Want to increase the lifetime value of your existing accounts with customer expansion (aka account expansion) strategies? Well, here are some questions you need to consider:
- How do you know if your customers are ready for cross-sells and upsells?
- When should you pitch those customers additional offerings?
- What do you say to make it clear that you’re promoting these offers to benefit your customers and not just use them to increase revenue for your business?
If you’re not sure how to answer those questions at the moment, don’t worry. You’ll be able to by the end of reading this blog post.
We’ll also show you how AI technology is changing the customer expansion game and making this revenue growth strategy a more effective and predictable task for SaaS companies.
Let’s start with the basics before digging into how you can implement a customer expansion strategy for your SaaS company ASAP.
What is customer expansion?
Customer expansion is the process of increasing customer lifetime value by exploring various tactics that encourage customers to purchase more and engage further with your company. This strategy can help you increase your company’s overall revenue more sustainably than simply relying on new revenue streams.
You may have heard that customer retention is 5x cheaper than customer acquisition. But have you also heard you have a 60-70% chance of selling to an existing customer? On the other hand, you only have a 5-20% chance of selling to a prospect.
With those odds, it would be a huge mistake not to explore customer expansion strategies, especially if you’re in the SaaS industry.
Why is customer expansion important for SaaS companies?
Operating in the subscription economy has its unique challenges—from pricing and product packaging to customer engagement. With a customer expansion strategy in place, SaaS companies can boost revenue by increasing the lifetime value of their customers and focusing on generating new business from existing customers.
Customer expansion strategies also help SaaS companies build deeper relationships with existing customers through account based marketing. In turn, these strategies can help to boost customer loyalty and encourage those customers to stay with your company for a longer time.
So, whether you’re a newly funded startup or an established large enterprise, customer expansion is where you can find gold. Well… if you know when and how to dig for it. In other words, if you know when and how to implement an effective customer expansion strategy.
What is a customer expansion strategy?
Customer expansion strategies are specific tactics that companies use to increase the value of existing customers. These tactics include upselling, cross-selling and add-ons. Here, we’ll discuss each tactic in more detail and give examples of how they apply to SaaS companies.
For SaaS companies, upselling involves offering customers subscription plan upgrades or higher-priced versions of a product. For example, let’s imagine you work for a cloud hosting company. As an upsell, you could offer customers an upgrade from basic hosting to premium hosting plans.
Cross-selling means introducing customers to complementary products. This tactic allows SaaS companies to increase sales while also creating a more comprehensive and attractive customer experience. For instance, an EdTech company that sells online certification programs could offer students access to additional courses or study materials when they purchase one of their courses.
Add-ons typically come in the form of a few additional features rather than standalone products, as they depend on another product or service to be functional. For example, a financial software company could offer additional tracking and analytics features to existing customers who have purchased their financial software.
How to know when your current customers are ready for expansion opportunities
So, how do you know when to actually offer account expansion opportunities? And how do you avoid annoying your existing customers with sales pitches for upsells they may not be ready for?
Data. Yes, you can determine when to offer account expansion opportunities by looking at the data. But what kind of data?
Well, typical advice on customer expansion will tell you to look at data on customer usage. For example, by looking at usage data, you can determine when customers use your product more over time. This type of data could indicate those customers are likely to be open to account expansion opportunities.
Customer sentiment data can also be helpful. This data type can include customer survey responses, NPS scores and customer service conversations. If customers provide overwhelmingly positive feedback, they’re more likely to expand their usage or add other products or services.
Both of these data types are great starting points to get you thinking about the right time to offer account expansion opportunities. But what you really need is data that shows what behaviors customers tend to display when they’re ready to purchase upgrades and additional products from you. And that type of data is called exegraphic data.
How exegraphic data can show you how to identify an upsell opportunity
What is exegraphic data? Exegraphic data is data showing how businesses operate and behave when they’re ready to purchase. For example, exegraphics might show that your best customers have all purchased upgrades after launching a product targeting a new market segment.
With that information, you’d know to keep an eye on customers who have recently acquired a new customer base and proactively upsell offers. With exegraphics, you could also learn how to tweak your messaging to show how an upgrade can enhance their market expansion strategy.
