What is a land and expand strategy? Is this the right thing for you SaaS? How do you get started?
In this guide, we’re going to show you how a land and expand strategy can help you grow your revenue generation from existing clients by deploying a foot-in-the-door approach with your sales team!
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What is the land and expand sales strategy?
The land and expand sales strategy focuses on landing a small deal within a team, company, or organization and then using that contract to nurture the customer relationship through excellent service.
You then expand by upselling and cross-selling the same client on other services for different projects.
What are the benefits of the land and expand strategy?
There are quite a few benefits to adopting a land and expand strategy when trying to acquire, retain, and expand client accounts.
The four most notable benefits of the land and expand strategy are:
- Increased customer lifetime value (LTV)
- Higher customer retention rates
- Lower customer churn rates
- Stronger customer relationships
Land and expand strategy checklist
There are a few things you’ll need to have in place before you launch a land and expand strategy.
These preparations will ensure that your sales process is set up to close an initial deal with new paying customers and effectively expand revenue growth from the existing customers that you already have.
Let’s take a look at the six key preparations you need to make for your land and expand strategy:
#1. You have a clear target market
It’s important to remember that a land and expand strategy is a multi-departmental effort that will need to be deployed across your sales, marketing, and customer success team in order to achieve optimal results.
As such, you’ll need to have a clear target market so that your marketing team can generate the right leads, your sales rep can touch on the right pain points, and your customer success teams are able to meet all the needs on key accounts so they actually stay around long enough for account growth to occur.
#2. Your positioning and messaging attract the right customers
Of course, having the right audience in mind isn’t much help if you aren’t able to attract those customers in an effective and targeted manner.
This is why product positioning and \brand messaging are so important as they’re able to appeal to a customer’s decision-makers in the most relevant way possible.
It’s pointless to talk about additional features that high-level decision-makers couldn’t care less about. Instead of trying to sell every feature to everyone on earth, optimize strategies around the core benefits that would appeal to more than half of your potential customers.
#3. You have achieved product-market fit
A land and expand strategy requires sustained ongoing efforts which is why it’s crucial that you already have product-market fit before you start putting in the hours. Making sure your product, sales model, pricing, and feature set already meet the needs of the average user in your target audience is key.
Without product-market fit, the land and expand strategy won’t take you very far beyond free trials and one customer out of however many leads. Remember, creating brand champions is impossible if your product doesn’t even satisfy the basic requirements of your customer base.
#4. Your sales team and sales process are ready for this strategy
The land and expand business strategy is only valuable if your sales rep lands an initial deal through it.
If your sales team isn’t ready then all the time and money spent on customer acquisition will go down the drain before you can even close the first deal (much less try to cross-sell anyone).
In the same way that engagement metrics can be skewed by power users, closing deals at higher price points disproportionately relies on appealing to key decision-makers.
Once your sales team and process are able to successfully implement this strategy, only then will you see the results you’re looking for.
#5. Your customer success team has a strategy to turn new users into loyal customers
Your customer success team and account managers will be key touchpoints when it comes to expanding accounts. The land and expand model hinges on your company’s ability to provide exemplary service so that customer renewal rates stay high and a future cross-sell is more likely to succeed.
Beyond the first deal, it will be your customer success team’s job to onboard users, educate customers about core features, and help every client accomplish their job-to-be-done (JTBD) while using your product — in other words, customer success across the entire user journey.
#6. You have decided on expansion strategies to increase net revenue retention
The land and expand model requires an effective expand process to start generating revenue growth from the entire organization over time. There are two primary account expansion strategies that you can use to create fresh revenue opportunities from existing customers:
- Upselling: The fastest way to identify upsell opportunities is to look at product usage data and see which features or milestones have the most potential to generate more revenue. For instance, if you notice that most of your customers are maxing out their storage capacity then you could upsell them on more cloud space for their monthly subscription.
- Cross-selling: Cross-selling differs from upselling as it focuses on selling a complementary product or service in another category. There are plenty of SaaS companies that have applied this strategy such as Toggl which has different solutions for time tracking, project planning, and recruitment.
How to restructure your sales & marketing process for a successful land
If you’re planning to adopt a land and expand to drive business growth then you’ll need to restructure both your sales and marketing processes. Look at your quarterly business review and see which marketing channels are driving the most new user signups then double down.
Next, make sure your sales process doesn’t have any funnel leaks that could impede your ability to land deals as the number of leads coming through your marketing campaigns increases.
You’ll also want to change the language that your sales reps use to bring it in line with land and expand strategies.
