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Understanding Customer Churn, Part 2
Navigating the Churn Labyrinth: A 7-Stage Journey with the TSIA LAER Model 

Abstract: 

This blog delves into subscriber churn, a critical metric in subscription businesses, using the LAER model as a framework. It explores the 7 stages of the subscriber journey from "Land" to "Renew", pinpointing potential churn areas and actionable solutions at each stage.

Key Points:

• LAER Model Stages: Unveiling the four key stages - Land (acquire), Adopt (onboard), Expand (upsell), Renew (retain) - and their importance in understanding churn.

• Churn Areas & Solutions: Identifying specific challenges and strategies for each stage, including missed opportunities during trials, onboarding difficulties, underutilized features, and disengagement before renewals.

• Data-Driven Strategies: Emphasizing the use of customer data and feedback to tailor offerings, personalize communications, and offer relevant upsell/cross-sell opportunities.

• Proactive Customer Engagement: Highlighting the importance of regular communication, proactive support, and loyalty programs to keep customers engaged and prevent churn.

• Competitive Advantage: Underscoring the need for competitive pricing, unique value propositions, and continuous improvement to retain customers against competitors.

Target Audience: 

Subscription business owners and professionals seeking to understand and mitigate churn through the LAER model framework, ultimately improving customer retention and business success.

For those who may be unfamiliar with TSIA’s LAER model, it’s a customer engagement model consisting of 4 key stages:

1. LAND - This stage is all about acquiring new customers. This involves marketing, sales, and lead generation efforts to attract potential customers and convert them into paying subscribers.

2. ADOPT - This stage is about ensuring that new customers are using your product or service and getting value from it. It involves onboarding customers, providing training, and offering support. 

3. EXPAND - This stage is about upselling and cross-selling to existing customers. It involves identifying opportunities to sell more products or services to existing customers and providing incentives to encourage them to do so.

4. RENEW - This stage is about ensuring that existing customers continue to subscribe to your product or service. It involves communicating with customers about upcoming renewals, offering discounts and promotions, and making it easy for customers to renew their subscriptions.

The LAER model is a powerful tool that can help businesses improve customer retention and accelerate growth. Land is a pre-sale stage as you work to acquire new customers, while Adopt, Expand, and Renew are all post-sale stages in which you work to satisfy and retain your customers. Through the lens of the LAER model, we will embark on the 7 stages of the subscriber journey and pinpoint associated churn areas and solutions along the way.   

LAND

Stage 1: Learn - This is the stage where potential customers are first exposed to your product or service. They may learn about it through advertising, word-of-mouth, or other channels. While they are learning about your offering, they are also learning about what your competition offers and making comparisons based on their needs, budgets, and preferences. Churn areas:

• Customers don’t understand what your product or service does. A potential customer learns about your product or service through an ad, blog post, or other online search, but they are not clear about what your product or service does, so they do not gain interest in your offering.

  • Solution: Make sure that your advertising and online information is clear, concise, up-to-date, and accurately reflects the value of your product or service. Ensure that the value directly speaks to your target customer segment for highest awareness, understanding, and interest.

• A customer hears negative things about your product or service. A potential customer learns about your product or service through word-of-mouth, but the person who told them about it didn't have a good experience, so they may not want to engage with your company.

  • Solution: Consumers are much more likely to try out a product or service when recommended by someone that they trust. Make sure that your existing customers are having positive experiences, so that they advocate for your offering to their friends, family, and colleagues. 

• Customers do not find your product or service to be better than what your competition offers. A potential customer researches the product or service offerings available in the market, learns about your offering, but then decides that it does not best meet their needs (be it related to functionality, price, reviews, etc).

  • Solution: Make sure that your offerings are competitive and clearly demonstrate the value to your intended customer base. Conduct thorough market research and tailor your strategies to what your customers want, and call out differentiating factors that put you ahead of your competition.  

Stage 2: Try - In this stage, potential customers try out your product or service for a set duration, either for free or at a discounted price. They may also get to try out a limited-feature version of your offering. This gives them the opportunity to see if it is a good fit for them. Churn areas:

• The trial is too short and/or too restrictive. A potential customer tries out your product or service, but they do not have adequate time and/or access to convince them to subscribe. 

• • Solution: The trial you provide your prospective customers with should be positive and compelling enough for them to want to subscribe. Play around with the best ratio of duration and features-provided to ensure you’re converting your prospects into long-term, paying customers. After all, if you offer a free trial that doesn’t provide enough time nor functionality for conversion, that’s an unfortunate loss in comparison to providing a more in-depth trial which converts a trier into a buyer for years to come.

• The customer experiences a technical issue that goes unresolved. While trying out your product or service, the customer faces a technical issue and is unable to resolve it, or they find it to be off-putting enough to not move forward with their subscription purchase.

• • Solution: Make sure that your customer support is easy to access and readily available to help potential customers resolve technical issues during trials; if a technical issue is solved in a prompt, efficient way, many customers may consider that to be a positive point towards the overall experience instead of just a straight negative. A post-resolution follow-up is also beneficial so customer support can answer any questions lingering encourage potential customers to purchase.

