Your Complete Guide to Customer Expansion in 2023

It’s happened, friends! 

More people are searching for “customer success” every month than “customer acquisition.” 

This chart from Google Trends supports that as well. The blue line is, of course, charting interest in customer success since 2017. The recent spike that’s shows interest at an all-time high came at the end of August as talks of a recession intensified.

The shifting sands of the B2B world are causing costly customer acquisition engines to slow down. Revenue declines are following suit. 

For B2B companies dealing with shrinking budgets and slower sales cycles, it’s understandably a scary time — but it doesn’t have to be. 

Instead of exclusively focusing on customer acquisition strategies, enter the goldmine that is your existing customer base and find ways to increase their lifetime value (CLTV). 

I’m talking about customer expansion. 

Here’s what you need to know about customer expansion and how it can help you generate sustainable long-term revenue growth despite the uncertain macroeconomic conditions.

What’s Customer Expansion?

Customer expansion is the strategy of increasing the lifetime value of existing customers via product adoption, increased loyalty, additional purchases and more. Common customer expansion strategies include upsells, cross-sells and add-ons. Customer expansion is significantly more cost efficient than customer acquisition and can help companies sustain long-term growth when buying power is going down.

Why’s Customer Expansion Important? 

Customer expansion has always been important, especially for B2B companies trying to maintain footing in an ever-increasing and competitive world. 

But, until somewhat recently, expansion wasn’t the primary way B2B companies drove revenue — acquisition was (i.e., the process of getting people to buy your product or service). 

When the economy was firing on all cylinders and B2B buyers had money to spend, this strategy made sense; keeping pipelines full wasn’t really an issue. 

In the wake of the pandemic, and now recession, corporate spending is going bye-bye.

So, what’s the first to go? Marketing, people and technology. If a company thinks they can do without it, it’s in danger of getting the axe. 

This is why we’re seeing so many layoffs. Intel, for example, is planning a series of layoffs in the “face of a PC slump.” 

As companies cut ties with vendors and partners, B2B companies are struggling to acquire net-new customers. 

It’s not all doom and gloom, though. While customer acquisition strategies will be under pressure for the foreseeable future, B2B companies have readily available tactics to keep revenue trending up: customer expansion.

How to Drive and Sustain Revenue Growth with Customer Expansion

In reality, anything you do to increase the lifetime value of an existing customer is considered customer expansion. 

That said, there are a few strategies synonymous with the practice: Upsells, cross-sells, and add-ons. 

Upsells (or Upgrades)

Upselling is a common tactic companies use to get their customers to buy more of their product or service.

One example of upselling you’re likely familiar with occurs at car dealerships when salespeople try to get you to buy the car with more bells and whistles. 

Upselling works in the same way for B2B companies.  

This example of upselling from project management tool, Monday, is prompting customers to upgrade from its Standard Plan to Pro to unlock the Workload view.  

Meanwhile, Google’s upselling its customers by suggesting that they buy its Basic membership to get 100GB of storage, access to Google experts and more. 

Cross-selling

Cross-selling and upselling share the same goal — to get customers to buy more — but they differ in the way they accomplish that. 

While upselling aims to increase CLTV by getting a customer to spend more on something it’s already using, cross-selling does this by getting them to pay more for a complementary product.

The example below shows Salesforce’s approach to cross-selling. Salesforce sees all of these as separate products. So, a customer using its CRM, Customer 360, could also be convinced to buy Tableau for its analytical magic.

Shopify opens the door to cross-selling by offering products that help businesses “sell,” “market” and “manage.” So, if you were using Shopify to create your online store, cross-selling would come into play if you were to buy its marketing product. 

Add-ons

Add-ons only enter the picture if a customer is already using the base product (i.e., add-ons aren’t standalone products). 

For commerce solution provider, BigCommerce, add-ons include Thred NFT and Bolt.

Again, these are add-ons because someone can’t just buy Bolt through BigCommerce. Rather, they have to buy the latter first and then add Bolt on top of that. 

Here’s another add-on example, this time from Gong.

A great way to think of add-ons is this: They make an existing product better by “adding” a new capability or feature. 

How to Expand Your Customer Base 

Unfortunately, upsells, cross-sells, and add-ons rarely just happen. 

Think about your experience with different products and technologies. 

Do you ever just wake up one morning and say to yourself, “I think I want to spend more money on this app just… because.” 

No. 

Instead, there’s some lead-up to that moment, whether you realize it or not — and each of those micro-moments have something in common: they deliver value. 

For example, someone using Monday.com to organize their workload could be swayed to upgrade to a higher-priced tier after seeing how much the base plan helped it increase its team’s efficiency and productivity. 

Similarly, someone using Salesforce’s CRM could give Tableau a shot after seeing how much the CRM alone accelerated deals and increased pipeline for its sales team.  

These revenue-generating opportunities stem from a track record of demonstrating value and a customer reaching the point that they say to themselves, “Hey, let’s see what else this can do.” 

This is the core premise behind customer expansion. 

The pressing question is: How can you drive these valuable micro-moments? 

The answer: Customer education and customer success.  

Sustaining Growth with Customer Education and Customer Success

Again, these expansion opportunities rarely, if ever, appear out of thin air. They can present themselves regularly, though, if you invest in customer education and customer success.

Why?

Because the core tenet of these strategies is to ensure customers realize the value of a product or service and maintain it throughout their lifetime. 

Customer education does this by empowering customers with the resources they need to learn whenever and wherever they are. Most customer education programs are built around an academy or a centralized resource hub that’s available 24/7 to help customers navigate challenges, answer questions, level up product usage, get certified and more. 

A customer academy powered by a learning management system (LMS) takes things to the next level by automating many of the tedious and time-consuming parts of customer education, ensuring people are receiving relevant content exactly when they need it. 

For example, as soon as a new customer comes on board, the LMS could automatically send an email or notification to them with directions on how to activate their account or invite team members. 

Built-in learning analytics also give customer education and success teams insight into performance, challenges and more — insights they can use to improve the learning experience, and thus, product adoption, retention, etc.   

Customer success works as an extension of an academy. 

Whereas an academy acts more as air support — it’s always there when a customer needs it — customer success managers (CSMs) are boots on the ground that provide more white-glove service. 

By empowering customers to take learning into their own hands, they’re inherently less likely to reach out to their CSM or support reps. For example, if someone is having trouble logging in or using a new feature, they could go to the academy and take a course on those topics.

Because they’re not reaching out to internal teams and submitting tickets when they approach every last hurdle, CSMs and support reps gain valuable resources they can then dedicate to higher-return strategies, like building individual success plans and relationship building — strategies at the heart of delivering value and driving those revenue-generating opportunities. 

Customer Expansion: The Only Way Forward for B2B Companies

The B2B world is unpredictable. It always has been and always will be. 

What’s not up for debate, however, is how B2B companies will generate revenue in the future. 

The rather grim economic outlook — the International Monetary Fund warns the “worst is yet to come” — generating net-new customer growth will be challenging. Budgets will just be too small and the uncertainty will scare off some buyers. 

While that’ll certainly throw a wrinkle into things, generating long-term revenue is still very much possible. The way in which you get there is just different. 

Instead of going after customer acquisition, success will find those who shift their attention to metrics like retention, product adoption, NPS, and ultimately, getting more value out of existing customers. 

Do you want to learn more about how to drive customer expansion with Northpass? Reach out today to chat with a customer education expert.