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Land, Adopt, Expand, Renew—Well before its official debut in Technology-as-a-Service Playbook in 2016, TSIA proposed the LAER model as the ideal framework for technology business growth, and it has become far more than just an acronym since then. LAER has helped shape the customer approach for the entire XaaS movement and the technology industry as a whole. But like any roadmap, it’s most useful if you use it to guide your entire journey.
Each driver on a journey can’t follow their own individual map, or everyone will take wrong turns. Similarly, each of your business functions following the LAER process needs to see how the whole revenue picture comes together, and think about how each step in LAER serves the broader purpose. It’s the only way to achieve growth in an efficient and cost-effective manner.
If your company is going to capture the efficiency promised in the LAER model, you need to stop thinking about each motion separately, and start thinking about how the motions flow together to grow revenue throughout the customer life cycle. The Land motion should set up Adopt and Expand, and Adoption should lead directly to improved to Expand and Renew. These motions cannot function as independent initiatives or silos.
For example, when you Land your customers, do you pave the way for efficient expansion? Does your product have a path for easy add-ons, and do your contracts allow for the purchase of additional products and services without a full re-negotiation of terms? If not, then the Expand motion won’t be any more efficient or cost-effective than the Land sale, no matter who drives it.
Similarly, you need to look at what percentage of your Renewals have an Expansion tied to them. If you’re taking the customer through a full purchasing process as part of a renewal, which requires difficult motions like gaining buyer consensus, securing budget approval, negotiating with Procurement, etc. Then you have to push for an expansion as part of that renewal wherever you can. As any salesperson will tell you, driving a sale through the customer buying process is hard, but if you’re taking on expansion outside of the renewal, it’s twice as hard, because you have to go through the same cycle again. It’s inefficient at best, and borderline irresponsible at worst.
It’s not just salespeople and Customer Success teams who have to think about how their interactions serve LAER and lead to growth. Services teams interact with customers at a rate 5-15x as often as Sales, and can play a critical role in driving revenue growth. This is why TSIA’s Expand Selling body of research, which focuses on selling effectively to existing customers, includes such a significant amount of content covering everything that Services can, should, and shouldn’t do to help grow revenue without compromising their status as trusted advisor. They can take leads for new opportunities that they discover, deliver key messages and education, and even shepherd simple opportunities to closure. If your company is going to grow in any sort of cost-efficient way, these are motions that TSIA strongly recommends you undertake.
However, even if the Services and Customer Success teams don’t take proactive motions, they are generating incredible amounts of customer data. Each touchpoint with the customer provides potentially useful information. Even better, as the industry moves toward XaaS, companies are suddenly awash with telemetry and consumption data around how their offerings are being used. This much data can be overwhelming for companies, such that they often don’t know where to start. It’s a good problem to have, but a problem nonetheless.
Much of the issue is that this service and product-generated data usually exists in silos and formats that Sales cannot access or understand. The trick is turning this customer data into Account Intelligence, which is created when data is organized and aggregated in such a way that it can be utilized to grow customers, improve outcomes, and guide key decisions. TSIA is now providing prescriptive guidance on how to gather and leverage Account Intelligence at every step of the LAER model. In fact, Account Intelligence may be the glue that holds it all together, and the best way to gain the efficiencies promised by XaaS.
Most companies base their customer engagement models around their own internal cost model to sell and service their customers. They use criteria such as the customer’s overall size or spend to assign responsibility for additional transactions beyond the first sale, or, least efficiently, they just hand everything over to Sales and gain no efficiencies whatsoever.
TSIA believes, and our research has shown, that the right way to segment Expand and Renew opportunities is to match the capability of the person or team driving the sale with the complexity of the sales process.
(Click image to enlarge.)
Matching complexity with capability.
Matching complexity with capability.
Most Land sales are complex motions, but you can’t automatically assign a level of complexity to Expand and Renew transactions. The greater the complexity of the transaction, based on things like the size of the contract, the customization of the offer, or the difficulty of the decision-making process, the greater the sales capability required. Also, the more complex the transaction, the less likely that one person or team will have all the capabilities needed to secure the deal. What you want to avoid is high-capability people and teams working on low complexity transactions, as the cost of sale is unnecessarily high. You also don’t want lower-capability resources working on complex transactions, as they will struggle to close the deal.
The good news is by simplifying the offer, providing customer data in the form of Account Intelligence, and putting the right systems in place, you can enable lower capability (and lower cost) resources to do more and more in the sales cycle. You can even pass some of the very straightforward sales off to (gasp!) automation and e-commerce. LAER efficient selling means putting the right resources toward the right opportunities across the LAER lifecycle.
The topic of LAER as the roadmap for growth will be explored in detail at the upcoming Technology & Services World conference in Las Vegas this October. Our team of revenue-generation experts will host an interactive panel called “Welcome to the Customer Growth Team,” where we’ll talk about how each motion within LAER serves to grow revenue efficiently.
I will go into more detail on LAER as a roadmap for growth, and talk about the “4 Phases to LAER-Efficient Selling”, and TSIA’s vice president of XaaS product management research, Laura Fay, will talk about how Product Management organizations can build offerings that are LAER aware and effective, and much, much more. We look forward to seeing you there, and beginning your journey to profitable growth with LAER as the roadmap.
Post Date: September 3, 2019
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Steve Frost is the vice president and managing director of revenue research and advisory for TSIA. He also serves TSIA’s vice president of expand selling research. Throughout his career, he has held various leadership and business development roles at companies like Google, Netscape, and Loudcloud, helping them define their go-to-market strategy and business development tactics. Steve is dedicated to helping technology organizations grow their services, subscription, and XaaS revenue by optimizing their practices for growth throughout the customer lifecycle.
The Technology Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.