• The customer determines the product or service is not a good fit for them. When your customer trials your product or service, they may ultimately decide that they did not see the value in continuing with a subscription.

• • Solution: While it is critical to ensure your trial period provides clear benefits and value, it is also important to understand from your trial-users why they chose not to move forward with a purchase. Was it difficult to use? Too expensive? Not comprehensive enough? Be sure to gather feedback from your users, and try to offer them something which may entice them to change their mind, or simply use it to make the overall experience better for future customer trials.

ADOPT

Stage 3: Purchase - If potential customers are happy with their trial, they will purchase your product or service. This is a major milestone in the subscriber journey. Churn areas:

• The customer doesn’t like the pricing options or payment plans available. When it comes time for your customer to pay, they may not like the pricing options or ways to remit payment, so they decide not to purchase.  

• • Solution: One size does not fit all – so you need to ensure that you provide options and flexibility that entice your customers. Be sure to offer flexible packages with various pricing structures and payment frequencies (monthly, annually, etc.), in addition to numerous payment methods (credit card, cash app, bank withdrawals, etc.). This encourages your customers to choose the options that work best for them, hence reducing the likelihood of churn.

• The payment process is too difficult or lengthy. Once your customer has chosen their package, a challenging or time-consuming payment process can cause customers to turn away from completing payment altogether. 

• • Solution: Make your payment process as simple and straightforward as possible. The faster your customer can enter their information, submit their purchase, and proceed to access their subscription – the better. Keep your subscription billing system up to date with all the latest capabilities and integrate it with your other end-to-end systems for a smooth customer onboarding experience. And, if errors do arise, connecting customers to support agents that can swiftly resolve their issues will reduce the likelihood of customers giving up.

• The payment gets rejected due to insufficient funds. If a customer has insufficient funds, their bank or other payment provider may reject the attempted withdrawal payment, leading to churn if not addressed.  

• • Solution: If a customer’s payment declines while they are trying to pay, provide prompt notice and suggest alternative means of payment, or connect them to a service representative for assistance to resolution. If the error occurs at a later point, do not immediately cut off their access to your product or service; to provide the best customer experience, notify them of their overdue payment and make updating their payment method as simple as possible so they can continue to benefit from your offering. Proactive, supportive communication is key to reducing this involuntary churn.

Stage 4: Use - Once customers have purchased your product or service, they will start using it. This is where they will experience the value of your product or service and decide whether to continue subscribing. Churn areas:

·       The customer doesn’t fully utilize the product or service. If a customer fails to use the product or service’s full range of features and capabilities (likely due to not fully understanding how to use it effectively), they may become dissatisfied and cancel.

o   Solution: To help your customers take full advantage of their new subscription, develop comprehensive onboarding resources, such as video tutorials, knowledge bases, and user guides to support new customers throughout their journey with the product or service. You can also offer personalized training sessions and send targeted feature update emails to encourage users to further explore and utilize the functionality fully.

• The customer finds that your product or service does not meet their needs. If a customer begins using your product or service and finds that it does not provide them with the value they expected, they will likely cancel.    

• • Solution: Make sure your product or service is aligned with your customers' needs—even as those needs evolve. You can do this by conducting customer surveys, implementing customer feedback, and regularly improving your product or service offerings to increase the value to your customers. Customer service representatives can also work with customers to determine if changes to access, price, or other factors can help to improve their overall experience and prevent cancellations.

• The customer has a bad experience with your product or service and is not satisfied with a resolution. If a customer faces challenges while using your product or service and they are not satisfied with a resolution, they may decide to simply cancel instead.

• • Solution: In addition to making sure your product or service offering is easy to understand and use, it is also essential that customers can easily access help when they need it. This can be done by providing online help resources, offering live chat support, or making it easy for customers to contact customer support by phone. For a more proactive approach, customer service representatives can contact customers directly to inquire whether they’re enjoying their experience or facing difficulties, and then work to provide prompt resolution to any concerns.

Stage 5: Manage - As customers use your product or service, they will need to manage their account. This may involve updating their billing information, changing their plan, or cancelling their subscription altogether. Managing an account is typically done through a self-serve portal. Churn areas:

• A customer is unable to find pertinent information within their account. If a customer is unable to easily navigate their account information nor find the details they are looking for, this decreases customer satisfaction and can lead to churn.       

• • Solution: The beauty of a flexible, user-friendly self-service portal is that customers are able to – you guessed it—serve themselves. The ability to find desired information at ones’ own convenience is a large part of the subscription experience. To prevent unnecessary frustration, ensure that your account management portal is intuitive with convenient functionality and packed with relevant information—such as billing statements, plan and usage information, personal details, payment methods, and so on. When customers feel that they are in control of their subscription experience, they are much less likely to cancel.

