BSMS 80 - Account expansion (part 1)

• Stijn Hendrikse: Author of T2D3 CMO Masterclass & Book, Founder of Kalungi
• Brian Graf: CEO of Kalungi

B2B SaaS companies move through predictable stages of marketing focus, cost and size (as described in the popular T2D3 book). With people cost being a majority of the cost involved, every hire needs to be well worth the investment!

The best founders, CFOs and COOs in B2B SaaS work at getting the best balance of marketing leadership, strategy and execution to produce the customer and revenue growth they require. Staying flexible and nimble is a key asset in a hard-charging B2B world.

Resources shared in this episode:

• B2B SaaS Go-to-Market Checklist for Successful Market Expansion [Free Download]
• BSMS 31 - T2D3: How some software startups scale, where many fail
• BSMS 43 - What to do when your numbers stall
• T2D3 CMO Masterclass
• Submit and vote on our podcast topics

Brian Graf: Hi there and welcome to episode 80 of B2B SaaS Marketing Snacks. I am Brian Graf, the CEO of Kalungi. And today I'm joined by Cecilia Pérez-Muskus Mouscas, an associate CMO at Kalungi, who's been helping early stage B2B SaaS companies scale for years. In this episode, we're diving into account expansion, a key revenue growth lever that too many SaaS companies overlook.

While most marketing efforts focus on acquisition, expansion is just as crucial for long term success. We'll break down when to shift your focus from new customers to maximizing value from your existing ones, what strategies work best for upselling and cross selling, and how to align marketing, sales, and customer success to drive real impact.

If you're looking to improve retention, boost revenue, and make the most of your existing customer base, this episode's for you. Let's get into it. 

Welcome back everyone. And thank you so much for joining. I have a new guest today. Her name is Cecilia Pérez-Muskus, and she is an associate CMO with Kalungi and has worked with us for a number of years over a few different clients. 

We have a really good topic today that she brought up to me, and that is account expansion, which I think a lot of times people may think may not really relate to marketing, but is really, especially with B2B SaaS marketing, marketing is a heavy driver of it. And it's a key.

Revenue growth lever for companies that I feel like is often overlooked, particularly in the earlier days. So, super excited to have you on the show, and thanks so much for joining. Do you want to just give a quick intro about yourself, tell the audience who you are, what you've done, and what you're into from a marketing perspective?

Cecilia Pérez-Muskus: Of course. Thank you Brian for having me on the podcast, very excited. to be able to join you. I am Cecilia. I'm one of Kalungi's fractional CMOs, like Brian said. I've been with Kalungi for over three years now during which I've worked with early stage B2B SaaS companies. I have a formal background in literary studies and cultural management, so I've always had a passion for storytelling, for critical analysis, for communicating and engaging with audiences.

And one way or another, I eventually channeled these interests. and skills towards marketing. Specifically with Kalungi and as a marketer, I've found myself, like I said, immersed in the world of early stage B2B SaaS companies, which is where I think that I tend to be able to have a bigger impact that my skill set really shines through.

With early stage companies, you typically want to work with somebody who's both a strategist, but also very hands on. That is somebody who can develop your go to market strategy from scratch, but also manage and lead a team in the execution of it. Like I said, I've always had kind of like a snack, a knack for storytelling.

So I have strong research and analytical skills, which is what precisely allows you to build that go to market plan, come up with a unique value proposition, create a brand. Establish competitive advantages, validate your ICP, generating that initial empathy that you need to strike with, with your audience in those early moments as you launch a brand.

So, yeah, that's my sweet spot, I would say. 

Brian Graf: I think people throw around the term, like, jack of all trades marketer, but I think you take it to a whole different level, which I've always admired about you, and I do think that that will lend itself quite well for this conversation. So. Let's start with just giving a quick background for everyone who doesn't know.

What is account expansion and why does it matter? Why is it important for a B2B SaaS company? 

Cecilia Pérez-Muskus: Of course. So very simple terms. It's one of the strategies that you can pull on to grow revenue from existing customers. So instead of focusing on bringing in new customers, you're just focusing on the ones that you already have and you're either increasing the usage of the tool that they're on, you are encouraging them to purchase additional products or features, or you are upgrading them to like higher tier plans.

Brian Graf: Yeah, I guess from Kalungi’s perspective and a lot of the ways that I think about it, there's, there's three main levers of B2B SaaS growth. There is customer acquisition, which is what people mostly think about marketing's impact. And then there's retention and expansion.