But how do you find exegraphic data? Well, we’re a bit biased. But the easiest way is to use Rev.
Rev uses AI-powered technology to pull and analyze exegraphic data points from company websites, job boards, press releases and similar sources. The platform even prioritizes the accounts based on readiness and fit, so you know which companies to pitch upsells to first!
5 additional tips to optimize customer expansion strategies
In addition to using AI and exegraphic data, here are five additional tips to help you drive revenue through upsells and cross-sells.
#1 Update your ideal customer profile and the customer journey
Where do expansion offers fit into the customer journey? At what point might your customers need more than your standard service plan or standalone product? Knowing your ideal customer profile (ICP) and their behavior within each stage of the customer journey will help you target expansion offers at the right time.
If you use Rev, you can update your ICP using exegraphics to better understand what influences businesses to buy from you. Rev also allows you to create a dynamic model of your ICP (we call it an aiCP) that evolves as your customer base grows.
That way, you always have the most accurate view of your best customers, which helps you market more effectively when looking to earn more from your existing customers and acquire new customers.
#2 Empower your customer success team
If your customer success team still needs to make customer expansion efforts a priority, it’s time to get them onboard. Empower your team with the tools and strategies that will help them spot opportunities for upsells and cross-sells.
For example, you can train customer success managers to analyze customer and exegraphic data to recognize when customers are likely ready to upgrade their plans or add additional services.
This way, you’d develop a team of customer success professionals who are ready to leverage customer expansion strategies to drive growth without needing the direct support of sales for every customer.
#3 Learn from customer churn and downgrades
No one likes to see customers leave, but analyzing customer churn can help you identify any potential issues that may have led to their departure. How do you do this? By gathering insights from surveys and the customer success team on why customers downgraded their plans or decided to leave.
With that information, you may be able to identify new offers to present as upsells or cross-sells to prevent churn proactively. It can also help you develop an upselling strategy for current customers at risk of downgrading.
For example, let’s say you identified that a customer was unhappy with the customer support they received. You could offer them a customer success package that includes access to exclusive content, one-on-one training sessions with customer success representatives or discounts for upgrades for the year.
Exegraphics data is another data point that can help you prevent churn. By evaluating the exegraphic data of recently-churned customers, you can see the deeper signals that led to churn—so you can build programs that help mitigate it well before renewal conversations.
#4 Segment your messaging to demonstrate the value of an upsell or cross-sell
Don’t make the mistake of thinking the customer will automatically understand the value of an upsell or cross-sell. You need to use language that demonstrates the value and outlines how the offer will help solve their unique problem.
For example, suppose a segment of your customers is using your software to streamline their financial operations in the HR tech space. In that case, you could tailor your marketing messages to highlight how a particular upsell or cross-sell specifically helps HR Tech companies save time and money.
On the other hand, you may also have a segment using your financial software in the legal industry. In this case, you could emphasize in your messaging how a particular upsell or cross-sell can help streamline time-consuming, tedious legal processes.
#5 Create and promote relevant content about your premium features
Quality, in-depth content about the benefits of your upsells and cross-sells can enable your sales team to sell more efficiently as they talk to customers about why they should upgrade or purchase additional features.
Even without the involvement of sales reps, content explaining the value of your premium features can convince customers who prefer to do their own research before making decisions.
For example, you could create a case study on how one customer benefited from your upsell and another blog post about how a particular upsell or cross-sell can help customers get more value from your product or service.
Customer expansion is ultimately about improving customer relationships and providing value. But it’s not enough to just present customers with upsell or cross-sell opportunities. Instead, you should focus on how these additions will help customers get more from your product and make their lives easier.
Exegraphic data is an invaluable tool for knowing when and how to do this. Not only can it show you which businesses are the best fit for upsells and cross-sells, but it can also indicate when they’re most likely to purchase additional items. Using exegraphic data also helps ensure that you can tailor your messaging to each business’s unique circumstances.
Want to see the power of exegraphics in helping you increase the value of your existing customers? Contact us, and we’ll give you a free audit of your ICP so you know the characteristics of the best candidates to pitch your additional offers.