Land and Expand with a Platform Business
If you have a good platform, it's one of the best strategies to grow a SaaS Business
I was talking with a founder recently who is seeing a lot of momentum through their open source tooling. There are a ton of different opportunities that they have to pursue but the big question they are trying to figure out is which way to go.
There’s certainly a lot of tactical things that could be done to outbound more effectively or execute better on the deals that they had but I said the biggest opportunity I saw was implementing a Land and Expand Strategy in their business.
Land and Expand Strategy
The "land and expand" strategy is a sales approach where a company initially secures a small deal or entry point within a larger organization and then expands its footprint by selling additional products or services over time. This method leverages the initial success to build trust, demonstrate value, and uncover further opportunities within the organization. Here's a more detailed breakdown of the strategy:
Landing: This involves securing an initial contract or deal with a client, often with a smaller scope or a limited product offering. The goal at this stage is to get a foot in the door and begin building a relationship with the client. It’s crucial to ensure the initial implementation is successful and delivers clear value.
Expanding: After establishing a foothold and proving the value of the initial offering, the next step is to expand within the organization. This can be achieved through various means:
Cross-selling: Offering complementary products or services to the initial offering.
Upselling: Providing enhanced or premium versions of the current product or service.
Increasing usage: Encouraging wider adoption within the client’s organization, such as getting more departments or teams to use the product.
Key Elements of the Strategy
Customer Success: Ensuring that the initial deployment is highly successful and that the client sees immediate benefits. A strong customer success team is crucial in this phase to support and ensure customer satisfaction.
Relationship Building: Developing strong relationships with key stakeholders within the client’s organization. Understanding their needs and goals can help identify further opportunities for expansion.
Proactive Communication: Regularly communicating with the client to provide updates, gather feedback, and discuss new opportunities. This keeps the relationship active and shows the client's ongoing commitment.
Value Demonstration: Continually demonstrating the value and ROI of the product or service. This helps in justifying the expansion and securing additional budget from the client.
Flexibility and Adaptability: Being open to adjusting the approach based on client feedback and changing needs. Customizing solutions can often lead to further expansion opportunities.
Benefits of the Land and Expand Strategy
A Land and Expand strategy, when executed successfully, is a great growth strategy since it doesn’t require you to grow through new customer acquisition, a much more expensive and slow approach to selling than expanding.
With a Platform business, it’s even more powerful since the number of use cases are only limited by the imagination of the end users. In addition to this great revenue growth strategy, there are additional benefits of this strategy:
Lower Initial Risk: Clients are more likely to agree to a smaller initial contract, which lowers their risk and investment.
Stronger Client Relationships: Continuous interaction and expansion foster long-term relationships and customer loyalty.
Market Penetration: It allows companies to penetrate larger accounts gradually, which might be difficult to achieve with a single, large initial deal.
Land and Expand Works Best with Platforms
Land and Expand can be used whether you are selling a Platform or Tool but it works best when selling a Platform. Let’s start with defining the difference between the two and then we’ll talk about why Platforms make work best for Land and Expand.
Platforms vs Tools
The most simple way to explain the difference between the two is that a platform doesn’t provide capabilities in and of itself - it requires an application or other functionality on top of it to provide value. Whereas a tool provides functionality without necessarily requiring any other tool or application to provide value.
Platforms
A platform is a comprehensive environment or framework that provides a foundation for developing, deploying, and managing applications and services. Platforms typically offer a wide range of functionalities and support multiple tools, applications, and services. They are designed to be extensible and scalable, allowing users to build and integrate various components to create more complex solutions. They are much more horizontal meaning that the use cases vary a lot by industry (although certain vertical use cases could exist as well). Examples of platforms include:
AWS: A comprehensive cloud platform offering a wide array of services for computing, storage, networking, machine learning, and more, enabling users to develop and run applications at scale.
Databricks: A data storage and processing platform that provides the functionality to store different types of data in different formats and different types of processing engines that allow you to use and manipulate the data in a variety of ways
Tools
A tool is a specific application or software designed to perform a particular function or a set of functions. Tools are typically focused on solving specific tasks or problems - they are usually more vertical, meaning they cover a particular business process that doesn’t really vary across industry. They are often used individually or as part of a larger process but have a limited scope in terms of functionality. Examples of tools include:
Microsoft Excel: Used for spreadsheets, data analysis, and visualization.
Adobe Photoshop: Used for photo editing and graphic design.
JIRA: Used for issue and project tracking.
Use Cases are the Key
The biggest difference between platforms and tools is that platforms support a much larger set of use cases. Tools do some things very well and while there can be multiple use cases they support, they are much more limited and all within a certain range.
By their nature, Platforms support many more use cases than Tools, which is why they have so much value for Land and Expand - the expansion can grow continuously as those use cases are deployed.
Platforms
Computer Vision (CV) is a type of platform that allows a user to do things like object detection, classification, segmentation, keypoint detection, and object segmentation.
The CV platform is going to support an almost unlimited set of applications. You could think of anything human sight is able to do, which is almost infinite in its applicability, and that’s probably just scratching the surface of what a CV platform can do.
Tools
A Chatbot that uses LLMs and RAGs to provide customer service to website and telephone users is a type of tool.