And so we're talking about the third lever here. I mean, at the end of the day, from my perspective, it does seem like it's just revenue growth. Which is what marketing's there to do. But take it from, it almost goes inside out. Instead of outside in. So when would you, maybe we start with, when should you focus on account expansion?

Versus the other two. Everyone, everyone always wants marketing to fill the top of the funnel, but, when would you make the case that, no, we should take some of those resources and focus them on expansion? 

Cecilia Pérez-Muskus: Yeah, and I agree with you that typically when people think of marketing, they're typically thinking of filling in that top of the funnel.

I think also when you think about customer acquisition, it's probably one of the easiest ways to demonstrate rapid growth when you have to speak to your stakeholders, to your investors. It's very, very easy to demonstrate the impact that customer acquisition can have. And then, but then when it comes to, then when it comes to account expansion, well, I think with retention, there's like this.

It's a very common knowledge factor that people know that it's typically more expensive to gain a new customer versus retain an existing one. I think that's nothing new that anybody's hearing right now, but I do think that sometimes people fail to go like that additional step, like, aha, you're retaining them.

But how about if you're already having them, if you already have them happy. Can you actually increase the value of that customer that you're already working towards keeping. So it's not a matter of thinking, okay, how can I extend that lifetime of my customer, but how can I actually increase it? So let's think about when's the ideal time.

To strike up a conversation of when we should be tapping into account expansion. So I think that one of the first things that I would think of is company maturity. For early stage companies, it's normal to prioritize acquisition. You know, you want to establish that customer base. You want to establish credibility.

You want to validate your ICP, probably make sure that you're getting to the right people. You want to validate your product market fit. So it's normal that for early stage companies, you're mainly focused on acquiring new customers. But then as your company grows you want to start shifting your focus towards retention as well.

That's where you're going to start filtering out the customers that perhaps are not the right fit. So you want to really keep the ones that are a good fit and that are going to extend that lifetime value. So the sweet spot for account expansion is basically I would say with growth stage companies and then more mature companies, companies that have already striped product market fit for sure.

Brian Graf: Yeah. Cause to your point, right. And even zooming out from marketing for a second the backbone of a successful SaaS business is the subscription model, right. And recurring revenue. And obviously. If you're thinking about even looking at the financial metrics of a company, or it is my B2B SaaS company ready for investment or, or looking at how attractive it is for investment from the investor standpoint.

They're going to be looking at whether growth is important, but more than that, investors, I think we'll want to know that if I put money into this system, it's going to give me a return. And nothing says that like retention and upsell from clients. And so it is a critical piece of your growth and the health of the business.

So I agree. It's super important to your point. And going back to the maturity point. You absolutely need to acquire new customers, in order to retain and expand them. But it does kind of follow pretty well the, almost the base path analogy, of T2D3 where your job as a small company is to find your niche, and find your target market and then start to expand on it.

And once you have found it, then it almost becomes a more natural process. Like you can, you can throw all the retention and upsell tactics behind a product that has a bad fit, but it will be really hard. You'll be pushing a boulder uphill in order to gain any traction there and so to your point I agree with that right like once you start to see the signs of product market fit I do think it's time to start leaning into account Hey, definitely retention, but absolutely expansion as well.

So we've, we've convinced everyone that's ever listened to this, that account expansion is a good idea. And now we have a decent idea of kind of when to start leaning into it. How do you go about it? What do you think about it? What are some of the campaigns that you like to run? Talk me through that.

Cecilia Pérez-Muskus: So. The typical ones that you think of when you think of like account expansion, obviously like cross selling. So finding a complimentary product or service that you can offer your customers. You can think of upselling. So think of a higher tier or premium version of your product and then your land and expand.

But either way, whichever, whichever route you want to go, you definitely need to start somewhere, which is basically sitting down and really analyzing in detail, all of the accounts that you have. I really think of account expansion function as a high effort, but also a high reward type of lever that you can pull.

It's not something that can be strictly automated, that can be fast to execute. This does require the combined effort of sales and customer success and marketing. So it's obviously very important to, first off, you sit down with your customer database, you map out, okay, who are my happy customers?

That's very, very important. And you obviously don't want to. rattle the hornet's nest, you want to make sure that you're reaching out to the people that are actually achieving and seeing value in your product. And that's something that you need to do basically manually. You need to do it in a very personalized manner.

You need to, like I said, sit down with customer success sales. One of the more important things that you should do when you're thinking about. Account expansion is quantifying the opportunity that each of these accounts can bring on. Because it's highly personalized and again, it does, it does require a lot of effort.

