Customer Growth: The Difference between Sales and Expansion
If you missed it, I’m done talking about churn. If you have a churn problem, read this post and follow my directions. Churn won’t be an issue for you anymore.
Now we can move onto GROWTH!
And the first order of business is understanding the difference between Sales and Expansion and why knowing the difference is so important.
I’ve said that Sales is part of Customer Success before, and by that I mean Sales – like every other part of the company – should be governed by Customer Success as a philosophy.
But, when it comes to operationalizing account growth, where do you draw the line between sales and expansion?
Good question, let’s dig in.
In my experience, if you want to remain a small company, have your New Business Sales team also handle Expansion (Upsells, Cross-sells, etc.) sales.
However, if you want to grow fast, sustainably, and predictably, you need to have people dedicated to bringing in new Good-fit customers and other, separate people dedicated to taking your successful, evolving customers and growing their relationship with your company.
And if you don’t have people handling sales or expansion but everything is done self-serve, great…. same rules apply; you must approach these two business processes differently.
There are many reasons for this, but the simplest is focus. Be deliberate in your growth.
But there’s more to it.
Those people dedicated to Expansion (I’ve talked about this before) must have a well-designed process created specifically for growing existing relationships. Companies that fail to realize this tend to stay small or when they grow, that growth is less than what it could be, slower than what it should be, and FAR more painful than it has to be.
Think about it… New Business sales is all about the unknown and is driven by made-up stretch goals. Salespeople need to go out there and literally pull revenue out of thin air to reach those made-up goals.
The things that are REQUIRED for New Business Sales to be successful – quotas, a pipeline with enough leads to hit your quota based on your close rate, aggressiveness, relentlessness, hustle, etc. – are the things that will absolutely KILL a real Expansion strategy.
I’m not saying anything negative about New Business sales here, it’s just that those things aren’t required for expansion and are potentially very harmful to your existing customer relationships.
In fact, putting a quota on Expansion often LIMITS growth potential while also HURTING the relationship with customers.
Rather than analyzing the customer base and uncovering real opportunities for expansion therein (I’ve talked about this before, but will elaborate in a future post), this quota-driven “New Business” approach to expansion almost always leads to mass email blasts and indiscriminate phone calls to all customers, or repurposing existing meetings already on the calendar to blindly pitch products they don’t need, when they don’t need them, and for some, when they’re not even successful as our customer!
And because expansion in this way is such a painful process, once the quota is hit – if that even happens – it’s over. We’re done here.
The reality is, we know so much about where our existing customers are on their journey with us, whether they’re successful or not, what their goals are, AND we have a relationship already, that expansion should be easy.
If you’ll take advantage of this amazing position you have in your customer’s world and create an Expansion strategy that looks more like “Ascension” from their POV, it kind of is easy.
As our customers evolve and grow, their relationship with us should evolve and grow, too!
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