Breyta

Touchpoints 27.07.2022

Land and Expand: How to Capture an Entire Company With One User

Land and expand is a billion-dollar hyper-growth business strategy that starts with a single user.

land and expand cover image

Behind every successful SaaS startup is a massive outbound sales team.

...Right?

Wrong.

Some of the biggest companies in the last decade have no salesforce.

Zero. Zip. Nil.

Yet, Atlassian reached $100M in sales within 7-years. The software had to sell itself, come in at a low price point to move subscriptions, and turn users into avid fans.

Clocking 23 years, Basecamp is one of the oldest SaaS businesses. Over the last two decades, 20,000,000 people have used the project planning app, and the company hit $25 million in ARR. Within the first 6-weeks of its release, Basecamp hit its one-year goal of $5k MRR.

Each one operates with no outbound sales team to account for its hyper-organic growth.

So what's the secret?

What are these companies doing differently, and how can you get a slice of the same success?

The journey begins with implementing the land and expansion framework into your business.

What is a land and expand strategy for PLG companies?

A land and expand strategy means to start small, gain trust, and then expand into other areas of the business.

It's your trojan horse without the deception.

Instead of smuggling your way into an organization, you're using brand champions to open up the gates and welcome you to the land of company-wide user adoption.

How does it work?

  • A user signs up for your free trial, aka "the land."
  • Your UX, onboarding, and CX team exceeds expectations, and you help the user nip a painful problem in the bud.
  • The user sings your praises to everyone on their team, sending a wave of sign-ups to your product.
  • Before the free trial ends, your CX team steps in to upsell the team to a paid plan, and the users convince other departments to give the app a try, creating a cross-sell opportunity.
  • Your enterprise sales reps take over the account and nurture the opportunity, "expanding" the one user to the entire organization.

But that's not the only way you can "expand."

Take a page out of Datadog's book and expand your product profile. 25% of Datadog's users use four or more products, and 75% use two or more products.

The reason for Datado'sg multi-product success? Trust.

The land starts with a free trial. The product is easy to use and quickly delivers value to users. With a solid PLG sales strategy that removes friction, users naturally trust Datadog and opt-in for additional products, resulting in a 130% net retention rate.

Why PLG and land and expand are perfect partners

Product-led growth is a business strategy that relies on the product to attract and convert leads into paying customers. One of its key components involves using free trials or freemium products to draw in leads, demonstrate value and drive feature demand.

When someone clicks "sign up for a free account," the land is in motion with the free trial or freemium version, giving users a taste of what the platform can do.

From there, the courtship ritual to expand begins. Premium or additional features entice the user to say yes to a paid plan, and your excellent service keeps users happy, engaged, and in love with your product.

Land and expand examples

With all the theory out of the way, let's dive into some land and expand examples from the world's top PLG companies.

Asana

In 2018, Dustin Moskovitz (Facebook co-founder) and Justin Rosenstein (Facebook lead engineer) set out to change how teams work.

After struggling with efficient workflows came together to create a side project with a single goal: kill email at work.

Fast forward a decade later, email is still around, but the idea of Asana (making collaboration and communication more efficient) took off, snowballing into a $3 billion project management company.

The secret to their sauce? A successful land and expand strategy.

Let's break it down.

First, how does Asana "land" a user?

  1. Frictionless sales process: Tap "get started," enter your email, and you're ready to start planning projects and collaborating with team members.
  2. Investment into R&D: Asana spends 74% of its annual revenue on creating the best possible user experience, which leads to stickiness.
  3. Integrations: Connect your Asana account to the tools your team uses daily. With dozens of integrations and apps, it creates a seamless experience, improving workflows and making the "land" a no-brainer.

Second, how does Asana "expand"?

  1. Asana Ambassador Program: The ambassador program comes with kickbacks like exclusive templates, resources, trainings, events, and swag to drive user adoption. It encourages a deeper connection between the app and the users by creating brand champions who increase adoption levels on a company-wide level, helping Asana to expand organically without relying on a sales team.
  2. Collaboration: Users get value out of Asana through collaboration. Naturally, new users invite team members, driving growth and further expansion into the company. Asana launched high-value features like Organizations and Dashboards to help increase cross-team collaboration and make the process intuitive.

Success in sales at Asana is trying to bring in as many folks under our umbrella and then land and expand. If our team sells something small to a large corporation and it grows from there, that's a win not just for sales, but also for Customer Success and the entire company.

