Growth is on every organization’s mind. If you are exclusively using a traditional sales funnel to manage and forecast your growth, you might be missing out on your best source of revenue expansion.
Most businesses rely on a funnel to define their buyer journey, forecast sales, and focus on expanding their customer base.
Funnels make sense for managing new customer acquisitions. Not every customer you engage is ready to buy, or ever will be. To counteract this, organizations work diligently to fill the top of the funnel with prospects and nurture them until they are ready to buy.
Logic would follow that to achieve growth; one simply has to reach out to more prospects or modify tactics to nurture and convert prospects. The more prospects you put in the top of the funnel, the more leads your sales team can engage, and the more customers you convert.
While funnels are effective, overreliance on them can reinforce a singular-mindset that growth only comes by acquiring new customers. This type of thinking overlooks a brand-defining opportunity and can reinforce department silos.
The Downside of Funnels
Funnels, with their emphasis on conversion, tend to create transactional relationships with your customers. Specifically, they cause your sales and marketing teams to focus entirely on the funnel, creating a one-way flow.
Meaning that sales and marketing interests shift back to new prospects once a purchase has been made—leaving a void in the customer experience.
This singular mindset on landing the sale creates boundaries between teams that form silos.
For example:
- Marketing relentlessly pursues generating awareness and filling the funnel with leads.
- Sales works diligently to engage and convert prospects into customers.
- Service works round the clock to onboard, support, and delight the customer.
At first glance—this seems like a harmonious team. But from the customer’s perspective, relationships and interactions change dramatically as they progress through your operations. This also creates teams that are disconnected from their customers and the experience provided.
In these transactional customer journeys, teams are effectively de-incentivized to work together to ensure their customers’ success—thereby sacrificing loyalty to pursue new leads.
This paradigm is often exaggerated as a company grows—making it more difficult to manage meaningful relationships with customers at scale.
Luckily, there is another way to bring resilient and lasting growth. The answer lies beyond the funnel—once a customer has made a purchase.
LAER Model: Sustainable Customer-Centric Growth
While funnels are a valuable tool, they need to be counterbalanced with a more holistic approach to growth.
The LAER model—which represents Land, Adopt, Expand, Review—is a customer journey framework that encourages businesses to invest in long-term relationships with their customers. LAER was introduced by TSIA (Technology Services Industry Association), and it balances the funnel equation by emphasizing the importance of ensuring customers achieve ROI, providing long-term value, and sharing success.
This customer journey model has found widespread adoption in the XaaS industry, where revenue models rely heavily on shared success strategies. Any organization can use the same customer-centric strategy to increase brand loyalty and revenue.
Let’s take a look at the individual stages in the LAER model and how they change a businesses priorities through a customer’s journey:
Land
The Land stage encompasses all the activities required to motivate a customer to purchase and the initial activities to implement the solution. “Land” should be familiar as this is where your traditional funnel resides along with all of your customer acquisition efforts. Essentially, the entirety of your new customer acquisition efforts (the funnel) resides in this one stage.
The remaining three stages are dedicated to various aspects of growing your customer relationships.
Adopt
The Adopt stage is where you begin to invest in your customer’s outcomes. The purpose of this stage is to ensure the customer achieves their intended value—or return on investment (ROI). Your offering may have many benefits and features, but the Adopt stage focuses only on the features and benefits that motivated your customer to purchase.
While this stage is service-centric—successful adoption requires heavy involvement from sales. Marketing teams support service and sales by ensuring messaging, collateral, and value statements remain consistent.
During this stage, your teams foster accountability and trust as they help the customer reach their goals.
Expand
During the Expand stage, your organization engages customers to increase their utilization of your products. Further utilization may mean additional features, upgrades, accessories, or simply integrating existing functionality into the customers’ operations.
This stage helps make your solutions indispensable to the customer and secures your continued relationship. The more that a customer relies on your products to make their life easier—the more likely they will be to continue doing business with you.
Again, success in this stage relies on your organization’s ability to work cross-functionally. Service, sales, and marketing teams work together to identify opportunities to expand features and use cases by leveraging their relationships and insights.
Don’t underestimate the value of expanding relationships by delivering additional value.
Renew
The Renew stage comprises the activities required to get your customer to continue doing business with you.
This stage is similar to Land. However, customers now have firsthand experience of your organization and well-formed impressions. Your relationship up until this point and your customer’s achieved ROI—will determine this phase’s outcome.
During Renew, efforts are focused on reaffirming the customer’s purchase, demonstrating the value they achieved, and motivating them to continue their relationship with you.
There should be no surprises during this period, as both parties have a deep understanding of their dynamic and value.
This stage is often led by sales, with marketing and service teams acting in a supporting role.
Once a customer “Renews,” they return to an Adopt stage where new customer goals are established and pursued.
LAER Model: Virtuous Cycles and Revenue Expansion
The LAER model does not do away with funnels or efforts to attract and convert new customers. Instead, LAER argues that sustainable growth is achieved when marketing, sales, and service teams work together to ensure customers achieve their goals.
By sharing responsibility for the entire customer journey, marketing, sales, and service teams become more connected with their customers, champion their success, and create advocates.
Brand advocates spend more money with your organization—increasing customer lifetime value while promoting your brand and attracting friends.
In other words, the LAER model enables you to put your existing customers back into the funnel.
Existing customers cost less to acquire, are easier to sell, and provide you with the best marketing on the planet—word-of-mouth.
When successfully executed, the LAER model becomes cyclical—driving growth and long-term, mutually successful relationships.
This is known as a virtuous cycle, and the growth it provides is organic, predictable, and sustainable.
The Growth Potential Hiding at the End of Your Funnel
Here are the facts:
- Acquiring a new customer can cost five times more than retaining an existing customer (HBR).
- 80% of your company’s future revenue will come from just 20% of your existing customers. (Gartner Group)
- Improving your customer retention by just 5% can increase your company’s profitability from 25% to 95%. (Bain and Company)
- The success rate of selling to a customer you already have is 60–70% while selling to a new customer is 5–20%. (Marketing Metrics)
- “Loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the company.” (Qualtrics XM Institute)
Final Thoughts
The traditional concept of funnels and funnel management systems—are compelling and help teams manage, understand, and nurture leads through the sales process.
That said—successful businesses are shifting their focus and revenue generation efforts to encompass the entire customer journey.
The LAER model offers organizations a customer-centric framework in which to align their teams and promote growth.
Organizations that adopt a complete approach to their customer journey are better able to streamline operations as well as align goals and KPIs among their sales, marketing, and service teams. This breaks down silos and creates an environment in which departments contribute to common goals and share responsibilities.
Ultimately—the LAER model provides an opportunity to realign efforts away from transactional behaviors and toward shared success relationships within your organization and its customers. By developing long-term customer relationships, organizations can compound the value of their initial acquisition efforts.
Is your organization maximizing customer value by investing in shared success and lasting relationships at scale?