Everyone in the startup space invests so much energy in acquiring customers. So you have sales teams that are always on the go, and a hustle and growth mindset that’s present at all levels of the organisation.
There’s only so much you can do to control churn. But in my experience, holding onto an existing customer and growing with them offers more value for money rather than chasing new ones.
In other words, some SaaS companies could really benefit from the ‘Land and Expand’ strategy.
Here, the focus isn’t so much on chasing new customers as making sure your ticket size increases with tenure. I’ve had experience of doing this successfully in the past. On the other side of the table as part of Pentathlon Ventures, I’ve seen young SaaS startups that could benefit a lot from this approach.
Here are some ideas that can work for you.
Strategy 1: Become business critical
Here’s a simple question: Are you important enough for your customers’ business that they can’t do without you? I’ll go back to my personal experience. With a productivity software like Sapience, one of the turning points came when a customer mandated that all employers fill in their timesheets mandatorily. We had automated the data entry, which immediately made us a critical part of HRM.
More recently as part of Pentathlon VC, we use a particular SaaS product to keep track of our sales funnel. It does something very simple — whenever someone applies for funding, it creates an automated CRM entry, and all conversations with that prospect are tracked through that application.
I think you can guess how this has become a crucial part of our decision-making process.
Another tip: How well integrated are you into your customers’ systems? This is another way to increase engagement. So that way, when they think of expanding their product or entering new markets, it becomes a no-brainer for them to expand their engagement with you.
Strategy 2: Regular updates, continuous support
How do you make sure your product is aligned to the changing goals of your customers?
Have a mechanism to engage at the senior management level — in-person meetings, or a short monthly or quarterly call to make sure things are running smoothly.
Touching base with existing customers will be extremely helpful. It can help you realign your product, or spark some ideas on new services or features you can offer. It can bolster the customer’s confidence and they can think of adding more internal processes to use the product and expand the company as required.
Strategy 3: The ‘foot in the door’ product offering
Another way to ‘land and expand’ customers is to offer flexible pricing. Your priority should be to start a working relationship with the company. As time goes by, you can expand your engagement with them.
Offering different pricing slabs or productising services is another good customer retention strategy. It allows people to engage you with basic service packages and increase their revenue.
Another way is to have a freemium model. Let companies use the free product features but make the products and features compelling enough that they go for a paid subscription.
Surviving the slowdown
Finally, some final words of advice. With the US gearing up for a slowdown, customers are looking at cost optimisation across the board. This might include you as well. When you are acquiring a new customer in this scenario, consider lowering your billing rates, with an option to increase as the slowdown gets over.
With funds being tight all around, consider switching from an annual licensing to a subscription-based model. Give existing customers the option to transition to a new plan. This gives you the chance to reassure and hold onto those who might be getting cold feet!