In modern marketing, Customer Lifecycle Management (CLM) is a central instrument for optimally supporting and supporting customers throughout their entire journey. Companies use CLM to efficiently acquire, activate, retain customers and ultimately maximize revenue per customer through cross-sell and upsell. The entire process is divided into several phases aimed at increasing the value of each customer and minimizing churn.

Overview: The phases of customer lifecycle management

The Customer Lifecycle Management process can be divided into three main phases:

1. Attract and acquire: This involves recruiting new customers, nurturing leads and ultimately converting them into active customers.
2. Activate and incentivize: After a customer has been acquired, it is critical to activate them, encourage their usage, and identify cross-sell or upsell opportunities.
3. Maintain and retain: In the final phase, the company focuses on strengthening customer loyalty and preventing churn through excellent service and targeted measures.

A critical aspect within these phases is increasing sales through cross-selling and upselling. This is exactly where the activity index plays a crucial role. In the following sections we take a closer look at this concept and how it is used in practice.

The activity index and its potential in cross-sell / upsell

The activity index is a key figure that analyzes a customer’s behavior and evaluates the likelihood of a successful upsell or cross-sell offer based on various factors. By analyzing purchase history, interests and behavioral trends, companies can identify which products or services are particularly interesting for a customer. This index can be applied generally but also to individual transaction categories.

Now let’s look at a concrete example of how the activity index can be used to specifically make customers an upsell offer for a premium credit card.

Example: Upsell to the premium card

The following example illustrates how the affinity index is applied step by step as part of an upsell process for the premium card:

• Action: A 38-year-old customer with an income of 65,000 euros rarely uses her credit card.
• Analysis: Based on the activity index, the company recognizes that the customer has an increasing interest in the “beauty” category. There is also a high correlation between “Fashion” and “Beauty” in their transaction history.
• Measure: The customer proactively receives an email informing her that she can collect double loyalty points when shopping at a specific beauty brand. This is intended to increase activity on the credit card.
• Behavior: After receiving the email, the customer’s activity ideally increases. She initially buys fashion and supermarket items, later increasingly in the “Gaming” and “Beauty” categories.
• Activity index: If the activity index increases to a certain level, the customer qualifies for a different message, namely an individual offer for a premium credit card with the aim of achieving an upsell to premium.
• Result: Finally, the customer is made an offer for a premium card based on her interest and increasing usage.

Of course, not every customer will behave the same way… but we’re talking about an automation that, once set up, applies to all customers who meet certain criteria, so that every customer gets “the chance” to increase credit card usage!

And all customers who do not react accordingly can be further processed and “picked up” with another automation.

Conclusion: The affinity index as a sales driver

The activity index is a powerful tool in customer lifecycle management. Used correctly, it can significantly help increase a company’s sales by enabling personalized upsell and cross-sell offers. By analyzing customer behavior and taking targeted measures, not only can customer activity be increased, but loyalty to the company can also be strengthened. The affinity index therefore offers an excellent opportunity to optimize the customer lifecycle management process and ensure long-term success.

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