November 2, 2021
As a business grows, maintaining an existing customer base becomes just as important as attracting new customers.
To ensure sustainable growth, it is important to craft an effective customer expansion strategy. When executed correctly - a successful expansion strategy can significantly contribute to increasing a company's revenue without having to attract more users.
In this article we will look at successful ways to identify customer expansion opportunities; and how get the most of your existing customer base.
Having clearly defined segments of the customer base is a powerful starting point for helping you prioritize where retention and expansion efforts should be focused. There are different criteria to segment your customers.
One of the possible criteria is the Net Promoter Score, or NPS - a popular and effective way to track customer satisfaction over time. By measuring NPS every 3-6 months, you can segment customer satisfaction levels at different stages of their customer lifecycle.
This is useful for understanding the approximate amount of time it takes for a buyer to meet certain barriers to understanding the value of your product. From here, you can align your customer service team to minimize or limit these barriers.
After segmentation of your customers by NPS, you have a clear idea of what percentage of your customers are promoters, passives, or detractors, and whom to focus on in your expansion activities.
Alternatively, you can track your customers’ activity to define groups of users with similar goals and behaviors. Customer segmentation based on shared needs provided amazing opportunities to tailor personalized messaging when carrying out expansion activities.
Customer success happens when users get the desired results from using your product. This greatly contributes to improving the retention rate, increasing revenue figures, and ensuring overall business growth.
Therefore, Customer Success Managers need to make sure that clients are successfully adopting your product and getting value from incorporating it into their daily activities. Happy customers are much more likely to stick to your company and to extend the range of services used.
After having been working with a client for a certain time, you become more aware of the actual goals and objectives they are willing to reach with the help of your product. So, to increase the likelihood of expansion, be sure to illustrate the actual benefits of moving from one plan to a more expensive one, as well as purchasing additional services.
It is important to understand that seeking to increase revenue through expansion at any cost is not a winning strategy. Moreover, it can negatively affect the business reputation in the long term, as customers won’t appreciate being sold something that doesn't bring them the expected benefits.
For that reason, a good practice is to offer additional services or upgrades only when you truly see that this will bring real value to a customer and will help them reach their objectives.
This is actually where the Fear of missing out (FOMO) can serve as a powerful persuasive mechanism. As you are illustrating to your customers what they’re missing out on in case they don’t upgrade, you can greatly increase the likelihood of successful expansion.
To succeed in your expansion efforts, it is important to approach the messages for new prospects and to the existing customer base differently. This is because the psychology of the representatives of these two groups is different.
To craft your marketing messaging for existing customers, you may want to take the following steps:
After a client has subscribed for your product and passed the onboarding phase, be sure to create a post-onboarding customer journey for them. To achieve this, Customer Success Managers should keep track of how clients are reaching certain post-on boarding milestones that demonstrate the value of your product. The more benefits they see, the more likely they will be to stay with your company.
In addition, be sure to educate your customers on how they can get more value from your services. This will reduce the likelihood of unsubscribing.
A good idea is to include such clients in a special group of newsletter subscribers and send them additional content - such as answers to frequently asked questions or various kinds of memos and guides.
Another tactic is to dedicate a special section on the corporate blog to educating customers how to use your product. Some of them may not even know which features from those they subscribed to they are not using.
Customer stickiness represents users’ willingness to return to your solution or use it more often. The sooner your product becomes a part of their day-to-day workflow, the more difficult it will be to replace your solution, when the time comes for renewals or when they receive offers from competitors.
Customer stickiness is the result of the well-coordinated work of the customer success team. One of the ways to track stickiness over time is to measure the amount of time your users spend in your app and the average number of features they use in your product.
Once you've identified the signs of stickiness, it's time to encourage customers to return to your product for solving more of their daily tasks through upselling and/or cross-selling offers.
After expansion happens, it is still important for you as a Customer Success Manager to keep your finger on the pulse. Be sure to review whether the expansion brings additional value to your customers.
Monitoring customer success at each post-onboarding milestone and checking if they reach the desired goals contributes a lot to establishing trust and loyalty to the company.
Optimizing the expansion process involves constantly looking for ways to improve the customer experience. To achieve this, Customer Success Managers need to learn to identify patterns in customer behavior after a successful expansion, draw conclusions from this and adjust the further customer journey as needed.
Just a few examples of how this can be put into practice:
One way to reduce churn and quickly identify the potential expansion opportunities is to implement automatic notification triggers for the customer success team. This can be achieved using specialized customer success software platforms.
Here are some effective examples of notification triggers that such systems can provide:
As we can see, certain growth hacks can help to increase the company's income through customer expansion. To make it happen, it is important to identify the potential growth opportunities and to make the most of them.
At the same time, it is crucially important to make customer success your top priority, so that your strategy is mutually beneficial to both sides - your company and your customers.
The tactics discussed in this post will help make your expansion strategy as effective as possible. So, don’t miss an opportunity to tap into customer expansion as a growth factor!
August 27, 2021