The 4 Stages of LAER: Where Are You?

The four stages of LAER.png

Renewals

In our last blog, we explored TSIA’s LAER model (Land, Adopt, Expand, Renew) and the steps organizations can take to become truly “LAER Efficient”.

This month, we will list the four stages to becoming LAER efficient (as listed by TSIA) and explore the different tools adopted by organizations within each stage.

Stage: ‘Traditional Transactional’

Managed via: Microsoft Excel and a lot of people

This phase is largely characterized by one-off transactional sales. If you are in this phase, you would be using extremely manual tools and processes to manage these transactions, leaving a great deal of recurring revenue opportunities behind. Your tool of choice is Microsoft Excel, managed by a team of people responsible for manually reviewing and actioning - line by line.

There’s still quite a lot of technology providers still in this phase, despite experiencing slow quote to cash periods, increased cost of sale and loss of productivity and revenue leakage. Remaining in this phase could have a detrimental impact on your competitiveness and profitability in the long term.

Stage: ‘LAER Experiment’

Managed via: In-house software

Those in the “experimenting” phase have made the decision to move from upfront, one-off transactions to “as-a-service” offerings. To support this, you’ve established a customer success team who will help support customers throughout each stage of their lifecycle to increase recurring revenue. You may have also identified the need for better tools to help manage your subscriptions and/or usage and choose to build in-house software to fill this need.

Building in-house is not always a simple process though and can take a significant amount of time, money and resources. Once complete, it still requires continuous support, maintenance and upgrades by your I.T department, to ensure it performs and meets the business need. Perhaps the greatest downside is that the software will only be as good as your internal capability to continuously innovate – which isn’t always a strongpoint for internal I.T departments!  See more about this in our blog “Build Versus Buy – The Business Case”.

Stage: ‘LAER Effective’

Managed via: CPQ/CRM/ERP

If you have reached the LAER Effective stage, then you would have learned what is working and what is holding you back from becoming truly LAER Efficient. You would have identified the need for better tools besides Excel and/or in-house software. Given this, you may decide to utilize your CPQ system to manage both net new sales as well as renewals. But whilst traditional CPQ’s are adequate for managing net new sales, they fall very short when it comes to handling your product lifecycles and installed base. Here’s why:

  • Volume: Processing thousands of renewals via a tool that is built for low volume net-new sales is extremely time consuming and error-prone. 
  • Complexity: CPQ's aren't designed to manage a living installed base which is dynamic, ever changing, and complex (e.g. max 200 lines isn't enough!).
  • Channel: End-to-end collaboration throughout your entire channel ecosystem via a single platform is essential to succeed and CPQ's lack this functionality.

Stage: ‘LAER Efficient’

Managed via: Purpose-built platform 

With time, LAER Effective companies will discover that their Customer Renewal Costs (CRC) and Customer Expansion Costs (CEC) are far too high. Although they would be experiencing improved renewal rates, it would be at the cost of lower margins, especially at the scale and volume typical of a renewals business. As a result, they are not quite LAER Efficient as yet.

According TSIA, LAER Efficient companies are those who can expand and renew existing customers whilst driving down their total cost of sale. A key factor in keeping cost down is introducing automation into the process with a purpose-built, scalable SaaS platform like iasset.com, where you can:

  • Gain real-time visibility into your entire installed base
  • Convert quotes to cash faster with automated quoting from 120 days out
  • Trigger alerts when products reach end of life or service
  • Create automatic, pre-validated opportunities using pricing tiers and certifications
  • Integrate into your internal systems e.g. ERP, CRM or ITSM
  • Integrate to your upstream or downstream partners (or both!)
  • Leverage live dashboards and reports for in-depth intelligence
  • Leverage AI to predict trends and opportunities that may be at risk in advance

Companies that use iasset.com realize ROI in as little as 3 months from implementation, which is why it is the solution of choice for technology providers who want to become LAER Efficient. 

Find out how Fujitsu consistently achieves 90%+ under-contract and monthly renewal rates by automating their renewal management with iasset.com.

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