Frank Mayfield, Former Sales & Monetization at Asana and Head of Sales and Monetization at Attio

Slack

Slack is somewhat of a unicorn in the SaaS world. After eight months of going live, the startup hit a $1 billion valuation without spending a dime on traditional advertising.

How did Slack become the most popular chat and productivity tool used by 77% of Fortune 500 companies?

The app takes the land and expand strategy one step further by going cross-company.

Before we get into that, let's break down how Slack "lands" a user.

  1. Easy sign-up process: Enter your email address, create a Workspace, and you're ready to make work life simpler and more productive.
  2. Social proof: Slack uses Twitter to pin and favorite Tweets raving about the app. 92% of people trust a recommendation from a peer giving Slack powerful ammo to convince someone to take the leap and "land."

We bet heavily on Twitter. Even if someone is incredibly enthusiastic about a product, literal word of mouth will only get to a handful of people — but if someone tweets about us, it can be seen by hundreds, even thousands.

Stewart Butterfield, CEO at Slack

Once a user creates an account, the expansion process begins:

  1. Collaboration: Slack only needs one person to sign up, try it out, and then invite collaborators. As more people join a workspace, teams need to upgrade to paid plans to use the collaboration tools and get the most out of the platform.
  2. Cross-company: Once Slack takes over an organization, it grows further with "Connections." The feature allows organizations to invite users from other companies into the Workspace, helping to streamline client communication and expand even further.
  3. Gated Integrations: To land in the market, Slack uses integrations to make the platform more appealing and help teams work smarter. To expand, Slack only lets free plan users connect to 10 apps, whereas users on the paid plan can install an unlimited amount.

Dropbox

After launching in 2008, Dropbox hit 1 million users within a year, and by 2011, it had passed 50 million active users.

The propellers behind the startup's growth?

It's users.

A Spiceworks study found that 93% of respondents used Dropbox, which their IT administrators did not approve.

That is the quintessential land and expand experience.

Dropbox's growth didn't come from a top-down approach. It became an $8.8 billion company because employees adopted the product, forcing their companies to come on board.

But to get there, Dropbox needed to "land" users.

How did the new startup gain traction in a space full of competitors?

By launching a referral program leading to 3900% growth in 15 months. Every three months between 2008 and 2010, Dropbox doubled its user base with no advertising spend.

That's not all.

Dropbox doubled down on creating a simple cloud storage product that works well and people love using it. Without those core principles, its referral program wouldn't be one of the best cases of referral marketing.

After capturing a large portion of the SMB market, Dropbox turned its attention towards the enterprise market to expand.

Why?

SMBs have an annual churn rate of 31%-58%. That's a major problem for PLG companies who want to keep churn low and net revenue retention (NRR) above 100%.

On the other hand, enterprises only have an annual churn rate of 6% to 10%.

To tap into this market and expand, Dropbox launched features to attract potential clients and meet the needs of key decision-makers.

  • Security: Security is one of the biggest pain points for enterprise clients. Dropbox upgraded its security features to make the platform secure and compliant for company data, users, and devices for in-house and distributed teams.
  • Integrations: To ensure adoption, Dropbox seamlessly integrates with existing workflows.
  • Advanced tools: Enterprise users can get more out of the platform with advanced data governance, creative tools, and premium support.

Ingredients of a successful land and expand strategy

As you can see from the examples above, there's a recurring set of criteria that makes a land and expand strategy successful.

If you're looking to implement it in your business, here are some of the boxes you need to tick:

  • Build a collaborative experience: How does your product help a group of people achieve a common goal? A product that works better with multiple users on board is the surefire way to expand your PLG company.
  • Aim for low friction: What can you do to remove as much friction as possible? Focus on creating a product with low entry barriers and a user experience that solves problems instead of creating hurdles.
  • Create integrations: How can you seamlessly fit into a company's existing tech stack? Integrations are a bonafide way to gain market share from your competitors and attract new users. Once you develop trust and roll out more features, you can start luring users away from competitors and expand by selling multiple products like DataDog.
  • Deliver an exceptional customer experience: How do you deliver a "wow" experience and stand out from companies that offer the same or a similar solution? A key ingredient to land and expand involves curating an exceptional customer experience from beginning to end. It creates user stickiness, referrals, and expansion into other teams and departments within and outside of an organization.
  • High investment in R&D: Is your product easy and fun to use? You don't need to spend more than 70% of your annual revenue on R&D like Asana, but investing in your product is a must. If your UX is bad and customers don't enjoy using your product, you'll struggle to land users, and those who give you a chance will churn before you can expand.
  • Time to value: What action does the user need to complete to see value in your product? For Slack, it's when a team sends 2,000 messages. Once you have a value metric to benchmark your product against, you'll have a game plan to help users achieve it as quickly as possible. The sooner someone sees value, the less likely they'll churn, and a 5% bump in your customer renewal rates can increase your profitability by 75%.

