Want to drive expansion revenue? Sales needs to lead the charge

Previously, the SaaS sales process was linear

At Correlated, we work with a lot of revenue teams at modern SaaS companies to help them drive expansion revenue from existing customers. One thing we’ve noticed that was a bit surprising is that many teams we work with have chosen to make Sales primarily responsible for expansion, upsell and cross-sell while Customer Success fills a more supportive role.

This is somewhat counterintuitive because in traditional enterprise sales, you’d typically see a linear pattern in the go-to-market motion. Sales would be responsible for working with a customer until the deal was closed and perhaps for some time after that. Then the customer would be handed off to a Customer Success manager who would take most of the responsibility for managing the relationship after that.

Sales and customer success in PLG companies

Customer Success became a category in its own right responsible for tracking customer health metrics like churn, NPS or CSAT. In the traditional enterprise go-to-market model, sales might re-engage with an existing customer if they raised their hand and asked to expand their contract, or at an annual renewal date. Typically, revenue expansion was still by and large the province of Customer Success.

But, something happened over the last few years as enterprise software go-to-market has been upended by Product-Led Growth exemplified by self-service and freemium software products. Often these products are sold on a usage basis meaning that the concept of an annual deal, while still important, has been superseded by making sure customers are getting value out of the product and using it more and more.

Usage-based pricing

The most famous example of this shift to usage-based pricing is Snowflake. When Frank Slootman took over as CEO, he got rid of the entire Customer Success function there. Here is Snowflake’s CFO describing why they made that decision: 

“[Usage-based pricing] changes your compensation plan for sales reps. You can’t pay everything on new deals. You have to pay on consumption. Every one of our reps has a big consumption quota. We fundamentally want our reps to be involved in customer success.”

Most of our customers and SaaS companies we speak with have still been investing in customer success, even the ones with usage-based pricing. This is largely due to the fact that customer success plays a critical role in fighting churn and maximizing revenue from existing customers. However, sales is playing a larger role “post-sale” than ever before as they are met with expansion quotas.

So, how are sales teams engaging post-sale to drive expansion revenue? 

We’re seeing three key trends:

1. Sales teams are keeping an eye on product usage data and other metrics to be aware of expansion and upsell opportunities.
2. Salespeople are leveraging internal champions to expand use cases within customers.
3. For technical products, Sales Engineering helps to drive additional usage of technical products, particularly those that are priced on consumption.

In a future post, we’re going to walk through tactical advice on how to drive expansion revenue leveraging these trends, so keep an eye out! In the meantime, at Correlated we help sales teams implement some of these strategies using our product. If you’re interested in learning more, we’d be happy to give you a demo!