Expansion Revenue Strategy

Are Your Customers Delivering You Enough? If Not, Work on Your Expansion Revenue Strategy

The two most important factors that affect the flow of recurring revenue are customer churn rate and customer acquisition. Both are considered KPIs that depict the performance of a SaaS business. The thing that can fight back against increasing churn rate is the acquisition of new customers.

However, there is another thing that can help you in such a situation—expansion revenue. Now, what is expansion revenue? It simply means that companies strategize to increase their earnings and profits from the existing customer base. But the scenario will slightly differ in the case of big enterprises and small startups or SMBs.

Also Read: The Art of Improving Customer Loyalty with Upselling—Tips and Tricks to Boost Your Recurring Revenue Streaming

Revenue Expansion in SMBs & Startups

In startups and SMBs, the focus of the businesses is usually the acquisition of customers. The point is simple—if they do not pay attention to acquiring customers, whom would they need to retain or expand revenue from?

So, in startups, it is understandable that more resources are dedicated to customer acquisition. But revenue expansion SaaS strategy can help startups to increase revenue by selling more to even a single customer who is being onboarded.

Revenue Expansion in Big Enterprises

When it comes to established SaaS businesses, they need revenue as well. Howbeit, they invest more, and they need more Return on Investment (ROI). Expansion of revenue can be the source of meeting revenue targets.

Here, the acquisition is already satisfactory so, the focus can easily be diverted to revenue expansion strategies. Sometimes, revenue diversification and expansion considered one thing.

The Flywheel Model for Your Expansion Revenue

The flywheel model is also about utilizing the customer base so that they help you sell more. When you treat your customers better, the chances of retention increase so the CLV also increases. Another way to increase customer value is the revenue expansion strategy. As per the flywheel model, there are three factors that make a cycle:

  • Attract
  • Engage
  • Delight

Expansion revenue strategy can be dealt with at all three stages of the flywheel model. Your effective marketing can make your add-ons, upsell and cross-sell activities lucrative for your customers—attract customers.

If your sales teams are competent enough to convince current customers to purchase a new version or an application that you have developed, then customer engagement will increase.

And if customers find maximum usability in the add-ons or newer versions of your SaaS products or services, then customer satisfaction (delight) will also increase. Your flywheel model and SaaS revenue expansion strategy can boost the overall performance of your business.

Both startups and enterprises can run the flywheel model with an effective revenue expansion strategy. What you need is to keep working on the customer value.

Also Read: The Challenges Of The Recurring Revenue And The SaaS Business Growth

Value Expansion Directly Proportional to Expansion Revenue

If you work on the customer value from the beginning, a balance can be created between new customers and the current customer base. Keeping the entire clientele loyal to your SaaS services or product can be taxing, but not impossible. And to make this possible, revenue expansion is a way.

Analyze the type of products or services in which your SaaS customers are interested, and engage your team of developers to come up with relevant add-ons that will surely intrigue the customers. At the next stage, engage your marketing and sales representatives. Strategize effectively to outreach customers to sell these add-ons to the current customer base. Selling add-ons will be profitable for your SaaS business in the following ways:

  • Customer value will increase
  • Customer loyal will improve
  • The chances of churn will reduce
  • Revenue will boost

You need to make customers realize that you are the product expert, and only you can tell them what they need for the success of their business. For instance, a salesperson knows he needs to offer a ball along with a bat even when a customer only asks for a bat. Likewise, a mouse with a PC, a burger with fries, and a phone with a phone case are a must.

So, not only the customer value, here, you need to work on product value as well. The product value will show the usability of the product and the customer’s perception of the product so that you can work on add-ons accordingly.

Also Read: How Account Expansion Invigorates Flow of Recurring Revenue

Conclusion

By now, it is clear that the acquisition of the customer is important for the success of a SaaS subscription business, but the story does not end here. Businesses need to work on customer retention, customer value, and revenue expansion (for which again value of the customer matters) as well. While working on net revenue expansion, MRR and ARR are the KPIs that you cannot ignore. Consideration of these metrics will tell you about churning customers and the revenue that you are losing because the value of customers might differ.

To make an effective expansion revenue strategy, you need robust SaaS subscription management software that can help you constantly analyze the performance of KPIs. So, here we are to help you with expansion revenue. Call us to schedule a demo.

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