You want to make sure that you're prioritizing the right account. And the way to do that is again, quantifying that opportunity. How much potential revenue could I actually be bringing by? upselling this particular account or cross selling this other one. So it's definitely one of the first places to start for account expansion.

Brian Graf: Yeah, I like it. You mentioned pricing, which I think is a really interesting piece. I feel like this whole conversation touches on a lot of points that maybe, maybe B2B SaaS founders and executives know in the back of their mind that are true. Like retention is important, upselling is important, but they never get around because there's other priorities, or it's too daunting to take on, or something like that.

I think pricing and feature alignment is one of those pieces. I feel like often companies can build pricing structures and feature structures and packaging structures just kind of. Almost in the same way that they can build messaging and in that like hey I think this is a good way to do it and so we're gonna do it this way.

Like because the leadership team gets in a room and all agrees that this sounds good. Which is a good place to start, but it's not necessarily rooted in Customer preferences. Or what is actually best for them, for the customer. I do think that even not to make this more what you see, you did say it was high, high effort, high return.

So I do think it needs to start with. How you actually think about pricing and packaging your product. Like if you're going to upsell a customer into the enterprise version of your product, you need to make sure that it actually works for, then adds a ton of value for that type of customer.

And so it is. I think you said prioritizing accounts is absolutely right. Like looking at the cost of service and how satisfied they are with their current subscription. But also I think going almost a step deeper and doing a lot of customer interviews, maybe it's setting up a customer advisory board.

But to make sure that all of those, all the tactics that you put in place, are rooted in strong customer preferences, because I think that that sets everything up for success, rather than, then, again, pushing the boulder up the hill. 

Cecilia Pérez-Muskus: 100%. And that's probably like another, like another indicator of when it's actually a good time to think of account expansion.

You know, when you have high NPS scores, when you're receiving positive comments from your, from your customers, when they're willing to do testimonials, that's obviously another great indicator that it could be the right strategy for you to pursue. 

Brian Graf: So particularly expansion is a pretty collaborative experience with marketing, having to work really closely with account executives and customer success and product.

To make sure it's a really coordinated effort to pull off. How do you set up your marketing teams or initiatives in a way that sets you up for success with all those other teams and make sure that everyone's pointed in the right direction and, and collaborating the right way? 

Cecilia Pérez-Muskus: I think it will sound cheesy, but you know, communication is key.

Communication and alignment. I think the most basic thing and the most essential thing as well is creating that space to actually exchange ideas and exchange outcomes and exchange hearing from sales how their conversations are going and then hearing from customer success, which accounts are shifting or are actually reacting to our campaigns.

So it's going back to the basics right of being able to everybody sit on a room on a regular basis you establish Depending on how much efforts you're actually allocating to account expansion expansion It can be from daily to weekly to bi weekly again, that'll determine on how many efforts like the volume of accounts that you're reaching out to But that's very, very important, being able to share those learnings and stories.

Because again, it's a very, very personalized type of, type of strategy. So the only way to be successful at it is looking at it in the most detailed way. 

Brian Graf: Yeah, and I agree with that. I also think that the teams have to be incentivized the right way to keep coming back to the table because I could see this again being one of those initiatives where people get excited about it for a month or even a quarter and then other priorities come up and But if you know if bonuses are tied to this or if every It can be tricky to do but can be really effective if done.

If sales and marketing and CS are all lined up behind the same metric that they all have to contribute to that can be helpful or even just breaking the metric into What each department controls with strong SLAs between right can be really helpful, but I totally agree. Once the incentives are in place, everyone needs to come to the table very regularly share ideas share insights, right each team It's so easy for teams to work in a silo on these things, but you'll just miss the boat on so many insights and strategic pieces that are so important to everything that you do.

So, on that note, what from an executive standpoint and even just a success standpoint, what KPIs should a company look for to gauge if this type of initiative is effective. This is something that will require a lot of planning, a lot of coordination, and likely won't hit immediately.

When you put it in play. So how can you as an executive or a founder of a business, how can you look at this and make sure that you are seeing traction. Even if a customer hasn't expanded yet. 

Cecilia Pérez-Muskus: Great question. So we can think of leading indicators and lagging indicators. So as part of our leading indicators, we can think of product engagement.

