Land and Expand: Grow Small Deals Into Big Opportunities

A land and expand strategy is a great way to generate revenue from your current customers.

It is time-consuming and resource-intensive to acquire new customers. Whereas establishing a great relationship and providing a stellar customer experience can lead to your next big expansion sale.

What is a “land and expand” strategy?

Essentially, it’s when you focus on selling a small deal first to a customer. And as time progresses, your focus is on building a relationship with your customer while identifying new opportunities, such as use cases or features to sell.

If you’re new to this sales strategy, this blog will help answer your questions and point you in the right direction. Get started by reading below to learn what a land and expand strategy is, the benefits, KPIs, and several examples.

What is land and expand?

Land and expand sales strategy is an effective way to grow a customer base. You start with a small purchase from a few customers and then gradually identify new opportunities to expand existing customers over time. This requires you to build a strong relationship through excellent customer experience, value creation, and trust.

It’s essential to recognize that this approach should not be confused with selling smaller deals just to get your foot in the door.

The critical difference is that the land and expand technique does not involve using low-value transactions as an entry point.

Instead, it’s about focusing on offering deeper engagements or larger units of sale on products and services with greater potential for upselling and cross-selling.

Successful land and expand strategies require continual conversations, market insights, data analysis, ongoing account management, and customer relationships.

It has a higher sales efficiency rate and a higher conversion rate than acquiring new customers. According to Marketing Metrics, the likelihood of converting an existing customer is 60 to 70%.

This approach can add many new layers of value both for the customer and the seller.

For example, an Account Executive sold a Marketing Automation Platform to a VP of Marketing. Throughout the customer’s lifecycle, the AE builds a relationship and introduces a complimentary feature to the VP of Marketing.

After a few months of usage, the VP of Marketing sees a lot of value created. They then purchase the complimentary feature to accompany their original purchase.

In the example above, the Account Executive focused on building a long-term relationship while identifying opportunities to help the customer.

Importance of Land and Expand

An organization dedicated to land and expand strategy can benefit from increased customer revenue.

A land and expand strategy yields numerous benefits, everything from a reduction in customer risk to an increase in upsells.

According to Forbes Insights, 74% of customers are at least somewhat prone to buy based on customer experience alone.

Read below for several benefits of following this strategy.

• Increase revenue from existing customers through cross-sell and upsell opportunities.
• Reduce customer churn risk and improve retention
• Increase Net Revenue Retention (NRR) through expansion revenue.
• Focus on long-term revenue potential within an account.
• Segment team members into sales pods.

What Land and Expand Is Not

A land and expand sales strategy is more than just a one-size-fits-all approach.

While it can be effective with certain customer types or specific markets, there are better choices for some situations.

It is often more effective when sales teams target larger, more established companies where they can build relationships over time rather than trying to make quick gains from smaller businesses.

Companies must have well-defined goals tailored to the customer’s needs to maximize success with this strategy. Additionally, having a clear plan for post-sale engagement is essential for long-term success.

Land and expand isn’t a no-touch sales strategy either.

However, Product-led Growth (PLG) has grown as a critical strategy, land and expansion require relationship building and a human-assisted sales approach. It’s much more resource intensive than PLG but necessary for high-value accounts, especially if you’re selling into the Fortune 500.

How To Implement A Land and Expand Plan

Now that you understand what a land and expand approach is, the difficult part will be implementing it within your organization. This effort needs a critical view into your current sales process and how you win new deals.

Remember, it’s not an overnight process. Instead, it is an organizational change requiring you to review your current go-to-market strategy.

Instead of a linear funnel from Lead-to-Customer, you’ll have to remodel your funnel to look like a bowtie.

The big difference is that you’ll have to kickstart another sales process after a company becomes a customer. This expansion sales process relies on nurturing and growing the account through onboarding and customer success.

There’s also a clear delineation between sales hunter vs farmer roles. Typically an Account Manager will solely own the expansion sales process.

