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 Sales > Settings > Sales left side menu > Deals > toggle the Sync lifecycle stages to associated contacts and companies 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 > Contacts & Companies.