Every business needs to grow. However, in today’s customer-centered economy, simply seeking out new customers is not enough. Companies today are instead looking to implement a customer expansion strategy.
Customer expansion isn’t about pushing current customers to spend more; rather, it’s about creating extra value that customers will benefit from. Customers are willing to pay for this new value, which helps you increase your company’s revenue. Think of customer expansion as a challenge to your business to become even better while enabling you and your customers to grow together.
What is a Customer Expansion Strategy?
An effective customer expansion strategy starts by taking the time to understand what your customers wish to achieve by using your product. Every customer who purchased your product did so with a specific goal in mind. When customers started working towards those goals during the onboarding stage, it was their first time achieving value. Being mindful of your customers’ goals will help you identify upsell opportunities that offer them additional value.
In our customer-centered economy, renewals are more important than ever. They’re a robust source of growth for any recurring revenue business model, but don’t wait until the last minute. Ensure a renewal by making sure you deliver on your promises and bring value throughout the entire customer journey. Let’s take a look at key considerations for offering additional value that aligns with your customers’ goals.
Tips for Improving Your Customer Expansion Strategy
Customer behavior can give clues as to where the customer is headed in their journey, and with a watchful eye and thoughtful questioning, you can find expansion opportunities as they arise. For example, if you see that a client is growing, they might need new features or additional licenses. That’s the ideal way to approach upsells: only pursue an upsell or cross-sell if it will genuinely benefit the customer.
Here are some tips for improving your customer expansion strategy:
- Use segmentation: You can use segmentation to group customers who have similar goals and behaviors. Aligning customers by shared needs makes it easier to tailor personalized messaging and identify expansion opportunities by segment.
- Learn how to identify an expansion opportunity: To do this, start out with customers who are not in escalations. Wait for them to graduate from onboarding, then analyze levels of high product usage, overutilization, and license utilization data. What features are a customer using? What features should they be using? Figure out what services or features will give customers that extra edge.
- Keep expansion strategies in mind at every stage of the journey: Promote high utilization of the product and licenses at every stage. What are you doing early on to improve the experience and increase the value for their investment? An effective onboarding process should set customers up for continuous learning throughout the customer journey. Those customers up for renewal should feel reassured that they are supported and have resources for best practices—and feel like they are kept in the loop. At the adoption stage, provide multiple opportunities for users to be taught more advanced or new features.
- Optimize customer expansion: Before making an expansion offer, make sure you know the whole story of the account. For example, does the customer have a new point of contact? If so, you may wait to present expansion opportunities until the new contact is fully onboarded. Was the customer’s team acquired by another division? This may give you a chance to expand the product use to the rest of the new division or increase licenses. A CSM or representative can come prepared with the latest customer data to show how the product is being used today, the value it has brought, and customer goals accomplished. Or, maybe a customer has high license utilization for only one product, but you identify that they may benefit from using an additional product. If so, this is a great cross-sell opportunity. Make sure you fully understand the customer’s status before attempting expansion and you’ll have better chances of success.
- Gather client data in one place: Customer expansions rely on data, including detailed customer histories. Every team member who interacts with a customer must have access to this information so they can fully understand the customer’s journey. Using easily shareable data, every team member can track and analyze each customer’s expansion progress.
Implementing these tips can be difficult to do manually or without software that offers all the capabilities you need. Customer-centered growth is the future of businesses with a recurring revenue model. If you are ready to start identifying which of your customers are ready for expansion, try using customer success software that delivers capabilities designed to help you achieve your customer success goals.
Improve Your Strategy with the Right Software
A customer success platform offers the visibility needed to understand customers’ goals, track progress, and respond to behavior that indicates they could use an expansion offer. It gathers customer data from a variety of sources and presents them in one view that makes insights easier to spot and makes data actionable. It provides this intelligence to every member of your organization, making it simpler to identify customers ready for expansion. Give your team a process that guides CSMs on how to best follow-through on the expansion opportunity.
Remember, providing additional value is the driving force behind customer expansion. Your customers are your best advocates, so continue to grow your product, services, and efficiencies along with them to help you both shine.
Totango offers a customer success platform that can help you enable an early warning system to identify expansion opportunities and take action right away. To learn more, explore Spark. Or, request a demo to try using Spark yourself.