. She emphasized that understanding how the final customer uses and values a product is vital to long-term success. This insight can reveal unrecognized needs and opportunities for adding value. For example, a supplier of building materials might notice that merchants accumulate unwanted wooden pallets, creating clutter. By offering a service to manage these redundant pallets, the supplier could solve a problem and enhance their value proposition to the merchant.
The Stages of the Customer Activity Cycle
Vandermerwe's framework divides the customer experience into three distinct stages: PRE, DURING, and POST. Each stage reflects a different phase of interaction, during which customers have different needs and expectations.
The PRE Stage:This stage is where the customer begins the process of recognizing a problem and evaluating possible solutions. It is a phase filled with decision-making, and customers weigh different options to meet their needs. Businesses that understand the uncertainties customers face during this phase can position themselves as a helpful guide, offering tailored solutions that closely match the customer's expectations. For example, a company might offer product comparisons or customer reviews to assist decision-making.
The DURING Stage:During this stage, the customer is actively engaging with the product or service, often leading to the point of purchase. It’s crucial that companies have the right processes in place to support the customer, whether through efficient delivery, customer service, or providing clear instructions on how to use the product. For example, offering an easy-to-access helpline or troubleshooting guide can make a big difference in how the customer perceives the brand’s value. The delivery experience itself—how quickly and efficiently products arrive—can also significantly influence customer satisfaction.
The POST Stage:Winning a customer is only half the battle; retaining them is just as important. The POST stage focuses on nurturing long-term relationships by ensuring that the customer continues to feel valued. This can be achieved by staying in touch, offering after-sales support, or developing solutions that address evolving customer needs. Companies that actively engage with customers after a purchase can build loyalty and improve their chances of repeat business. This stage is also crucial for gathering feedback, allowing businesses to refine their offerings based on real-world usage and customer insights.
Comparing the Customer Activity Cycle to AIDA
The idea of a customer journey is not new. In fact, the early 20th century advertising model known as AIDA (Awareness, Interest, Desire, Action) presents a similar sequence of steps, focusing on how customers move from learning about a product to making a purchase. However, the AIDA model primarily focuses on the moment of sale, while the Customer Activity Cycle goes beyond this, examining how businesses can add value before, during, and after the transaction.
Whereas AIDA focuses on customer behavior up to the point of action (the purchase), the Customer Activity Cycle digs deeper into the customer experience, offering a more holistic view of how to create lasting value and loyalty.
How the Customer Activity Cycle Has Evolved
The concept of a life cycle is not exclusive to Vandermerwe’s Customer Activity Cycle. Over time, other authors and business strategists have built upon this framework, expanding or modifying its stages to fit various industries. One area where the model has seen significant application is in eCommerce. By understanding customer behavior in each stage of the cycle, online businesses can improve website design, search engine optimization, and digital marketing strategies. For instance, tracking customer engagement across the PRE, DURING, and POST stages can help companies identify what is working well and what needs improvement, making the customer journey smoother and more rewarding.
Case Study: Baxter Healthcare
A real-world example of the Customer Activity Cycle in action comes from Baxter, a healthcare company that manufactures disposable dialysis bags for patients undergoing kidney treatment at home. By the late 1990s, Baxter was struggling with high product costs and declining market share. To address these challenges, the company took a closer look at the customer activity cycle, seeking ways to add value beyond the product itself.
Rather than just selling dialysis bags, Baxter began to view the experience through the lens of the patients using them. They considered how patients managed their prescriptions, how they disposed of used bags, and how the product impacted their day-to-day lives. By offering services that helped patients manage these aspects of their treatment more easily, Baxter transformed itself from a dialysis bag manufacturer into a patient care provider, extending its value proposition. As a result, patients were able to manage their treatment at home for longer, reducing the need for hospital visits and enhancing their overall experience.
Applying the Customer Activity Cycle to Your Business
To leverage the Customer Activity Cycle effectively, businesses need to ask themselves several important questions:
Who are the end-users of your products or services?
What do you know about their engagement during the PRE, DURING, and POST stages?
Which aspects of your offering are most valued by customers at each stage?
Are there any elements of your product or service that are underutilized or unnecessary?
How can you modify or expand your offering to provide more value across all stages of the customer journey?
By focusing on these key points, businesses can better understand their customers’ needs and create lasting value that builds loyalty over time. Whether through improving the buying experience, offering better post-purchase support, or finding new ways to engage with customers in the early stages of their journey, the Customer Activity Cycle provides a powerful framework for driving long-term success.
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