Below are five key steps when implementing your land and expand strategy.

1. Think about long-term goals

Long-term goals are essential to any successful land and expand sales strategy. It also helps your customers think about what they’re trying to accomplish long-term.

I identify the specific outcomes you hope to achieve through your land, expand your strategy, and set specific and measurable goals to track your progress.

For example, you might set goals around increasing Net Revenue Retention, new revenue, or percentage of customer expansion revenue.

Consider your long-term goals for each customer and how your solution will grow with their needs.

Your customers look to you as consultants and business partners, so it’s important to relay information that will help their business with your product.

2. Identify your target market

Clearly define the customer segments you hope to target with your land and expand strategy.

A transparent market will help you focus your efforts and resources on the most promising opportunities.

3. Determine your value proposition

Communicate your product or service’s value to customers and how it can help them achieve their goals.

This will be crucial in convincing customers to purchase your product and continue expanding their use case over time.

4. Plan for expansion

Consider how you will expand your offering as you expand with each customer.

Spend time mapping out new divisions or lines of business. See which areas of your customer’s business could see value in your product, additional add-ons, or new use cases.

5. Engage multiple stakeholders and departments

It is essential to know your key stakeholders to ensure that you are spending your time with the people who can have an impact on moving your deal forward.

Use a sales tool like Zoominfo to map out the key stakeholders and decision-makers within an organizational chart.

Consistently engage different stakeholders and make introductions.

6. Build mobilizers internally

Identify key stakeholders with a strong bias for action and great relationship-building skills within each account.

Enable them with the resources and assets they need to sell internally. A great mobilizer will help you identify new opportunities and make introductions to different divisions.

Having a capable mobilizer on your side can make the land and expand strategy much more seamless.

7. Monitor and evaluate your progress

Regularly review your progress against your long-term goals and adjust your strategy as needed. This might involve identifying and addressing any bottlenecks or challenges preventing you from achieving your desired outcomes.

By following these steps, you can ensure that you are effectively thinking about long-term goals as you implement your land and expand sales strategy and that you are progressing towards achieving your desired outcomes.

Important Land and Expand KPIs To Measure

• ARPU: Increase in the Average Revenue Per User (ARPU), especially of key accounts, from the time of the first deal.
• Adoption: Utilization of product features.
• Account Engagement: Frequency and quality engagement with key executives, decision-makers, and organizational stakeholders.
• Account Revenues: Total account revenue booked by the customer expansion team.
• Customer Lifetime Value (CLV): Total revenue your company can expect from a single customer.
• Customer Acquisition Cost (CAC): The money spent across sales and marketing to acquire a customer. By comparing your company’s Lifetime Value of a customer versus its CAC ratio, you can quickly glean valuable insights for business growth. It all boils down to how much more or less should be invested in land & expand strategies—an ideal LTV:CAC ratio being 3:1. You may want to adjust spending if this number goes too low (< 1) or get creative with marketing campaigns when things look good (> 6).
• Customer Churn Rates: The percentage of customers that aren’t renewing.
• Customer Renewal Rates: The percentage of customers who are renewing.
• Net Dollar Retention: The total net revenue grows or shrinks over time. A successful expansion strategy will increase this metric to over NRR> 100%. Top-tier SaaS companies have an NDR of >130%.
• Net Promoter Score (NPS): Customers that would recommend your product after gaining value from it or receiving exceptional customer service.

Costly Pitfalls That Derail Expand Strategies

Low product utilization

If your customers aren’t fully adopting your product, it’ll not be easy to expand beyond the original use case or product. This is more relevant for software companies or products that charge by usage or licenses. However, consumer brands can use a land and expand approach as well.

Low product utilization typically means the customer isn’t seeing value yet. The expectations made during the sales cycle aren’t living up to the customer’s experience.

If your customers are using your product, then your strategy needs to focus on adoption and training. Have your Customer Success team work closely with key stakeholders to train everyone on using your product. Organize lunch and learns or weekly sessions to review how to use specific features in your product.

