COO & Co-Founder, DemandFarm
Imagine that you’ve just graduated from college and landed a job with the organization of your dreams. The salary is generous (to put it mildly) and there are immense opportunities for professional growth. All in all, it’s a perfect fit. On the third day of the job, you enter the CEO’s cabin and demand that she assigns you to the flagship project, doubles your salary, and promotes you on the spot.
That escalated quickly, didn’t it? It is not supposed to (umm, never even think about trying this). In reality, you may have to showcase exemplary skills for years before being anywhere close to such atrocious demands or expectations. This is even applicable in your personal life and the analogy from Forbes hits home in that regard. This is nothing but a modest case of land and expand business strategy.
What Is Land and Expand?
Land and Expand is a business strategy that is based on three simple rules:
- Rule#1: Efficient selling involves a natural progression.
- Rule#2: Selling too much too soon can undermine deals.
- Rule#3: Current customers are the best source of income.
In other words, land and expand dictates a strategic framework under which the salesperson first focuses on landing a small deal with an organization (‘Land’). The goal is to first get the foot in the door. Now that he/she becomes a part of the organization, it gets considerably easier to explore opportunities for upselling and cross-selling over time (‘Expand’).
For instance, let’s say that you work in a tech company that sells hotel management software. Your latest convert is a multinational hotel chain with tremendous potential for account growth. Under the framework of ‘Land and Expand’, you would go above and beyond and do everything in your power to overdeliver. This might mean providing hands-on training to their employees or constantly anticipating and addressing possible concerns even before they arise. Think about your favorite restaurant that sends you a free pudding with every order.
Or your local store that provides free delivery even for low-key shopping sprees. The idea is to delight customers and exceeds expectations, forging long-term relationships. As HubSpot lays it down for newcomers, ‘Exemplary Service’ is key. Now, let’s say that the client loves the experience and a couple of hotels can significantly improve their day-to-day productivity, saving thousands of dollars every month. Imminent trust looms around the corner, ready to pounce at a moment’s notice. This is where you sweep in and start taking advantage of possible upselling opportunities, potentially introducing your software to hundreds of other hotels in their portfolio.
What it Isn’t?
Notice that we have cautiously used the term ‘business strategy’ in the above definition. Contrary to popular beliefs (and the lingo of marketing gurus), Land and Expand is not a sales strategy. It is a business strategy that masquerades as a sales model. It may seem that the sales team is doing all the heavy lifting. After all, they are the ones who plant the seeds and nurture them to fruition. But many variables are working in the backend to support their case. This can range anywhere from ideal marketing and pricing strategies to unmatched deliveries and focused vision. As evident, this is very different from the case of one user organically leading to 10 other users.
Importance of Land and Expand
Once you decide to implement this framework, you’ll find that it takes the center stage in everything that you do. At its peak, it may even be driving more than half of your entire revenue. If properly executed (a big IF), Land and Expand strategies can help you:
- Significantly increase your cross-sell and upsell rates while also protecting you from discounted deals.
- Reduce the overhead cost of acquiring additional revenues with fertile customer expansion strategy and retention patterns.
- Taper the risks associated with selling by increasing the number of customer touchpoints and conversion timeframe.
- Accurately pitch the value proposition of your offering to your clients with an extended sales timeframe.
Land And Expand Process
The first step is to keep track of new user signups so that a sales representative or a customer success representative may identify ideal customer early on, even before your product is widely used. A typical ‘Land and Expand’ strategy will include several activities, each will ensure the relationship with the customer is strengthened across all potential stakeholders. Cold calls, emails, in-person meetings for lunch or at events, webinars, linking one of your executives with the customer’s decision-makers, or even a quarterly business review are some of the possibilities.
You’ll need to keep an eye on user acceptance of your product as you improve your relationship inside the customer’s organisational hierarchy. It is critical that you maintain your focus on product adoption at all times. Make sure you understand the broader potential use cases for your product as well as the commercial impact it will have.
As the product gains traction, it’s time to take advantage of the relationship you’ve developed with the customer’s decision-makers. Your product’s advocates and power users will help persuade high-level decision-makers of the importance of implementing your solution throughout the organisation.
Land and Expand Action Plan: How To Implement It?
For the strategy to work, you need to have a repeatable strategy action plan that moves the customer from one milestone to another, irrespective of the pace. Such a framework should include steps such as:
- Acquiring small pieces of business within potential accounts.
- Servicing every ensuing task at extraordinary levels.
- Developing trusted relations with multiple potential stakeholders.
- Penetrating the business by encashing this trust at strategic touchpoints.
In the context of conversion and engagement funnels, Hunter And Bard neatly presents the framework as follows. At the ground level, this framework calls (rather, screams) for a support system in the form of sound practices. No Land and Expand strategy is complete without these:
- Right Off the Bat: Exceptional service should be the talk of the town from day one. Trust is an important building block here and you will never land new accounts or references without it. It’s important to look at your first deal as a dive into a sea of unbiased referrals.
- Patient Colonizing: Landing customers for life is no easy feat. It takes concerted efforts and strategic relationship building. Hence, it is important to take your time to lay the groundwork before you hit the gas.
- Never Be Grounded: As you grow your roots within an account, sales cycles will only get more complex and personal. This might call for a certain local presence or representation that reduces the risks of remote management. Geographical expansion might look feasible in such cases.
Mike Pilcher, Chief Sales Officer at Condeco, interestingly explains that there are even be three types of Land and Expand frameworks:
- Expansion: Selling the same product or service to multiple customers.
- Extension: Using the first offering as an anchor for selling additional products or services.
- Repetition: Selling a diverse set of products or services to different sets of customers.
