The 5 Keys to Expansion Sales in Customer Success

There are five essential keys to expansion sales in Customer Success: you’ve got to have the right foundation (1), clarify roles and responsibilities (2), set customer goals (3), work with orchestration (4) and have the right focus and drive in order to execute well (5). In this article, I go into detail on all five keys to help you succeed at expansion sales.

Customer Success is when the customer achieves their desired outcome through the relationship with us. That's why a customer becomes a customer in the first place, and that's why a customer stays as a customer. As the desired outcome evolves over time, we can play a big part in getting them to the next level. 

Net Revenue Retention: Why is it important?
In any subscription business, you’re looking at net revenue retention. It's going to be what the investors, the board and the management are looking at - It's a key metric for your business. A study was done across US and European SaaS companies where the researchers looked at net revenue retention, and they saw that around 102% was the median. But a lot of companies were above those 102%, and a few below, as you can see in the graph.

Screenshot 2022-10-26 at 15.38.24

What does this tell us? Customers above 100% will keep growing without any actual new business. Thus, it's quite powerful to be on the upside of the graph. On the contrary, being on the other side can be quite challenging. 

Most of us are familiar with the net revenue retention metric, but let’s get into what factors have an impact on it, namely churn and expansion. Churn is when you lose a customer or a part of a customer's business, and expansion is when you add sales to an existing customer. It can be added seats, upgrades, add-ons… Both of these have a direct impact on your net revenue retention. If you can manage expansion sales well, you will also reduce churn since customers that buy more are less likely to churn. This tells us there’s a double benefit to capture here.

Sales vs. Customer Success
Before we go into the five keys, it’s important to know that when you try to bring new sales into Customer Success, you can run into some walls. Sometimes, those who are new to Customer Success (or just starting to build it) come from a sales background where they’ve done really well. 

If you look at sales and what salespeople do, it’s pretty straightforward: they get leads. They set appointments. They do demos, and they win deals. When you look at Customer Success on the other hand, it's a lot more on their table: usually they onboard new customers, they have churn risks and problems to fix for customers, they might do some success planning, then add expansion to their plate, which is the sales part of the job. On top of all of this, there may be even more responsibilities: putting together guides, doing training, and carrying out admin-related tasks not related to their core work. This is important to keep in mind when you come from a sales background and you look at expansion on customer success.

The Pushback-Challenge
When you start talking about expansion, you might get pushed back from the Customer Success Managers and the Customer Success team. Why is that? As stated earlier, some Customer Success Managers might spend all their time firefighting churn. They have terminations coming in and they're out there fighting to bring them back. It can also be that they don't have anything to expand the customers with if there are no plans or pricings that support expansion.

Another reason for a pushback may be discomfort. Maybe these individuals come from a technical background or from support, maybe they're not used to talking about prices or getting a customer to agree to buy more. Keep in mind that if you get some resistance when you lift expansion and more expansion on existing customers, you have to look a little bit deeper to understand.

Now that we got that covered, let’s introduce the first key to succeed in expansion sales in Customer Success.

Key #1: Enabling Expansion With the Right Foundation
The first key is about setting the right foundation, where we basically need to look at our offerings: how does our pricing and plans support expansion? Usually you have to make some sort of a plan - it can be a small, medium or large plan. It can be flexible plans depending on users, data and customers - the point is: you gotta have plans.

A lot of innovation is currently taking place in how you tailor your plans. Typically, you have some add-ons where you can add more features or things into your plan, and then you have services. Ask yourself if you have plans, add-ons and if you offer the support the customer needs in order to grow with you. If the answer is no, it will be hard for Customer Success Managers to do more sales on their portfolio.

Customer Health is Part of the Foundation
It’s contradicting, but true: selling to existing customers can harm the trust if we introduce an expansion to a customer who’s not getting value from what they bought in the first place. This is where customer health comes into play. Are they using what they have? Are they achieving the goals that they want with us? If the answer is yes, then of course, they want to do more business with you. But if things aren’t going well (maybe the onboarding is dragging out, they haven’t got all the users in, or adopted the platform) it can hurt our business. If we reach out to that type of customer and introduce an upgrade or add-on, it won’t go well. Therefore, it’s really important to understand the context. Where is the customer? Where are they in the live stage? And are they doing well where they are? If they are, if things are looking good, then we need to review the desired outcome. 