Land and expand KPIs to track

You don't need to ditch your sales team and follow in Atlassian's footsteps to launch a successful land and expand strategy. Whether you have 10 sales reps or none, these are the most important SaaS sales metrics to track and keep tabs on how well your business strategy is working.

  • Churn rate: Your churn rate tells you how many customers or volume of dollars your business lost over a specific period of time. Once you have enough data, you can see customer loss trends and whether you need to adjust your strategy.
  • Renewal rate: The renewal metric is a snapshot of your loyal customers or dollars retained over a time period. It tells you how many users decided to stay or cancel their subscriptions, but it’s limited to users eligible for renewal during the period.

Why do you need to track your churn and renewal rates sales data? It's essential data to coordinate your sales, marketing, and customer success teams.

  • Customer lifetime value (CLV): When delivering an excellent customer experience, you need to focus on your CLV sales metric. It tells you how valuable a customer is to your company over the entire relationship period.

Why is this important for your land & expand strategy? It costs less to keep current customers than to acquire new ones. If the value of a single customer increases, it shows the user is happy with your product, and you're expanding by driving revenue growth.

If you see spend dropping as the customer uses your subscription less, it's an indication of potential churn, and the account should be flagged and sent to your customer success team.

  • Average revenue per user (ARPU): ARPU is an underrated sales metric you can't ignore as a PLG company. It tells you how much the average user spends and gives you insights into what drives a user to spend and how to optimize your pricing to improve your future revenue.

Let's look at an example.

If your ARPU is $5/mo, it's going to take A LOT of users for you to reach $1M ARR. Besides the revenue hurdle, you'll have less money to spend on R&D, customer support, and marketing which will handicap you in scaling your business.

When you dive into your ARPU data, you can see what makes your most loyal customers tick. Maybe you notice that your best customers prefer your higher-tiered plans, where your lowest-value users are the first to churn.

The data reveals you should position your product towards higher price points if you want to keep growing and attracting the right users.

Land and expand isn't a no-touch strategy

The human touch isn't going anywhere.

Despite PLG empowering users to zip past lengthy sales cycles, if you want to roll out a land and expand strategy, you still need sales reps to step in at the right time.

For example:

  • Enterprise clients need custom requirements to meet company protocols. If you want to close those big accounts, a one-fit approach won’t work. Your SDRs are crucial to creating a deal that makes high-level decision-makers happy and gets you one step closer to $1M ARR.

You can’t do enterprise without the human element. You might land some deals without it, but the reality is that for enterprise clients, things get very technical or political. Your sales reps role becomes acting as project manager meets politican meets engineer.

Ryan Nutley, Director of Sales Engineering at Datadog.
  • Lack of knowledge. While modern buyers are more knowledgeable than ever before, that doesn’t mean users know everything about your offer. Sometimes additional useful features and products are looked over. When that happens, sales reps can step in and educate customers and create upsell opportunities.
  • Identifying and reacting to churn behavior signals. Once a customer decides to click on “cancel subscription”, it’s nearly impossible to win the business back. When your sales reps and customer success team step in before a user makes the final decision, you can save the relationship.

How can you proactively reach out to accounts that have the potential to expand and stop churn?

Activate your product data with Breyta.

Once you turn on our integration, the algorithm compiles your data from multiple sources and intuitively surfaces accounts ready for expansion.

Within seconds you can:

  • Identify users up for renewal and divert those accounts to the CX team.
  • Route enterprise leads to your internal sales team.
  • Identify at-risk accounts by looking at engagement metrics, step it in before churn happens, and you'll see an increase in customer retention.
  • Discover the type of customer that's most profitable for your business and focus resources on attracting and converting the users who fit your ideal customer profile.

When you put your data to work, you can scale your business quickly and grow your customer relationships with the accounts that are key to your success.

…But that's not where a successful land and expand business model ends.

The final ingredient is a robust onboarding journey. Building a lasting business relationship begins as soon as someone signs up, and it doesn't stop.

It requires sustained ongoing efforts from your sales reps to your customer service team, which is only possible with the critical human touch.

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