Are Your Customers too Smart for Your Land & Expand Strategy?

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The land part of your land & expand strategy ought to be a no-brainer for customers. Buying more software licenses as they roll your application out to additional users is a natural, nearly inevitable process. Customers are inextricably pulled in the right direction by purchase incentives as well as desire to avoid the discontinuities, complexities, and added costs of operating across multivendor point solutions. That’s how easy land & expand ought to be.

Too often, however, the expansion phase is far more difficult than expected, or it never plays out at all. But here’s the thing:

All the major problems with expansion are in your customers’ heads.

By that, I don’t mean customers are imagining issues. I mean that to succeed with land & expand, you need to know what your customers are thinking. In particular, here are three big danger signals for expansion.

Danger signal #1: “The software hasn’t made that much difference.”

While they may not be able to quantify it, most software buyers have a good sense of whether or not the purchase has worked for them and paid them back. Their attitudes and word of mouth create expansion momentum, or not. If you’re lacking momentum, look at how well your licensing approach aligns with how your users are deriving value from your software and turning it into economic gains for their organization. Also listen closely for how well they perceive and can describe that value.

Danger signal #2: “The deal doesn’t seem to make sense as we roll out to more users.”

You successfully made landfall with a first group of users because the deal made economic sense to your customer. To expand, the deal still has to make sense for every subsequent group of users. The trick is to understand that volume pricing must scale with customer perception of value, which tends to decline as you roll out to these additional users. Your licensing approach and related aspects of software monetization should enable you to offer attractive deals across all sales targets.

Danger signal #3: “Maybe we should give another solution a try.”

When customers are considering other options despite strong economic incentives and the cost savings of sticking with the same vendor, it’s usually a problem with how the initial deal for the first group of users was configured. Maybe you gained only a partial footprint in the department you sold into and some people are still working manually or with other tools. Maybe initial adopters are using your software in specialized ways that aren’t a strong reference for other groups you’re targeting. In any case, how easily you expand depends a lot on how well you landed.

It’s important to find out what your customers are thinking so that you know whether or not you’re on-track for expansion.

Don’t take subsequent sales for granted—they have the potential to be very profitable deals, but require careful planning and execution on all fronts. Learn how to make land & expand more of a sure thing by downloading our exec brief “Three Ways to Make Sure Your Land & Expand Strategies Actually Expand.”

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About the Author

Chris Mele

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Chris is a software monetization and pricing expert and former CEO of an award-winning SaaS company. An avid scuba diver, Chris should probably move closer to the beach.

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