Part 4: Expansion Sales
Part 2: Drive New Business Sales
Part 3: Confidently Renew Customers
It's no surprise that Net Revenue Retention (NRR) declined last year. Modest price increases failed to keep pace with customers consolidating software vendors and service providers, cautious CFOs scrutinizing every budget dollar, and layoffs at customer organizations resulting in the natural trickle-down reduction of seats and licenses.
Yet, with outbound selling more complex than ever, account growth and our ability to cross-sell and upsell have never been more critical in the eyes of investors, boards of directors, CEOs, and sales leaders. Asking customers to spend more is now the top growth lever for many sales organizations.
To maximize the lifetime value we get from happy customers and to supercharge our NRR, we need to dial into three strategies:
- Prioritize accounts
- Sell to multiple customer contacts
- Pay for and reward account growth
Prioritize accounts
Our January 2022 article offered five components to a best-practice territory plan, which we aptly renamed a "victory plan." We pointed out that prioritizing accounts is a must-have tactic.
The sample priority matrix above shows the likelihood of buying or the Ideal Customer Profile (ICP) "fit" on the Y-axis. The X-axis refers to the potential size of the cross-sell or upsell deal.
In this matrix, 10% of our accounts should be top-tier. Based on ICP fit, these customers buy quickly, rarely ask for discounts, and tell their peers about our solution. Tailor our messaging and consider an "all-hands-on-deck" approach where C-suite execs get involved and support selling into these accounts.
Target 70% of our accounts in this matrix to be mid-tier. Some opportunities we pursue might be more prominent in value but have a lower likelihood of closing (quickly). Others could be lower in value but have faster deal cycles.
Finally, approach the bottom 20% with automated outreach or place them in our standard marketing campaigns. These accounts result in smaller cross-sell and upsell deals, making our ability to hit quota more challenging.
Sell to multiple customer contacts
The number one mistake expansion sales reps make in growing an account is cozying up to the original champion or the primary day-to-day contact at the customer organization. We get lured in by the borderline friendship and copacetic working relationship. Why rock the boat?
Unfortunately, this close relationship backfires once we fail to cross-sell or upsell our primary contact, and they tell us no. This attempt to sell creates an unsettling situation that hinders our ability to reach out and pitch other stakeholders. When we do, we typically get this response:
"I already told you no. And please go through me. I'm the main contact, so you make me look bad when you contact my boss."
And if that's not explicitly shared, we feel it. Expansion reps need to be clear from Day 1 that our responsibilities include proving the ROI of our solution and driving that value to other parts of the customer's business. Ask our champion to make introductions with other key stakeholders across different functions or business units.
Suppose they don't, remind them of the value we're providing. If we're helping our champion make or save money, we only do our job if we spread that value with additional products and services with other customer teams.
Diversifying our outreach and building relationships with multiple contacts gives us much better odds at cross-selling and upselling, and the renewal becomes more probable, too. Leverage our managers to help with the outreach.
And remember to build relationships with finance, legal, and procurement people. Often, they hold as much, if not more, power than the original customer team we sold to.
Pay for and reward account growth
As a challenge to CEOs and founders, no product (or service) sells itself unless we are a genuine product-led growth company. If we have dedicated reps––strategic account managers, expansion account executives, or hybrid AEs pursuing net new and expansion revenue––we need to incentivize, reward, and pay reps on par with how we compensate and commission new business deals.
We offered a win-win commission structure that's still relevant today and applies equally to expansion sales reps. If reps find and close their own cross-sell and upsell opportunities, pay them a double-digit commission of at least 10%. Consider a slightly lower rate if our customer success managers deliver "CSQLs" or our marketing or partner teams hand over inbound customer leads.
Examine tying SPIFFs and bonuses to expansion revenue or NRR if reps are also responsible for renewals. Reward expansion reps just like we do with sellers on the new business side with a President's Club invite, consistent shoutouts for closing key cross-sell deals, sharing recorded winning calls team-wide from our conversation intelligence platform, and other awards given to high-performing reps.
In summary, prioritizing accounts, selling to multiple customer contacts, and paying for account growth form a powerful trifecta for maximizing customer lifetime value, supercharging NRR, and growing revenue from expansion sales. It strengthens our long-term financial health and positions us for long-lasting success in this hyper-competitive landscape.
