Customer Expansion: Your Overlooked Growth Engine in Your Business
Shift your focus from acquisition to expansion with data-driven strategies and targeted investments.
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This week’s research note includes:
GTM Research: Customer Expansion: Your Overlooked Growth Engine in Your Business
Spotlight: Kelly Hopping showing us How better ICP Drives better NRR
Event: Better Together Leadership Summit
GTM Research: Customer Expansion: Your Overlooked Growth Engine in Your Business
Customer expansion is one of the most overlooked strategies in modern businesses.
Despite its potential for driving efficient growth, many companies remain fixated on customer acquisition, overlooking the treasure trove of opportunities within their existing customer base.
By shifting this mindset, businesses can achieve transformative results.
Consider this: a company with 120% net revenue retention (NRR) can double in size every five years without acquiring a single new customer.
This insight underscores the immense value of focusing on expansion within the existing customer ecosystem.
Let’s explore how to master the art of customer expansion through data-driven strategies, cohort analysis, and targeted go-to-market efforts.
Reframing Customer Expansion: The Mindset Shift
Historically, companies have channeled their energy into acquiring new customers.
This is evident in metrics like pipeline creation, deal closures, brand differentiation, and improving win rates.
However, customer expansion demands a new approach: revisiting and reanalyzing the customer journey to uncover growth opportunities among existing customers.
The key question shifts from “Where can we grow the most in acquisition?” to “Which existing customers have the potential to grow the most with us?”
Building Cohorts Beyond ICP
When targeting new customers, Ideal Customer Profiles (ICP) serve as a compass. These profiles are built using firmographics, technographics, and other qualifying criteria.
However, for existing customers, ICP falls short because you already possess a wealth of post-sale data that goes far beyond these initial assumptions.
Here are attributes to consider when segmenting your existing customer base into cohorts:
Product Usage: How are customers using your product or service? Which features do they rely on most?
Psychographics: What is the ethos or operational mindset of the customer?
Advocacy: Are they champions of your product?
Maturity: How mature are they in adopting your solutions?
Reach: Are you embedded across departments, or is the relationship limited to a single team?
Momentum: Are they signaling an urgent need or significant opportunities?
Budgets: What is their capacity to invest further?
This expanded lens helps you identify which customers are most likely to grow with you and ensures your teams prioritize the right relationships.
The Shift from ICP to Customer Cohorts
By transitioning from ICP-based segmentation to customer cohorts, you unlock the ability to focus on existing customers most likely to expand. Here’s how to approach this:
Cohort Development: Identify attributes that differentiate customers most likely to grow with you. Move beyond superficial groupings like “SMB” or “Enterprise” to factors like spend levels, engagement depth, and potential for expansion.
Data Integration: Combine historical sales data with existing customer data to create a holistic picture. For example, link customer lifetime value (CLV), retention rates, and upsell opportunities to pipeline metrics.
Effort Analysis: Examine where your teams are investing time and resources. Are they focused on segments with high future potential, or are they wasting effort on low-value customers?
Case Study: The Power of Segmentation
Consider a SaaS company operating on a seat-based pricing model.
By analyzing data from the past two years, they segmented customers by license count (seat size) and discovered a wealth of actionable insights.
Key metrics included:
Average Sales Cycle: Time required to close deals.
Revenue Per Day: Contract value divided by sales cycle days, showing efficiency.
Retention Rates and NRR: Dollar retention over time.
Lifetime Value: Revenue generated by customers after acquisition.
This analysis revealed that while certain segments were easier to sell into, they created long-term challenges such as higher churn, service demands, and low profitability.
Armed with this data, the company realigned sales and marketing efforts toward high-value segments, ensuring long-term growth.
Strategic Alignment for Expansion
Once you’ve identified your most promising customer cohorts, align your organization to support their growth:
Go-to-Market Motions: Deploy tailored motions like outbound, inbound, partner-led, or event-led strategies specifically for existing customers. Treat them as unique market segments with dedicated campaigns.
Marketing Spend Allocation: Redirect marketing dollars toward nurturing these cohorts. For example, focus content marketing or product updates on features relevant to high-value customers.
Product Roadmap Alignment: Inform your product development team about the needs of your top-performing cohorts to prioritize features and solutions that drive expansion.
Operationalizing Customer Expansion
To put this strategy into action, follow these steps:
Data Collection: Compile data on customer attributes, pipeline activity, and historical performance. Use metrics like closed-won percentage, deal size, and sales cycle duration.
Analyze and Segment: Identify patterns in customer behavior and performance. Experiment with different segmentation criteria until you find attributes that correlate with growth potential.
Prioritize Resources: Allocate time, budget, and effort to high-value cohorts. Educate teams about the new focus and provide tools to execute on expansion strategies.
Monitor and Iterate: Continuously measure performance across cohorts and refine strategies based on results.
Customer expansion represents a massive opportunity for sustainable growth, yet it’s often overlooked.
By leveraging data to develop customer cohorts, aligning go-to-market motions, and prioritizing resources effectively, companies can unlock the full potential of their existing customer base.
The shift from acquisition-focused thinking to customer expansion is not just about driving revenue—it’s about building deeper, more meaningful relationships with the customers who already trust you.
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Spotlight: A Better ICP Drives Better NRR
This week, we’re sharing another video from our Better Together Virtual Summit earlier this month.
In this engaging conversation, Kelly Hopping (CMO of Demandbase) shares powerful insights into account-based marketing (ABM), highlighting the strategies that have helped companies like Workday and SAP Concur thrive.
Highlights include:
The ideal customer profile for ABM in complex go-to-market environments
How aligning sales and marketing teams can drive accelerated success
The power of data-driven insights and predictive modeling
Strategies for increasing velocity, ASP, and close rates through ABM
Event: Better Together Virtual Summit
Discover the secrets to Go-to-Market success in this two-part virtual series.
Part One was on February 13. The topic: Top 5 GTM Metrics used by CXOs
Watch the full replay here.
Learn how industry leaders leverage key GTM metrics to drive growth and align teams, and explore the tech stacks powering enterprise efficiency and ROI.
Part Two (March 13)- 6 Enterprise Tech Stacks
Register here.
Speakers like:
Jill Rowley, SaaS GTM leader from Salesforce, Eloqua, HubSpot and Marketo
Christopher Lochhead, godfather of category design and one of the authors of Play Bigger
Jessica Fleisher, Director of Revenue Operations, Wix.com
Jodi Lebow, Vice President, Global Demand Center, Hexagon
Leslie Barrett, Director, Customer Marketing, Tipalti
Have a great week!
Love,
Sangram and Bryan