Why do so many under invest in existing customers?

Every business under the sun wants recurring revenue. Note that I didn’t say SaaS subscriptions – while that is one of the most effective forms of recurring revenue, even if you are selling services or devices or anything else, every company can benefit from existing customers buying again. As every commercial person will tell you, it’s easier to sell to an existing customer.

And business leaders know that. Time and again, I see revenue plans that show substantial growth expected from existing customers. Whether that is SaaS clients expanding or upselling or looking for the next order from a services or hardware sale, it’s planned into every revenue forecast.

Which is exactly how it should be.

But why, oh why do we then massively underinvest in it?

Most revenue growth plans include careful analysis of the number of sellers needed to bring in new logos, along with the lead generation metrics planned, the recruitment needed, the marketing support, the ICP, the strategy, … It’s often well thought out and expensive - it takes a lot of investment to find new logos.

But then I see the expansion line-item which says “20% expansion in existing businesses”. That’s it. Maybe there’s a +1 headcount in customer success/client services. No strategy. Nothing like the level of data analysis done with new logos to work out how we are going to get this expansion. No explanation as to why we think we will get 20% expansion (why not 5% or 50%?). What will the plan be, especially in the larger accounts? Do we have the product for this? Do we have the pricing model which will allow it?

Worse, it is often possible there is significantly more expansion opportunity available, if you invest in product, pricing, packaging, strategy, marketing, support effectively.

In some ways, expansion is more complicated than the initial land. Some expansion might be natural – perhaps the client just uses the product more, incurring additional fees. But in other cases, you need to have a pricing model which explicitly facilitates greater return to you, the vendor, as the client gets greater value. It’s quite likely you need to consider product enhancements to allow you to deliver new value – and that certainly doesn’t happen overnight. You need to build account plans and strategy with executive engagement. Marketing can play an important role in educating your existing customers on the opportunities and value in your solution.

There is no simple plan I can point you at to get this right – any more than there is a single plan that works for new logo acquisition – but if you are not putting the time and effort into expansion that its value deserves, you will be less successful than you could be.