In the context of a growing SaaS (Software as a Service) company, expansion revenue is tracked on a monthly basis and excludes revenue from new customers within the same period. Aiming for at least 20% to 30% of revenue from expansion is suggested as a benchmark for success.
Expansion revenue can be increased by focusing on up-selling and cross-selling strategies.
For up-selling, align your pricing scale with the increasing value customers get from your product as their needs grow. Identify and monetize the core value of your product, understand your typical customer's trajectory, and test different price points and plan packages.
For cross-selling, drive revenue increases by offering services and products that complement what a customer already pays for. This can be achieved by offering one main product with several supplementary products, offering several related products, and continuing to develop new features based on customer feedback.
Expansion revenue and new business revenue are two distinct sources of income for businesses. Expansion revenue is generated from existing customers through up-selling and cross-selling, while new business revenue comes from acquiring new customers. Both revenue streams are essential for a company's growth, but they differ in terms of cost-effectiveness and strategic focus.
Key metrics to track include:
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