SaaS companies have long lived by the mantra of new customers at all costs. But what happens when that stops working?
Rampant funding, more skilled workers, and a low barrier of entry means more companies than ever are fighting for the same finite pool of prospects.
Net new ARR is more expensive, takes longer to close, and takes longer to pay back. For many, reverting to free-to-use seems like the only solution to growth.
During a market downturn, teams freeze spending on new tools, instead prioritizing deeper investment in the tools that have already proven value.
Only a minority of SaaS companies (less than 20%) attribute more than 20% of their annual revenue growth to expansion of current customers.
Even fewer (14%) see a notable YoY increase in revenue from their existing customers...
Avg. median cost to expand $1 of ACV
Avg. # of months to earn back expansion cost
Success rate of expanding an existing customer
Avg. median cost to expand $1 of ACV
Avg. # of months to earn back expansion cost
Success rate of expanding an existing customer
Not only is expansion cost effective. Research also shows that the most successful companies focus the most on growth via expansion revenue.
There is a direct correlation between a company’s growth rate and its percentage of new annual revenue from expansion.
Even better, expanded customers are churn, recession, and competition resistant.
Avg. % of revenue from expansion for hyper-growth companies.
Cheaper to retain customers
than attract new.
Cheaper to expand NRR vs
acquire new ARR.
Uncover opportunity in your customer data.