The chatbot is primarily interacting with end customers to support them. There might be some difference whether it’s an incoming request or it’s reaching out to do surveys, or lead qualification but it’s still the same. The chatbot might be leveraged internally to help with knowledge management but again, that’s tangential. You’re not going to use it to run accounts payable in Finance.
How Do You Implement Land and Expand?
Identify Target Accounts
Long Term Potential Growth
Identify potential clients by their potential for long term growth. The initial land is rarely profitable so it’s important to focus efforts on landing customers that have a strong potential for growth.
Come Up with High Value Use Cases
As part of the effort to identify accounts with long term potential growth, you should get a good sense of the high value use cases - those that provide a lot of business value and are relatively easy to implement.
Many prospects will come in with their own use cases but you should be able to bring a set of these to the table, particularly when doing outbound targeting. These use cases can be captured from existing customers.
Decide How to Handle Unprofitable Accounts
You will get prospects who don’t fit your target profile. They may be too small or not have enough use cases to expand over time. If you service them the same way as you do with the high value target accounts, they will be a drain on the organization - both from a profitability and focus perspective.
This is where a self-service or PLG motion could be used. While you might not be targeting these less than ideal customers, you will probably get them coming inbound. If you can serve them profitably, that’s great. If not, you will have to pass on these customers (which is most often done through pricing) or else they will become a drain on the business.
Land the Initial Deal
Target High Priority/Value Use Case
There may be a ton of potential use cases but you want to start with the high priority or value use case to get the initial win. If the prospect has a bunch of potential use cases, it’s important to get the initial win and come up with a roadmap to address the other use cases in the future.
Tailored Value Proposition
Develop a compelling value proposition tailored to address the specific pain points and needs of the target department or business unit. Highlight the immediate benefits and ROI of your solution.
Pilot Programs or Trials
Offer pilot programs, trials, or smaller-scale projects to demonstrate the value of your product or service with minimal risk to the client. If applicable, open source is also a good tool to allow prospects to try the product first.
Strong Sales and Onboarding Process
Ensure a seamless sales process and onboarding experience. Set clear expectations, timelines, and deliverables.
Ensure Initial Success
Customer Success Team
Deploy a customer success team to support the client, ensuring they derive maximum value from the initial implementation. Provide training, resources, and ongoing support. This all should be discussed during the initial sales cycle. While there is a transaction, the primary goal should be the successful implementation and realization of value.
Monitor and Measure
Track key performance indicators (KPIs) and gather feedback to measure the success of the initial deployment. Use metrics such as usage rates, satisfaction scores, and ROI to demonstrate value. These measurements of value should be in the client’s language. They should be tracked to use in future discussions with other prospects and to get a better understanding of the value of different types of use cases.
Address Issues Promptly
Be proactive in identifying and addressing any issues or challenges the client faces. Quick resolution builds trust and satisfaction.
Build Relationships
Regular Communication
Maintain regular communication with key stakeholders within the client organization. The Sales and CS team should have regular check-ins with the users, champions, and executive sponsors. Quarterly Business Reviews are a great tool to make sure that the teams are aligned on a more strategic level.
Understand Client Needs
Deepen your understanding of the client’s broader needs and strategic goals. Identify additional areas where your solutions can add value. This is a good area to bring in and establish contacts with the Product and Executive team. Relationships should be with different people in the organization.
Expand Within the Organization
Identify Expansion Opportunities
If you do everything else right, this should come much easier. The account team should bring thought leadership on different potential use cases, including the value and ease of implementation. The customer may have their own list of additional use cases but a good account team will be thought leaders in these areas.
Propose Value-Added Solutions
Develop tailored proposals for expanded engagements, highlighting how additional products or services can solve further pain points or contribute to the client’s goals.
The best way to do this is to have a pre-built roadmap with the customer where the list of projects and use cases have already been prioritized based on value and client needs. The proposals flow naturally at that point and are not necessarily about how much software is sold but how the enable solutions.
Leverage Internal Champions
Cultivate internal champions within the client organization who can advocate for your solutions and help facilitate introductions to other departments or decision-makers. If regular communication is happening and value is being delivered, champions will develop.
Deliver Continuous Value
Ongoing Support and Training
Continue to provide high levels of support and training as the client expands their usage of your product or service. Ensure they are fully leveraging the capabilities and benefits.
Innovate and Adapt
Stay attuned to the client’s evolving needs and industry trends. Be ready to adapt your offerings and approach to meet new challenges and opportunities.
Collect and Act on Feedback
Regularly collect feedback from the client and act on it to improve your products, services, and customer experience. Show the client that their input is valued and leads to tangible improvements.
Measure, Optimize, and Expand Target Accounts
Track Expansion Metrics
Measure the success of your expansion efforts using relevant metrics such as revenue growth, customer retention rates, and product adoption rates.
Optimize the Strategy
Continuously analyze the results of your land and expand strategy and make adjustments as needed. Identify what works well and replicate it, while refining or eliminating less effective approaches.
Expand the Target Accounts
As the playbook is successfully implemented at the initial set of target accounts, expand to other accounts. These most typically come from looking at what other customers are doing who don’t fit into the target account. Over time, the number of target accounts will increase as capabilities of the platform increases.