Always Be Closing Optimizing
Segregating your sales resources into respective ‘Land’ and ‘Expand’ efforts is the next step. Here’s how you can polish both sides of the coin to ensure that the odds are always in your favor:
The momentum of your landing efforts is based on both the speed and scale of execution. Principles of optimization here include:
- Identifying the type of sales enablement opportunity that you are chasing and customizing your playbook strategy. For instance, one customer may need convincing arguments while the other might want to be educated first.
- Making your initial deal as simple as possible. Instead of pinpointing dozens of issues and features, focus your attention on a single value proposition that you are confident about.
- Not resting until the customer (or the respective decision-maker) is delighted with your solution.
- Replacing ‘new logo reps’ (horizontal salespeople) with ‘existing logo reps’ (account managers) and accordingly iterating the incentive plans.
The end goal of expansion is to boost the lifetime value of your customers. Optimization strategies that help you achieve this include:
- Looking for parallel teams in other departments that might benefit from your solution. If it is working well for one team, it will likely work for other functional teams as well.
- Exploring additional features that current customers have not adopted yet. You can then educate them on how such features will enable them to better achieve their goals.
- Distinguishing between organic growth and growth due to upselling/cross-selling while tracking or incentivizing sales.
- Having a bottoms-up sales playbook that seizes every opportunity for cross-selling to book short-term wins.
Key Land and Expand KPIs To Track
At its best, even the most ideal land and expand framework will only apply to a subset of your customers (unless you have a sales qualification framework of an ice cream truck in a school playground). You will be able to grow only those accounts that present genuine opportunities for growth and retention. So the next logical question is – how do you identify such accounts and build key account planning strategies? By tracking some crucial Account management KPIs. These include the likes of:
- ARPU: Increase in the Average Revenue Per User (ARPU), especially of key accounts, from the time of landing.
- Adoption Levels: Following the adoption curve and revenue yield of high-value features for every account.
- Penetration Levels: Determining broader penetration levels across the organization due to new departments or seats being added.
- Engagement Metrics: Level, frequency, and quality of engagement with higher-level executives and key decision-makers of the organization.
- Account Revenues: Total account revenue that is booked by the customer development team.
Costly Pitfalls That Derail ‘Expand’ Strategies
While it may look promising on paper, ‘Land and Expand’ can eventually turn into a nightmare if it is not embraced by the entire organization at once. Everyone must be on the same page, ready to deliver value in every way possible in key account management. The most natural of expansion processes are based on unforgettable customer experiences. In this light, there are some costly pitfalls that you need to steer clear of:
- Pitfall: It is easy for your sales process to lack the right perspective because (drumrolls), this is not just sales. Issues can compound if they don’t know their targets or if the sales message is unclear. Fix: Have a strong sales onboarding strategy.
- Pitfall: The ideal expansion curve for tech companies can be significantly steeper than non-tech companies. The reason? Technological disruption. It is common for technologies to quickly evolve, trapping leaders into thinking that they have more time to expand than they do. Fix: Optimize and reduce your expansion time frame.
- Pitfall: Having a low-cost solution can also turn into a liability in the long run. If you miss the ideal expansion window, your customers might find it easy to move to something new and better. Fix: Re-examine your pricing strategy.
- Pitfall: Under this framework, it is also common for salespeople and leaders to struggle with identifying what matters. Landing a key account of a big brand can quickly turn into a false sense of security, even when there is no clear ‘Expansion’ strategy insight. Fix: Setting the right expectations and having a defining customer expansion strategy.
- Pitfall: With a smart (or over-smart) customer, pitching a small part of your big software/product/solution can blow up in your face. It may send a message that a part of your solution is a better fit for their needs instead of the entire deal. Fix: Combating brand dilution with subtle (and natural) mentions of other value propositions.
- Pitfall: Current scales are tipped in favor of the incumbent (their current solution provider). This puts you at a disadvantage since you are essentially working against an established relationship where the incumbent is already aware of the client’s needs and requirements. Fix Positioning features that differentiate your brand and showcase real value.
At the foundational level, most Land and Expand breakdowns are a direct result of change management being limited to sales teams. When the culture is not embraced by the entire organization, it devolves from a business strategy to a sales methodology. Organizations that suffer from such setbacks can gain considerably from Gartner’s philosophy of Land, Colonize, and Expand.
Successful Case Studies
There are numerous examples of companies that have used the ‘Land and Expand’ strategy to power themselves through revenues. It is the go-to strategy for SaaS companies to clock explosive growths. Let’s look at a couple of Land and Expand examples:
The largest product of Veeva, Vault helps its users to solve departmental and regulatory inefficiencies. Once the first contact with the customer is made (inbound or outbound), the salesperson analyzes the issue and helps the customer install a specific module to solve it, paving the way for long-term associations. With this strategy, Veeva has been able to grow its revenue by 9.4 times over the past 7 years and the number of ‘vault’ installations by 15 times. Source
A visualization tool for customer journey automation, Autopilot grew from 0 – 2,500 customers between 2017 and 2019, reflecting a 21% month-over-month growth. The strategy was to offer a modest version of the product at a much lower price point, then scaling the revenue through customer retention and increased engagement. Customers do not hesitate to upsell since they can taste the value proposition and results before making a serious commitment.
Land and Expand is all about making your customers feel important. In short, nobody likes being sold to. The tech era has introduced both buyers and sellers to an empathy-driven ecosystem where revenue is tied with the quality of the solution as opposed to the plausibility of the sales pitch. As Peter Thiel explains in his book, Zero to One, “The best salespeople hide in plain sight. They don’t even have the word ‘sales’ in their job title.
‘Land and Expand’ revolves around this. It is about making your customers feel like a priority and delivering exceptional service to the point that they are unable to replace you. This only reiterates what we already know – all good things take time. And meaningful customer relationships cannot be rushed.