Focusing on expansion and refresh opportunities post-adoption is key to providing added value and maximising the lifetime value of your customers. Tim Long, Digital Product Manager, talks about some pitfalls and best practices when it comes to expanding customer accounts and preparing for tech refresh when the time is right.
Account expansion refers to growing the revenue generated by existing accounts. You do this by upselling or cross-selling additional products to a current customer. This enables you to increase revenue and customer lifetime value without needing to acquire new customers.
Time and time again, research proves retaining and selling to current accounts provides a higher return on investment (ROI) than acquiring new customers. Customer acquisition costs (CAC) have increased by 50% over the past five years, so it’s essential to provide excellent service and ensure customer success to avoid churn or the loss of customers over time.
Then there’s the fact that the probability of selling to a current customer is 60-70% while the likelihood of selling to a new prospect is only 5-20%. Not only does it cost less to retain existing accounts, but current customers also generate more revenue. In fact, research from Bain & Co indicates that increasing customer retention rates by 5% can grow earnings by 25% to 95%.
Stop missing revenue opportunities
Not only is selling to a current customer easier, expanding a solution will help drive better business outcomes for the customer and increase revenue and profitability for you. The key to closing expansion opportunities is to deliver the best proposal for individual customers based on their concerns, goals and opportunities.
This could be increasing the number of licences as the customer grows or restricting use of an initial solution with a view to migrating the customer to a better solution more aligned to their goals. It could mean offering a basic package to ensure higher adoption with scope for further expansion or expanding existing deployments to reduce costs and provide a more cohesive solution.
Pitfalls and best practices
There are a few pitfalls during the expansion stage of the customer journey, but they can be avoided by implementing a solution lifecycle approach and clear execution.
- The customer not seeing value after the onboarding stage.Every user must see tangible value and positive outcomes for an up- or cross-sell to be considered
- Sporadic or inconsistent check in calls.Without a robust lifecycle framework and check-in cadence, easy-to-fix issues can slip through the cracks and dramatically hinder an upsell
- Missed opportunities.Without regular engagement and communication, you can miss an open door to an expansion or upsell opportunity
A refreshing way to upsell
Technology refreshes are the periodic replacement of IT assets, equipment and infrastructure to ensure protection and reliability, improve speed and capacity, and maximise performance. A regular cycle of updates can keep technology optimised, but once legacy equipment is no longer supported it can leave customers at risk from attack and inefficiencies.
If partners plan and prepare for end-of-life, they can proactively deploy a replacement that reduces these risks and introduces new levels of innovation to the customer through the latest technologies, so their technology continues to deliver against expected business outcomes.
The primary factors for a tech refresh are an application modernisation roadmap, new business requirements or technology optimisation which result in signiﬁcant improvement in performance, availability and recoverability – which may bring business differentiation. Other considerations are cost reduction, with a potential reduction in BAU costs and capacity enhancements.
Tap into opportunities programmatically
Expansion and refresh opportunities are the bread and butter of solution lifecycle management and are great indicators of customer satisfaction and loyalty in an installed customer base. Our solution lifecycle management framework identifies solution gaps and where new features or add-ons can complement or upgrade a current deployment. Analysis of customer behaviour trends, accurate vendor knowledge and metrics that highlight a customer as expansion-ready such as an increase in product usage, engagement or NPS score, all help to align opportunities with customer outcomes.
Successfully expanding a sale lengthens the customer relationship and reduces the need to acquire new customers or secure new business to grow revenue and maintain margins. By identifying customers that are ripe for expansion and refresh, and providing actionable insights, our solution lifecycle management framework ensures partners can take advantage of every customer opportunity the moment they arise, so they never leave money on the table.
To find out more about how solution lifecycle management can unlock expansion and tech refresh opportunities in your install base, download your copy of our latest eBook.
Read more about solution lifecycle management in our previous articles:
Solution lifecycle management: a new model for a new channel
Solution lifecycle management: how data-driven distribution fuels customer success
Solution lifecycle management: how adoption and consumption drive customer success