Very low expansion is a bad sign. It could be an indicator that those customers aren't getting any value from your platform. Of course, it can also be that you don't have the plans to support expansion. But in general: look at lack of expansion as a bad sign.

Key #2: Clarify roles and responsibilities
Who’s responsible for expansion? Is it the Customer Success Manager, Sales or someone else? It’s important for you as a leader to clarify who should focus on what and where expansion belongs. 

Depending on your company’s industry, number of customers and overall stage of your business, there may even be a team looking after portfolio customers. In this team, one person could have the commercial responsibility while another is more of a “fixer/doer”. But the most common setup is that the Customer Success Manager has the responsibility for expansion. As churn is a reality for most companies, you probably need to account for it in order to reach the 100 plus (or even more) in net revenue retention - if you want to hit a high level, that is.

A common question is: what should we measure? Is it target revenue or customer expansion? One should also be aware that putting too much focus on the expansion for a Customer Success Manager may cause problems in other ends of their responsibilities. Yes, you could get impressive results on expansion, but their attention and hard work on other customer problems may suffer. 

Key #3: Customer Goals make all the difference
Too many times, I see companies doing great at onboarding, but after that there’s no plan. If you don’t work with goals with your customers, that's something you need to get going in order to set yourself up for expansion. 

What do I mean by “goals” then? After onboarding, you should look at goals or milestones together with the customer that you can achieve and work on together. That way, both parties will be committed. This also opens up for powerful conversations. However, direct questions like “What is your goal with us?” rarely have a straight answer. Most customers respond that they don’t know, so don’t go down that road. Instead, try to identify the goal by digging deeper. My company has developed a framework for this, with mainly open-ended questions that can help and guide you. 

Goals could be to save costs, grow revenue, become more efficient - whatever the aim is, we want to co-create concrete goals with the customers. Once you know this, you start building a plan for how to get there. Start mapping. Should there be an upsell opportunity linked to this goal? This map can be done internally before you start talking to customers. Ask yourself: what in our platform, product and plans, can support this?

So, goals are about what the customer wants to achieve. When you have those, you can start looking at orchestration. 

Key #4: Orchestration is the name of the game
Once you have plans in place, healthy customers and the goals are set, you can introduce upcoming expansion opportunities to the customer. For example, if you take a CRM software where you're a CRM software vendor and your customer bought your software to grow their business, that’s the overall goal. Once you’ve onboarded them and set the first goal, you can introduce the next one and talk about expansion opportunities. For example, you could say: "Okay, to get even more growth using our platform, you can also use our marketing module, but right now where you are, since we just finished the onboarding, you're not quite ready. But as we have agreed now, the first goal together is to get the team to do X amount appointments per week (or whatever the goal is) and I believe you will probably be there in x weeks. Once you reach that point, we'll talk about this marketing module that’ll give you even more growth. Is that fair?" That’s orchestration.

When you introduce this at an early stage, what happens is that the customer becomes aware of what’s going to happen - it plants a seed - but they are not put on the spot and asked to make a decision instantly. I recommend that you build trust by saying for example "Let’s have a discussion on this, but only when you are ready." Of course, when a few weeks have passed, it’s easy for you to bring it up again; “as you recall, we talked about this a few weeks back and now that you’re up and running with the sales team, I think it's about time we look at this marketing module”. Then you get into why they should use that, the benefits of it and how that could lead to even more growth. 

Key #5: Focus and Drive will lead the way
Even if you have all the keys in place, it's going to come down to this one: the people who're going to execute, and execute in the right way. The quote “Never confuse motion with action” is relevant here.

Basically, it all comes down to the Customer Success Manager: who he or she is and how well they’re adopted for this role in order to get expansion sales working. If we are responsible for net revenue retention (which I believe we are - everyone is commercial since the customer is paying for our service), we need to be business-oriented and confident in talking to the customer about goals. 

Training in Customer Success
At Startdeliver, we have a training academy called Impact Academy for Customer Success Managers. If you’re looking to become more of a commercial and business-oriented Customer Success Manager, then Impact Academy is a great way to go. Check out dates and course programs here: 


Thanks for reading, and good luck! Don’t hesitate to reach out if you have any questions about the five keys or if you want to know more about Customer Success.


// Johan, Founder and CEO of Startdeliver,