There was an item of conversation that popped out of my post the other day about “Circling The Drain” that seemed to resonate with people that I’d consider “consumers” and others I’d think of primarily as “producers”.
I made a throwaway comment that the “funnel experts” promote the idea that customers are nothing more than a “wallet with feet”. Their mode of operation is predicated on the notion that the customer has cracked out their credit card, may never do it again, so you should get every last penny you can out of them during that one purchasing event.
The problem is when they start talking about “lifetime customer value”. Their view of the world has nothing to do with “lifetime”, it’s very singular transaction focused.
As I said, both “consumers” and “producers” seemed to be saying to me in email responses that they didn’t like that mentality. The consumers felt like they were being abused and producers felt like they were being coached on the idea of milking their customers.
First things first, selling isn’t evil.
Nothing happens in the world until someone sells someone something.
To be clear, I don’t have any problem with selling and nor should you. The problem occurs when the “funnel” becomes what I refer to as a “gauntlet of stupid” where you basically make the customer go through several screens, often insinuating that what they bought was not good enough, just to get the thing that they’ve paid for.
That’s abusive in my opinion and really is a case of doing business in bad faith.
So, what’s the answer?
I’m a proponent of the “LAER” approach (pronounced “layer”) that many technology companies have moved towards.
LAER stands for: Land, Adopt, Expand and Renew.
In simple terms, you “land” a client by providing them with good value upfront to establish a commercial relationship. That gives you both some skin in the game, but also moves beyond the “selling” phase into a “delivery” position.
The magic element of this strategy, in my humble but accurate opinion, comes from the “adopt” phase. Smart companies get their customers and clients to not just buy, but to take up and use what they buy. They focus on the onboarding stage to make sure the customer starts getting value out of their purchase as soon as possible.
Value is very sticky.
Once you’ve got the customer onboard and they’ve started getting value from what you’ve sold them, you have earned the right to talk about “expanding” the relationship into new products and services. You will have also gained some good intelligence about what the customer needs more help with and have the credibility to speak authoritatively.
Finally, the real value for your business comes with the “renew”. If you’re running a continuity type business, this is easy to understand – the customer keeps paying you beyond the initial term of your relationship.
For people selling one-off products and service, this might seem a bit more nebulous. When we speak of “renew” in this sense, it’s really more around continuing to buy other products and services that you offer in an ongoing fashion. Admittedly it does blur a bit into “expand” but think of this as the “lifetime value” area.
On an aside, if you don’t have a recurring revenue product/service in your business, you really need to think about why you don’t. But that’s a topic for another conversation.
Anyway, I think for those of you who are uncomfortable with forcing your clients through the “gauntlet of stupid”, then I reckon the LAER model is one you’ll be far more comfortable with. It’s all about the client getting value from what you sell them to help you get further sales by offering additional ongoing value from a position of strength.
Think about how you might be able to reposition what you already offer and weave this idea into the fabric of your business.