Growing your business isn’t just about bringing in new customers — it’s also about getting more value from the ones you already have. By focusing on customer expansion strategies, you can drive serious growth, keep your customers around for longer, and boost your profits in the long run.
What Is Customer Expansion?
Customer expansion is about finding ways to get your existing customers to spend more over time. Instead of pouring all your energy into acquiring new customers, you take steps to build deeper relationships with your current ones. This could mean getting them to add more users or seats, use your product more often, upgrade to a higher-tier plan, buy complementary products, or add on extra features.
The costs of acquiring new customers are going up, and the competition is getting tougher. It’s why customer expansion is more critical than ever. Here are a few key reasons:
- It’s cost-effective: Getting a new customer on board is usually much more expensive than keeping and growing an existing one. By investing in customer expansion, you get the most bang for your buck from the customers you already have.
- It increases lifetime value: When you expand your relationships with current customers, you increase their lifetime value. That means a more stable and predictable stream of revenue for your business.
- It boosts customer loyalty: Customers who buy more from you are less likely to churn and more likely to be satisfied with your product or service.
- It gives you a competitive edge: A strong customer expansion strategy helps you stand out from your competitors by offering more comprehensive solutions that meet more of your customers’ needs.
Types of Customer Expansion
There are a few ways to approach customer expansion, each with its unique benefits and strategies.
Adding More Users/Seats
This gets your existing customers to add more users or seats to their accounts. Let’s say a company starts by buying 10 licenses for your software solution. Your goal would be to get them to increase that to 50 or 100 over time. The more people using your product, the more value they’re getting, and the more likely they are to stick around.
Increasing Usage
Another way to expand is by getting your customers to use your product more often. This could mean encouraging them to explore new features, use your software for more tasks, or make it a bigger part of their daily work. The more they use it, the more they’ll see how valuable it is and the more they’ll be willing to invest in it.
Upselling to Higher Tiers
Upselling is all about getting your customers to upgrade to a higher-tier plan or a premium version of your product. To make this work, you need to show them how much more they could be getting with those advanced features and capabilities. If they can see the added value, they’ll be more likely to make the switch.
Cross-Selling Complementary Products
Cross-selling happens when you offer your existing customers other products or services that work well with what they’re already using. For example, if a customer is using your project management software, you might suggest a time-tracking tool that integrates with it seamlessly. You want to show them how these products can work together to make their lives easier.
Providing Add-Ons
Add-ons are extra features or services that customers can tack onto their main product. This could be things like advanced reporting tools, extra storage space, or dedicated customer support. These add-ons give your customers the chance to customize their experience and get even more value out of your product.
What Makes a Customer Expansion Strategy Effective?
To nail your customer expansion strategy, your SaaS company needs all hands on deck. It’s a group effort that requires sales, customer success, product, and marketing teams to work together like a well-oiled machine.
Cross-Functional Collaboration
Your sales team is usually the first to spot expansion opportunities when they’re speaking with potential customers. They need to recognize when a customer could benefit from additional products or services.
Meanwhile, your customer success team is building relationships and making sure your customers are getting the most out of your product. They’re in the perfect position to identify expansion opportunities during regular check-ins and feedback sessions.
Your product team needs to make sure your product can handle more users, features, and integrations as you expand. They should also be collecting customer feedback to figure out which new features or add-ons would be most valuable.
And don’t forget about marketing! They’re key to educating your customers about the benefits of using more of your product. This could mean creating targeted campaigns, educational content, webinars, or demos.
Measuring Success
To measure the success of your expansion efforts, keep an eye on key metrics like:
- Annual Recurring Revenue
- Lifetime Value
- Net Revenue Retention
Set specific, measurable goals, like increasing the average number of seats per customer or achieving a certain upsell rate, to keep your team on track.
Accelerating Growth Through Customer Expansion in 2024
To rev up your growth through customer expansion, focus on nailing these key areas:
- Onboarding: Start on the right foot with a stellar onboarding process. Make sure your customers are fully trained and comfortable using your product from day one. Bonus points for personalized onboarding experiences – they can really boost customer satisfaction and make future expansions more likely.
- Customer Education: Keep your customers in the loop about new features, best practices, and ways to get the most out of your product. Webinars, tutorials, knowledge base articles, and in-app guides are all great ways to do this. The more your customers know, the more likely they are to see the value in expanding their use of your product.
- Product Adoption: Encourage your customers to dive deeper into your product by showing off the benefits of features they might be missing out on. Use data to figure out which features aren’t getting enough love and create targeted campaigns to promote them.
- Relationship-Building: Build strong relationships with your customers through regular check-ins, feedback sessions, and top-notch support. The stronger the relationship, the more trust you’ll have — and that makes customers more open to expansion opportunities.
- Account Management: Give your key customers their own dedicated account managers who know your customers’ needs inside and out. These managers should be proactive about suggesting relevant expansions.
Tools and Platforms for Customer Expansion
The right tools and platforms can supercharge your customer expansion efforts:
- Customer onboarding platforms like OnRamp streamline customer onboarding, setting the stage for future expansion with process automation, enhanced engagement, and increased visibility.
- CRMs like Salesforce or HubSpot track interactions, spot expansion opportunities, and manage relationships.
- Customer success platforms like Gainsight or Totango provide insights into customer health, usage patterns, and expansion opportunities.
- Product analytics tools like Pendo, Mixpanel, or Amplitude offer detailed insights into product usage and identify upsell opportunities.
- Marketing automation tools like Marketo create targeted campaigns to educate customers and drive growth.
- Communication and collaboration tools like Slack or Microsoft Teams keep teams aligned on expansion goals.
Conclusion
Customer expansion is a must-have growth strategy for B2B SaaS companies, especially when times are tough. By focusing on getting more value from your existing customers, you can seriously boost your revenue and profits. It takes a team effort, the right tools, and a commitment to understanding and meeting your customers’ needs — but the payoff is worth it. OnRamp can help you make customer expansion a top priority, and see sustainable growth in 2024 and beyond.
