The CRM will update the lifecycle stage of Contacts or Companies when they first become associated with a deal and when that deal reaches a deal stage with a 100% probability (Closed Won).
When a Company is associated with a deal, the lifecycle stage will update to 'Opportunity'.
- When a Contact is associated with a deal, the lifecycle stage will update to 'Opportunity' provided they do not have their lifecycle stage set to 'customer', 'evangelist', or 'other'."
Once a deal associated with a Contact or Company reaches a deal stage with 100% probability (Closed Won), then the lifecycle stage will update to 'Customer'.
You can manage this setting under Settings > Deals > toggle the setting to turn it off or on.
Note: When the lifecycle stage of a Company is updated, the lifecycle stage of all Contacts associated with that Company will also be updated if 'Lifecycle stage sync' is enabled within Settings > Companies.