Use growth loops to acquire more customers
Growth loops are mechanisms that facilitate compounding growth. Put simply, a growth loop is a scenario where a user fuels future growth by reinvesting their output into new inputs that will reflect positively on the following growth cycle.
There are various forms of growth loops such as referral programs, social sharing, and user-generated content but they all share three main components: input, output and action.
Input is the strategies you use to acquire new users. Action is the process a user undergoes to get value out of your product. Output is the compound effect that results from the user’s action. If any of these three stages fail then the growth loop will be broken.
There are plenty of examples of SaaS companies that utilize growth loops to drive customer acquisition.
For instance, Slack uses its Slack Connect function that allows users to be invited to other people’s channels so they can use the platform even if they don’t have their own team. As a result, new users are able to use Slack for themselves which keeps it top-of-mind until they need a messaging tool for their team.
Drive traffic to your website with SEO and content marketing
If inbound marketing was a fishing trip, then content marketing would be the lure. It’s the attractive hook that gets people interested in your business and starts driving potential customers to your website’s sales pages.
Of course, SaaS content marketing only works if three conditions are met:
- Your website is optimized for both SEO and conversions.
- You target readers who are most likely to turn into customers.
- You cover high-intent topics that your target audience is interested in.
When done right, content marketing can be one of the most sustainable ways to drive compounding growth for your user acquisition strategy. To quote Daniel Priestley, everything is downstream from lead generation.
Implement referral programs for customer acquisition
A referral program is one of the most popular growth loops in the SaaS space. Evernote is a prime example since, despite most new users being on a free account, they’re able to make a referral program work and increase the number of premium users as a result.
How it works is that Evernote users are able to invite friends to the tool and earn reward points for every successful referral. The first three referrals provide enough points for that free user to get three months worth of Evernote Premium which does two things:
- It creates an incentive for users to become advocates and drive your word-of-mouth marketing.
- It shows freemium users what they’re missing out on by letting them try the Premium plan.
As such, Evernote’s program is equal parts land and expand since it drives acquisitions while making existing customers more likely to stay on the Premium plan long-term. There are plenty of other land and expand examples but few manage to accomplish both goals with a single program.
How to retain new customers and increase the average revenue in the “expand” stage
Retaining customers is instrumental to a successful land and expand strategy as you won’t be able to generate expansion revenue if your customer relationships don’t last long enough to do so.
Here are six customer retention strategies that can keep your customer churn rate low!
Prioritize user adoption to ensure customer success
Customer success is dependent on user adoption which itself is dependent on the onboarding process.
Personalized onboarding makes it possible to fine-tune your in-app guidance so that it’s easier for new users to adopt the product and get continuous value out of it.
That said, personalized onboarding hinges on your ability to properly segment your user base. If you don’t know what role, goal, and JTBD each customer is coming into your platform with, then you won’t be able to effectively segment them in the first place.
Use surveys to understand more about your users and use the answers to build advanced segments to personalize in-app communication.
Collect customer feedback to improve customer experience
Tracking satisfaction metrics like NPS scores will help you determine the right time to upsell. After all, trying to upsell unhappy customers is more likely to drive churn rather than expansion. The most straightforward way to collect feedback is through the use of in-app surveys.
If you see common trends and recurring issues then use these feedback patterns as a guide on which problems should get fixed first. You can also use customer feedback to figure out what to upsell users on.
If large teams keep asking about security features like 2FA then use it to hook them into a higher tier.
Achieve product stickiness to ensure long-term relationships
The best way to get customers to stick around is to make your product as sticky as possible. Increasing product stickiness has become an entire division of SaaS marketing in itself with many authors publishing whole books on building delightful products — such as Hooked by Nir Eyal.
If sticky products are so effective at reducing churn then implementing strategies that increase stickiness is a no-brainer.
A few product stickiness tips that you could use to retain customers for your own SaaS business include:
- Increasing feature adoption and engagement.
- Showing users what they’re missing out on.
- Collecting feedback with microsurveys.
Monitor user behavior to identify expansion opportunities
Much like feedback collection, monitoring user behavior and product usage will help you identify patterns.
While negative patterns can tell you what to fix, positive patterns can highlight potential expansion opportunities.
Implement upselling and cross-selling strategies at the right time
Whether you go for upselling, cross-selling, or both it’s essential that you get the timing right.
For instance, Loom keeps their upsell contextual by offering an unlimited recording time upgrade just as the user hits their recording limit:
Conclusion
As you can see, generating recurring revenue doesn’t have to be rocket science. If you continuously find new ways to benefit a customer’s business then the lifetime value for that account is bound to go up.
This ethos lies at the core of every land and expand strategy.
Ready to start engaging and upselling your users? Get your free Userpilot demo today!
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