Expansion revenue achieved through feedback | Pipeliner's John Golden
Dec 8 2021
He that hunts two hares catches neither. This ancient saying underscores the importance of focus. I’m sure you all have multiple directions you’re headed in when it comes to customer retention, and for the most part this isn’t a bad thing. However, it’s important to understand that maintaining focus on delivering results is tantamount to the number of “retention hacks” you may chase.
On today’s episode of Retention Talk, I speak with John Golden, Chief Strategy & Marketing Officer at Pipeliner CRM. We talk about the perpetuity of customer experience, expansion revenue, and how being focused gives you the best opportunity to succeed.
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Key points discussed in the episode
Sometimes it takes a little longer than you would like or you think it's going to. You have to have the energy to keep pushing forward, but you also have to have the patience and the realism to understand, ‘OK, we actually are making great progress right now.’”
– John Golden
The perpetuity of Customer Experience
A customer’s journey isn’t impervious to ending, which means you should be ready to serve at a moment's notice. This can be achieved through training videos, help docs, chat features, or even a knowledgeable team member. It’s nice to think that you can just “set it and forget it” when it comes to product usage, but learnings are there to be had.
Feedback can lead to renewals and expansion
There are certain metrics you’re going to be able to measure that your customers can’t access, but on the flip side, your customers may use your product in a way contrary to what you envisioned. There’s only one way to find out how they feel about your product: ask. As with John Golden, it can be as easy as asking how your product shapes up on a scale of one to five.
Focusing on the right customers will lead to success
While it’s easy to think that anyone could be a customer, the reality is your resources are best spent focusing on the right customers. While this is preached with acquisition, it’s very much the same with retention as well. And while your customer profile needs to be specific, you need to be somewhat ready to pivot at a moment's notice. Constant measuring and testing will help you determine if your profiles are accurate or if the notecards you pinned to the bulletin board three years ago belong in the trash.
Expansion revenue is the undiscovered band that only a few people appreciate… and it’s about time this band charted. It’s more financially efficient to upgrade or cross-sell a current customer than it is to acquire a new one. A2016 Pacific Crest Survey from David Skok and Matrix Partners shows that the median cost to acquire a dollar of ACV for new customers is $1.16, while the median cost to acquire a dollar of ACV is $0.27 for up-sells and $0.20 for plan expansions. Want to learn more? Check out Expansion Revenue: How Much do You Need to Be Successful? to learn more.
The best practices for both up-selling and cross-selling rely on building a loyal customer base and then providing additional value that those customers are willing to pay for.
Here are some tips to grow your expansion revenue:
Upselling works best when your customers' plans can grow along with your pricing scale. You can create the most effective value metric for your business by:
Identifying and monetizing the core value of your product
Pinpoint the solution that the customers get from your product and then create a pricing scale that aligns increasing prices with increasing access to that solution.
Understanding your typical customer's trajectory with your product
If you forecast how your customer will use your product over time, you can build your pricing scale to match and make upgrades natural.
Testing different price points and different plan packages
You should create your price points based on buyers' willingness to pay—but don't then set it and forget it. Test different price points for your pricing tiers over time, and experiment with different features in different tiers. Your market is always evolving, and with that willingness to pay, feature preferences change over time. A new price point, a new tier, or a new feature in a package could drive up-sells.
Cross-sells can drive revenue increases when you offer services and products to compliment the service a customer already pays for. You can drive the most cross-sells by:
Offering one main product and several supplementary products
Starting by offering a single product will allow you to hone in on market-product fit and make sure this product meets your customers' needs. Add-ons give you the opportunity to monetize those existing customers that you already know are a good fit, while keeping the focus around your main product.
Offering several related products
Offering several related products allows you many different ways to get into an organization, and then cross-sell to different team members in that organization who have different needs.
Continuing to develop new features based on customers' feedback
Customers may be willing to pay more for additional features, and continuing to innovate your product and create helpful additions gives you more opportunities to cross-sell these supplements. Develop based on your customers' feedback—you're more likely to create an additional feature that is truly useful to them, and they're more likely to want to pay for it.
Always remain open to honest conversations with your customers about why and how upgrades and cross-sells can improve their experience with your product.