Technology has radically changed the world. However, what has changed more radically is the way the technology is purchased and adopted by a customer. There are no longer significant upfront commitments but rather are made up of lower-cost subscriptions and value-added services. Undoubtedly, this change has crept into the Customer Success world as well. This is why the blog explains why the ‘LAER model in Customer Success’ is too important a topic to ignore.
As a Customer Success professional, you’d know how difficult it is to expand your customer base. You need to be on top of your customer’s journey to see if they’re getting what they came to you for. Delivering value and improved business outcomes is a sure-shot way of ensuring customer satisfaction. Hence, the LAER model in customer success is a method of determining how well your organization maximizes the value of each customer’s journey.
First, let’s clearly define and understand the LAER model.
What is a LAER model?
The LAER (Land, Adopt, Expand, Renew) model was developed by Technology Services Industry Association (TSIA). This is a customer engagement model which helps SaaS businesses drive growth. LAER helps customer success professionals make the most of their customer engagement.
The LAER model is a framework for establishing an initial relationship with customers and building on it over time. As more technology suppliers move toward subscription-based services, customer engagement has taken the center stage in ensuring customer success. Reviewing the KPIs and metrics is the best method to see how well you’re doing in each phase of your customer relationship.
What is a Customer Engagement Model?
So you understand that LAER is a customer engagement model. But what is a customer engagement model?
A customer engagement model is a company’s method of interacting and creating connections with its customers. The best customer engagement model will boost trial conversions, revenue per customer, customer satisfaction, and customer retention significantly.
How is it similar to/different from the Customer success model?
A customer success model defines how a business will interact with customers throughout its journey. It caters to both reactive and proactive service and support tasks, ensuring that customers get the most out of the product or service.
Customer Success teams are responsible for identifying customers’ goals and assisting them in achieving their objectives through the use of a purchased product or service. Meanwhile, customer engagement delivers exceptional service at every touchpoint, from awareness to acquisition and beyond.
Despite the difference, both are inextricably interconnected. Both the models (customer engagement and customer success), focus on a customer’s journey before acquisition through customer advocacy. Customer Success is all-encompassing and covers customer engagement under its umbrella.
LAER model in Customer Success. Who owns the model?
SaaS firms interested in using the LAER model, to track customer success, should first learn about each phase. Multiple, cross-functional teams own and implement this model. Each of these teams has a certain objective in mind, which ultimately supports the overall company objective. Let’s take a look at how these teams can carry out these steps of the customer experience.
‘Land’ would be the first phase in the LAER model. This phase encompasses all the sales and marketing activities that help to secure the first sale of a product to a new customer, as well as its initial implementation. You’ve successfully persuaded the prospect to become a new customer of yours when you land the customer. Simply put, this stage indicates the typical sales method for introducing a customer to a product or service.
Here are some tips that your Sales and Marketing teams can use to carry out the process effectively.
- Determine the needs, issues, and pain areas of your customers. You must be clear about the problem you’re seeking to tackle with your product or service right from the start.
- With regard to your solution, create buyer personas and important use cases. (Marketing)
- Examine your solution’s feasibility report and develop clear conclusions about how your product will help the consumer solve their problem.
- Define the value you intend to provide to your consumers.
- Begin the sales process with the customer’s success in mind and the above preparation in mind.
The second stage is ‘Adopt’. It generally includes activities involved in ensuring that the customer adopts and expands their use of the solution successfully. This is the step in which you assist the customer who has recently purchased your technology in successfully implementing it to meet their business objectives. Adoption is a major focus for most CSMs, and it entails training new clients on how to utilize the product to achieve their objectives.
Once you land the customer, you must assist clients in gaining value from the product. Time to first value is a critical metric that must be achieved flawlessly. Some key points to consider at this stage in the LAER model are:
- Continue to educate customers about new product features and coach them on how to use the product more effectively. (Customer Success team)
- Improve customer engagement to improve their product experience and encourage them to use more of the product’s features.
- Identify and fix challenges that the customer faces with product usage, if any. Resolve this immediately because this issue if left unattended can contribute to preventing product adoption.
When clients are actively involved in using specific services, it’s time to see if they are interested in other items that your organization offers. This is done at the next stage ‘Expand’. This step is educating clients and showing them what further they can do with a platform.
You can tell when a customer has adopted a product by using the correct Customer Success KPIs. When you are certain that the consumer is happy with the product, it is time to contact them for additional business. The steps for account expansion are as below.
- Determine whether or not they are ready for an upsell or cross-sell based on their product usage. (Customer Success team)
- Conduct regular customer review sessions to discuss any extra requirements.
- Demonstrate the value you currently provide and how other solutions you offer can assist them in achieving various company objectives.
- Get your sales team to help you set up the resources you’ll need to sell upsells and cross-sells to your customers. (Sales)
- Include key stakeholders who have the authority to decide whether or not to use additional solutions your firm provides.
Bonus resource: 5 Vital signs to see if customers are ready for upsells.
The fourth or the last phase is the ‘Renew’ stage. Your customer success efforts aren’t complete until they renew their membership for the next period, no matter how many products you sell them. Renewal isn’t merely wishful thinking. You must pursue the customer via numerous processes in order to achieve this goal.
When the end of the term approaches, it all comes down to encouraging your consumer to renew their subscription services. Don’t wait until the customer’s credit card is about to expire to start appealing to them.
- Staying ahead of renewal with regular quarterly business reviews (QBRs) with key clients is a terrific strategy to remain ahead of the game.
- Examine your key performance indicators for clues that your customer is on the verge of switching to another provider.
- Perhaps you’ve seen a decrease in daily logins or the number of queries your application processes.
- When a customer complains, make sure you respond quickly.
- Customers that have a renewal date approaching should be given high consideration.
- Tell them how much you value their business and how they may benefit from continuing to use your SaaS platform.
Check out the Renewal playbook for further information about this model.
Limitations of LAER model in Customer Success
After assisting firms with their GTM models in Sales and Success positions for the past few years, there’s something about the LAER model that isn’t right. Take a look at the image above. LAER is frequently depicted as a sequential, linear process. However, the customer journey is, in fact, a cycle.
This misrepresentation leads to reduced product capabilities, use cases, etc. The “serial LAER” method of thinking may provide certain difficulties:
- Limited communication and difficult handoffs between Sales and Customer Success teams
- Adoption of the product and it’s new features will be unclear as your software matures.
- The renewal conversation is divorced from the platform’s value and adoption.
- Later in the customer journey, there is a hazy insertion of specialist roles (eg: customer advocacy, renewals or account management function, etc.)
If you’re experiencing some of these issues, review your client interaction patterns and go-to-market strategies to account for “life after the first renewal.”
Final thoughts on ‘LAER model in Customer Success’
The Customer Success leader must orchestrate all of these stages in the LAER model. Customers are at various points in their customer journeys. As a result, you’d have to move back and forth between the many stages required. It takes time, experience, and continual learning to progress from a novice LAER model to a proficient LAER model.
You can use this technique to accelerate business growth by keeping a close check on your installed customer base. And once you get the hang of it, your customer success initiatives will begin to pay off in a big way.
P.S. – The main image has been taken from pexels.com