So there are many tools that you can use to evaluate. How many people are actually, how many users are actually engaging with the tool? Are they using it to the maximum of their ability? That's a very important one. Obviously NPS scores, like I said, confirming whether people are satisfied and happy with the features that they're using, understanding how it is that in these specific campaigns that you're rolling out, are they actually responding to those campaigns or are they actually clicking through, are they actually.

reaching out and, and interested in having a conversation with you. That's very important. And then we have as lagging indicators, we can think of referrals that we're receiving referrals that we're receiving from our customers. If we're getting active requests from our customers for additional features, they're raising their hand and they're saying, Hey, we, we realized that we have this particular need that could be a nice compliment they're being proactive and they're being, they're raising their voice because they're interested in seeing improvements in the tool.

And obviously, the more financial metrics. Revenue, revenue retention, and then revenue expansion. How much is your ARR growing based on these accounts that have been expanding? During X amount of time. 

Brian Graf: Yeah, I think all those are great. I think, depending on how mature your company is, the product engagement metrics could be harder or easier to get.

Younger companies can struggle with that. It is so important, though. And I do think it's absolutely a priority for the product to get in place. Cause again, how are you going to know what people use or find valuable in your product if you don't have those, if you don't have them, then you can kind of skip ahead to NPS scores, which are relatively easy to implement and just again, going back to the, back to the basics of customer interviews.

You can never have too many of those. I also think that you can almost treat this like a customer acquisition funnel. At the end of the day, once you get into, especially if you're running like a land and expanding strategy or using sales, have built yourself an upsell pipeline. And, once a certain activity level is reached.

Prospects enter, or customers enter and should be treated as new prospects. And so. That's a good way to showcase traction as well as, as customers move down the funnel. 

Cecilia Pérez-Muskus: And I think you can even do that from very early, early on in the process, especially when you think of the land and expand approach.

At least personally, I've seen, I've seen this happen organically with, with our customers. With our clients, they start seeing small size deals coming through the funnel and then they're happy with the tool and then they organically just extend and expand their deal sizes. So. There is a possibility of identifying as soon as I enter the funnel.

Whether they would be a good fit to extend their, if it's a big company, if you identify that they have the right amount of users to expand based beyond a five user deal, for example, they have the resources to be able to extend beyond, beyond what they're originally signing up for. So doing that from the early, from the early stages, again, as soon as deals enter and enter the funnel, I think that's also a great thing to do so that you're not you're not trailing behind or doing this too late in the process. 

Brian Graf: I'd also like to talk about the land and expand approach. It almost gives you all the benefits of an enterprise sale. But while allowing the team to sell for you internally and also gaining MRR out of that sale process.

So it's kind of the best of all worlds. But again, it takes a lot of coordination to be able to do and does require the product to do a lot of selling. For you. So the product needs to be ready.

Last question for you. The upsell process can be pretty daunting for companies. They can, everyone agrees that upsells upselling is a good idea in theory. But it can be really difficult to wrap your head around and figure out how to tackle. So from your perspective, what would be the first step that you think all companies should really make sure that they have locked in to make really solid traction against this?

Cecilia Pérez-Muskus: I think you, you need to ensure that you're actually delivering value. I think this needs to be a very honest and genuine type of approach, which is one of the reasons that I really like it. I think it's like a strategy that puts you in a position to actually be better for your customers. So, first thing to keep in mind if you're going to pursue this… are you actually providing value to your customers?

Or are you just pushing for a sale and that's it? Especially if it's a customer that you already have in your in your system You wouldn't want to lose them just because again you're pushing to have additional revenue like they need to understand That you're actually doing this for their benefit, that you're actually solving a problem that you have learned that they have and that you know exactly how to solve.

So that's my first, my first item that I would recommend companies to keep in mind. 

Brian Graf: That's great advice. It's funny how many things in marketing just boil down to understanding your customer or your prospect and making sure that you're adding value for them.

All the tactics are, are interesting and really impactful. But if you can't answer those questions, everything else becomes way harder. And if you can really answer it really well, then everything becomes much easier. Okay. Well, thank you so much for your time. I love the conversation and hopefully this was helpful to our listeners.

Cecilia Pérez-Muskus: Thank you for having me, Brian. It's been a pleasure.

Brian Graf: Thank you to Adriano Valerio for producing this episode, and the Kalungi team for helping us make this whole thing work. And of course, you for choosing to spend your time with us. As a reminder, all the links we mentioned in this episode can be found in the show notes, and if you want to submit or vote on a question you'd like us to answer, you can do that at kalungi.com/podcast. 

Every time we record, we take one of the top three topics and jam on it. Thanks again.

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