Expansion – not simple renewal – is the ultimate indicator of a successful customer.
There’s a way to handle expansion (upselling, cross-selling, land-and-expand, etc.) that results in limited, incremental growth in customer account value.
And there’s a way to do it that results in consistent, exponential growth in customer account value.
Interestingly, it doesn’t really matter who is driving the strategy for expansion.
Let’s dig in.
Incremental vs. Exponential Gains
Whether it’s driven by one part of the company (i.e. Sales) or whether it’s a synergistic cross-functional collaborative effort between Sales and Customer Success, if the push for expansion is quota-based and not derived from the customer’s actual progress, it’s going to result in limited increases in the value of customers.
However, if it’s based on the customers’ actual success, and the “expansion strategy” is built around giving the customer what they need, when they need it, then you will see revenue from customers 2x, 5x, 10x or more, leading to massive jumps in Annual Recurring Revenue (ARR) and Net Revenue Retention (NRR).
Complex Account Expansion Strategies Aren’t Needed
I’ll let you in on a little secret and you can tell your Sales leadership if you want: There’s just not a lot of ‘strategizing’ that has to take place to grow accounts like you have to do with prospects you don’t already have a relationship with.
Customers are ready to buy more stuff at different times throughout their lifecycle with you. Probably more frequently than you realize, meaning you could be getting a customer to buy more, more often, if you just looked at things the right way.
Instead, most of the time the customer’s readiness isn’t a deciding factor in whether they get approached to buy something.
Remember, expansion comes from customers with whom we’re already doing business. That context changes everything about the way you should approach expansion sales.
Customer Success IS the Expansion Strategy
Any “strategizing” that needs to take place would come in the form of understanding what success means for the customer and the stakeholders therein, ensuring the customer is progressing toward that success, knowing where they’re at on that journey, and getting clear on where along the way to that evolving success expansion makes sense. And then orchestrating properly.
It’s not like there isn’t work to do to ensure expansion happens, but the work is to ensure the customer is progressing to the points where expansion makes sense, and having managed expectations properly that once they hit that milestone, there’s an expansion opportunity waiting for them.
So it’s not about strategizing how to sell to them.
Rather, it’s about strategizing on how to make them successful and understanding what logical expansion opportunities exist for them along the way.
How to Surface Expansion Opportunities
When we talk about “Surfacing Opportunities” in Customer Success, we talk about surfacing them with the customer, and then connecting the customer to Sales or Growth or whomever needs to work with them to complete the deal.
For less complex “deals,” if the Customer Success Manager (CSM) can just add something to the customer’s account, they do that. Easy.
And if the customer can do it themselves, even better.
Done correctly, as customers grow and evolve, their relationship with you should grow and evolve, too.
The Ultimate Indicator of Customer Success
Expansion – not simple renewal – is the ultimate indicator of a successful customer.
In my years of experience, helping hundreds of companies around the world add Billions of Dollars in market value, the biggest constant among leaders of World-class companies is that they know Customer Success done right should be the biggest revenue driver in the company, far exceeding new business sales.
About Lincoln Murphy