• A customer experiences inaccuracies in their account. Inaccuracies found within an account, such as previously-updated personal details that didn’t stick or inaccurate billing charges, may cause customers to lose trust in your company and cancel their subscription.        

o   Solution: To ensure information is accurate for the end-user, all of your subscription systems must be properly integrated. Without the proper connections, data cannot flow seamlessly and accurately between the systems, leading to inaccurate billing and other disruptions to the customer experience. Well-done implementations and integrations will significantly decrease data inaccuracies, and other deliberate check-ins can be conducted periodically to verify that customer information is correct.

• The customer is unable to change their plan, payment information, or other details. If a customer wants to change their plan (let’s say to a less expensive plan, for example), but they are unable to do so easily, they may opt to end the subscription altogether. Similarly, if they cannot easily update payment information, they may choose to instead let the payment lapse and cease service.   

• • Solution: While no business wants customers to “downgrade,” it is important to make changing plans and updating payment information uncomplicated. Self-adjusting plans and other account information facilitates continuation of the subscription as opposed to the customer cancelling altogether due to lack of self-service ability. The various options offered should be clear, understandable, and simple to switch to, such that customers can make the appropriate changes when their needs or budgets change. And, if they do want to cancel their subscription, this should be just as easy with no hoops to jump through; you can collect information from them about their experience afterwards to improve the experience for others going forward.

EXPAND

Stage 6: Grow - As customers continue to use your product or service, they may be interested in upgrading their plan or adding additional features. This is an opportunity to upsell or cross-sell to your customers. Churn areas:

• The customer is not aware of upgrade options. It is possible that the customer is simply not aware that they have the option to upgrade their subscription. This could be because they have not been made aware of the different upgrade options, or because they are not sure how to upgrade.

  • Solution: While checking in on your customers, be sure to let them know what other options are available—proactively. Customers appreciate the ability to choose, and being in-the-know means they can make the best choices possible for their given circumstances. Once customers are aware of upgrade possibilities, foster an upgrade process that is quick, efficient, and avoids downtime.

• The customer receives irrelevant upsell or cross-sell offers. If a customer receives offers that do not align with their needs, they will not choose to expand their subscriptions.

• • Solution: Utilize data analytics to understand customer behavior and preferences, and then tailor upsell and cross-sell offers based on their specific needs and usage patterns. Be sure to emphasize the added value they would receive if they take advantage of these additional offers.  

• The customer does not see the value in upgrading their plan. If a customer is happy (or simply satisfied) with their current subscription, they may not see the need to upgrade; they may not think that the additional features or benefits of a higher-tier subscription are worth the extra cost.

  • Solution: Make sure that you offer compelling upgrade options to your customers, and that you communicate the value of these options. This could involve offering bundles or discounts, providing exclusive content, or suggesting other relevant products or services that your customers might be interested in. The more value you can provide to your customers, the more likely they are to continue expanding their subscriptions across your offering stack.  

RENEW

Stage 7: Renew - Once customer subscriptions are nearing expiration, they will need to decide whether or not to renew. As this is the final step in the subscriber journey, it is important to make sure that customers are happy with your product or service and that renewing with your company is a breeze. Churn areas:

• The customer forgets to renew their subscription. A customer using your product or service may forget to renew their subscription once the term has ended (presuming payments are not set to auto-pay).

• • Solution: While it is crucial to stay in touch with your customers throughout the term of their subscription, it is especially important during the renewal period. If your customers’ payments aren’t set to auto-renew, you should send them timely renewal reminders well before their term ends, provide a simple process for renewing subscriptions online, and possibly offer continuation discounts as an engagement incentive.

• The customer has disengaged from your subscription offering. Customers that do not receive regular communication, interaction, and/or incentive may become disengaged and choose not to renew.  

  • Solution: Implement a customer engagement strategy that includes regular newsletters, personalized updates, and relevant content to keep customers informed and engaged throughout their subscription period. Customer retention strategies, such as loyalty programs and referral incentives, also help to keep customers engaged throughout their term. In the event that disengagement arises from unresolved issues or negative support interactions, conduct post-interaction surveys and follow-ups with dissatisfied customers to address their concerns and rectify any issues; this demonstrates a commitment to resolving problems and will lower the number of disengagements from dissatisfaction. 

• The customer switches to your competition’s offering. A customer using your product or service may decide that they want to forgo the subscription with your company and instead head to a competitor due to competitive pricing or perceived better value.

• • Solution: Proactive communication throughout the customer lifecycle should include assessing customer needs and whether your offering meets those needs. If you can discover ways to improve their experience directly from them before they decide to leave, this will reduce churn. Additionally, you should conduct regular pricing analysis and ensure the subscription offering provides a competitive edge by showcasing unique value propositions and differentiating features.

Reducing customer churn in a subscription business is crucial for long-term success. To do so, companies should pay close attention to each stage of the LAER model and focus on providing exceptional customer experiences throughout the entire customer journey. This includes continuously assessing customer satisfaction, monitoring customer usage and behavior, addressing customer feedback, and offering proactive customer support. By understanding and implementing the principles of the LAER model, businesses can improve customer retention, increase customer lifetime value, and create a thriving subscription business.