Instead of expansion, you should switch to reselling the original value that your customer had bought.

Weak relationships with key executives and stakeholders

Inconsistent and low-quality engagement with key executives and stakeholders can hinder your land and expand strategy.

If you’re touching base with customers inconsistently, you’re not spending enough time to build a relationship. You haven’t built trust or goodwill over time. This is why customers will be less receptive to new use cases and features or provide introductions to other lines of business.

Spend time building meaningful relationships with each executive and key decision maker. Connect with everyone on LinkedIn and set alerts on company updates. Ensure your engagements are high-quality and that you’re consistently delivering value.

When a strong relationship is built, they will be all ears when you introduce new ways to help their business.

Unclear ownership of accounts

Who owns the relationship with key decision-makers or stakeholders? Unclear responsibilities of who owns the key relationship will get in the way of expansion.

At any given time, multiple people may be on your side supporting a customer—for example, a Customer Success Manager or Account Executive. The waters get muddled if it isn’t clear for either person to own the relationship.

Put in a RACI model (Responsible, Accountable, Consulted, Informed) to dictate who is responsible for relationships for each customer.

Overselling in the first deal

If your sales rep oversells on the initial deal, it can leave little room for an expansion opportunity.

It’s a hard pill to swallow for sales reps in the starting phases of a land and expand strategy. Sales reps follow their compensation plans. They would rather sell a more significant deal first if that means they’re compensated more for it.

When building out land and expand strategy, reconsider how to structure your compensation plan. Weigh the expansion sale more than the initial sale to guide your sales rep’s selling behavior.

With all of these pitfalls, one common theme is that a land and expand strategy needs to be more inclusive to just the Sales team. Land and expand should be a company objective that touches multiple teams such as Sales, Marketing, Product, Customer Success, and Support. It is a deliberate strategy that requires everyone in your company to buy in.

Land and expand examples

Let’s dive into real land and expand strategies in action.

Review below to understand how some fastest-growing companies grow revenue through current customers.

1. HubSpot

HubSpot began as a Marketing Automation Platform (MAP); through the years, they’ve built a CRM and a Customer Support platform, amongst many other features. Their Customer Relationship Management (CRM) software is critical to their land and expand strategy.

They will either land new customers through MAP or CRM software first. As their customers get value through their product, there’s a logical progression to introduce the other solution.

HubSpot focuses its strategy on providing a free trial version. To get started, customers enter a frictionless sales process. As they use more and more of the free trial, they can purchase paid licenses that provide more features and functionality.

2. Slack

Slack has grown wildly in popularity as more companies connect their employees online.

Slack’s growth strategy differs from a typical B2B SaaS company. They were initially a bottom-up approach targeting users rather than decision-makers.

This led to product virality within a company and eventually widespread usage.

Slack’s fair pricing policy is one of the key components of its land and expand strategy. Slack gives you the money back through prorated credits if a Slack user does not use the software for 14 days.

Slack’s pricing strategy offers incredible value to its customers, allowing teams worldwide to work efficiently while providing easy product onboarding and a stellar user experience that keeps people coming back.

3. Salesforce

Salesforce is a behemoth within the software world. They started as CRM software but eventually grew to encompass numerous solutions such as social media marketing, business intelligence, analytics, data platforms, etc. You name it; I’m sure Salesforce offers it.

A critical part of Salesforce’s land and expand strategy is acquiring companies with complimentary products. For example, Salesforce acquired Tableau, a business intelligence, and analytics platform, back in 2019.

Now, they’re able to expand customers and sell them Tableau to enhance Customer 360 with analytics apps, dashboard templates, and seamless product connections.

Are you prepared to land and expand?

If you’re looking for another channel to generate revenue, land and expand strategy can be an untapped opportunity.

By focusing on selling a small deal first and then expanding from there, you can reduce the time-consuming process of acquiring new customers.

With this strategy, you can also build strong relationships with current customers while identifying new growth opportunities.