Many readers enjoyed my essay on Expansion Revenue so I wanted to provide some insight into how I would tactically get going.
In order to have a chance at succeeding with Expansion Revenue, retention and expansion must be a Founder/CEO priority. This means the first thing the CEO things about when they wake up is their cohort analysis. This means the CEO must designate a Customer Success Manager (CSM), or similar role in the company and must have an incentive plan set in place for the role that focuses on
You also must have a person in the role. The first CSM should love people, love the problem your business is solving, and be proactive. Given the number of tools that will be created in the coming decade to support CSMs for many individuals they will be on the bleeding edge of what SaaS companies need to succeed so it's okay if they don't know everything and they should have a strong desire to learn everything out there.
With a CEO bought into Expansion Revenue and a CSM in place, you'll need to establish clear goals, a central hub for data, an experimentation framework, and weekly check-in/accountability sessions.
As CEO you need a target (and make it stretch). Say you're wanting $30K in expansion revenue per month (that's $30K MRR) here's what I suggest:
- Pull all customers into a spreadsheet
- Immediate remove customers that you know won't, or can't expand (likely customers that don't fit your ICP, or aren't in the right customer segment - too large, too small)
- With the remaining list, sort them by customer segment
- Add the correct variables via columns to come up with the amount of possible expansion revenue
- Factor the total amount based on likely percentage you'll get each month
- Create plans for each segment
This may take you a few months to do on your own. At each step you'll gain new awareness and it will give you new ideas/thoughts on how to obtain the expansion revenue. It's common for CEOs to run weekly meetings to understand what they've learned and what is possible.
Additionally, you'll want to start running experiments and these experiments take time to set up, run, evaluate.
While this is in no way an exhaustive list, I think this will get many of you on the path.
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