Expansion

Maturity Level:
Starting out
Goal:
Existing customer purchases more of their current product
Triggered by:
Usage approaches or exceeds limits
KPIs:
Averange revenue per account
Typically owned by:
Sales in coordination with Customer Success
Pitfalls:
May come as an unpleasant surprise to customer if usage tracking is not transparent to customer and seller
Scroll down for more
Begin quote

How do we make it as easy as possible for our customers to expand while maintaining a level of predictability and control over that expansion?

One strategy we use at Vidyard is to build in expansion to our agreements. For example, make extra user seats available for a limited time so other people within the organization have a risk-free way of trying the product. If they continue to use and see value from Vidyard, the additional seats are automatically co-termed to the original agreement.

When expanding the usage footprint of Vidyard in an organization, we’ll often need to secure buy-in from more senior leaders who may not actually use the product. To help them understand the value, we’ll use actual usage data from the accounts of people on their team. For example, we’ll show the number of clicks on videos they shared that (with our paid plan) could have been directed to a salesperson’s calendar. Using this data quantifies the upside and creates tangible “FOMO” that they’d otherwise be leaving on the table.

As the usage of our products increases, the use cases tend to become more complex. This is a great opportunity for my team to consult with our customers to figure out the best option for them. For example, when integrating Vidyard data into their existing systems, we can help our customers develop the right strategy. While we could enable them to add integrations on their own, it would be a missed opportunity to understand why these features are important to them. Additionally, as data from Vidyard is used more widely across a company, it’s beneficial for us to make sure new stakeholders are familiar and comfortable with what our product offers.

Whenever a customer has questions about security, my team can not only point them to the right product features but also help them scope out the right steps to take to keep their data secure. Oftentimes, we’re able to build additional champions in IT departments by giving them additional oversight and governance of the tools people in their company are using on a daily basis.

End quote
Cole McLay, Manager of Commercial Sales
Cole McLay, Manager of Commercial Sales

Expansion: What is it?

The expansion motion is the primary way a company can increase revenue from existing customers. Not to be confused with upsell, expansion is specifically the process of growing the amount of usage a customer is entitled to for a product they are already using.

In a hybrid go-to-market where the customer base is comprised of both sales-sold and self-service customers, expansion potential can emerge at any time from either pool of users.


The most common forms of expansion are:

  • adding user seats a customer can assign
  • increasing limits on usage metrics (API calls, workspaces, etc.)
  • providing additional licenses for software so it can be installed or used more broadly in the customer’s organization

How does it work?

Along with the conversion motion, expansion is the sales motion PLG Transformers will likely encounter early in their journey. In many cases, a version of the expansion motion already exists even before the company pursues a product-led go-to-market strategy. However, the introduction of PLG creates a few differences in how this motion should be executed.

In a traditional sales-led motion, the customers who are candidates for expansion are limited to those whose contracts are coming up for renewal. In a hybrid go-to-market where the customer base is comprised of both sales-sold and self-service customers, expansion potential can emerge at any time from either pool of users.

As customers approach pre-determined usage limits, sellers can intervene to help plan for continued growth and, in some cases, unlock tiered or volume discounts.

Things to look out for

When customers hit usage ceilings sooner than expected, it can be received as an unpleasant surprise. Consider automating notifications when users are approaching limits.

Additionally, evaluate overage policies that offer choices for how customers “true-up” usage against their pre-determined limits. For example, allow customers to choose between paying for each unit of usage they incur over their original limit or purchasing an additional bundle of entitlements at a discount. Each option has pros and cons but affords the customer a degree of control based on their level of risk.

Finally, over-aggressive expansion motions can result in customers pre-purchasing entitlements that go unused. In these cases, allowing customers “roll over” their purchase into the next term can lessen the blow, but this scenario should avoided if possible. Instead, opt for more conservative usage limits when negotiating contracts and focus on making the expansion process flexible and straightforward for the customer.

Read about other product-led sales motions
Maturity Level:
Starting out
Triggered by:
Usage approaches or exceeds limits
Goal:
Existing customer purchases more of their current product
Typically owned by:
Sales in coordination with Customer Success
KPIs:
Averange revenue per account
Pitfalls:
May come as an unpleasant surprise to customer if usage tracking is not transparent to customer and seller