Expansion revenue is the most underutilized recession lever

Happy customers actually buy more in a recession. So you should be focusing on expansion revenue even more than before. 113/bNfN04/VWNk0K2q2hKrN4VLwMx138LGW6WXg814MMKrpN8Vtb7G3q3nJV1-WJV7CgK4BVqQWHL7YmBfFW7WjSMr79nmP-W1-MnFR3J7rlLW4_hglF3K2Pd8W37yjg07B7KGQW8Q9LNJ5bc9XqW1zQGfw1st3TLW6C-fht97xn3jW6PpxXp9hdsvQW8LBCKx8WpgP2W1_ZvF57rn5T9W5kkpKZ2yPq7JVPNPwf4X94-fW2P-fDB48PfQBW2Lp-Nl5xNh-lW8lK4Rj1-KxL5W8V11Zs5vtHxsW1pYw4Z2gwWYkW1qrgvz96nHq8W4mC9pr5_zn4PW6qBq9k4Zw4lKW5L0-5J7fTRP4W4HtKnb96gD1_W3cQ6WR4M5XWm3mkt1 [pw-paddle-logo-white@4x] PRESENTS Expansion revenue: an underutilized growth lever Now that he’s Chief Strategy Officer at Paddle, our former CEO Patrick Campbell’s been busy merging our two companies, while maintaining revenue growth in the middle of a market downturn. In this market, Patrick recommends optimizing the most underutilized sales lever in a recession: expansion revenue. He shares some pricing and product strategies — to help you grow upgrades and cross-sells, even in a recession. [Read more](113/bNfN04/VWNk0K2q2hKrN4VLwMx138LGW6WXg814MMKrpN8Vtb8y3q3pBV1-WJV7CgSw7W4JH_LP2z3c4wW6xl2JQ75mgRrW3s1cNQ4qRHJqW46PhRF9g7DClW3W4_pN5jvmFrW88BWMD2TrqTTMfqcH3VnPGBW7tqT-N6GGL7pW3bkyTx2mFYVkW11xs5b8_RPhHW7jpRvq6cnhHNW6l-tB417Gc89VNsxHM7F7pVbW5XYNPw6DhR41W5rbD4z52R53pW1K5Llq1tjFNjW1qHrlC5KCLzQVRMWQG3z9jn1W8TXSYr4wdLfdW390l8Z6cMcgwW9g_f5V3gmYrgVMd1Pf44QFMBW1L4Jmr8st4mcW6LmQLG7slKP7VHvJYc2L7xmbW2M5__l4KCj2bN3DHwBhbVDpMW3Pvmyz50llsgW8rQd2361v7zxW5jR6LX7wrC0f3bF51) The talks around recession are getting louder. You're scared. You think your customers are scared too. But here’s a reassuring fact: Happy customers consistently buy more in a recession. Which means, as I said in a recent [thread](113/bNfN04/VWNk0K2q2hKrN4VLwMx138LGW6WXg814MMKrpN8Vtb8f3q3phV1-WJV7CgQskW371G5k3FRzyjW1VzbgF5sQD8tVTSNPM5HqCHYW7lh2ZF58MK_2W4Cly6F6L5cZnVtN58D2snNBLW8Lg4Zm8MKVRSW5xLv1K8c8YySW2bqS3f7P80J3W4x4Z0K37fFr5W6rrbxx7TPLtPW1gq5084xdwKDW7sxqLl8hzK3xW8b1C3-7G8bJHW2P7wnS757F93N5nq0X-yfQDzW9kVst-5FPDPmN7PJs0V64hvKW8XzRwv1SLMSWW5TlZK_4Tw9zkW7DbdZS7d-25ZW8ZnTx22RD9-lW6rSmnl6Ll1GjVbW4p427Q6-mW2SwWjs3g0Vf0W6PSLpW5dzbh3W7mfhFP5k4HGwN2FTZwKJ-4TC3fDQ1), that expansion revenue is the most underutilized lever in a recession. Here are five ways to take advantage. What is expansion revenue? Expansion revenue is any excess revenue that’s generated after the customer’s initial purchase or contract. It's your existing customers spending more than they did when they first signed up. As you’re forced to be more prudent with expenses in times of recession, expansion revenue is ideal because you’re able to generate new revenue from existing customers without the high costs of acquiring new customers. The most successful subscription companies have 20% or more of their new revenue coming from existing customers. Most have close to 0%, because we get “sales brain” and just assume once a customer’s closed - that’s the end. When acquiring customers gets harder, many companies find hypergrowth by selling to their existing customer base. So, how do you do it? [FVN7mIJXwAAzJMn](113/bNfN04/VWNk0K2q2hKrN4VLwMx138LGW6WXg814MMKrpN8Vtb7Z3q3n_V1-WJV7CgzN8N1RFsgb3w5JLW7nGMJk7J6TSqW851MNk7jjPv1W8QBXK11mPph2W2_53ZY3kBP_MW91DMlx90ljp3W1VGW2420LZ_QN5TkjfZ73BTdW5Wb90j6dbKsZN2-LnB-G8rkFW4ZX1c86lXyLrN5rkLX0dgX6zW2-_KjZ9f3KMCW9j7PMl4zFJL1VG9SrT53x2lfW4Fswqp3CZy0pW2N-sbT5sCffmW3WSSB22V6JKPW7mpwDT3bdhf4W8ft2GC3xR-9WW8glB_g5G5Xx6W6SHp0L8SqhT3W6NR3R963fm0YW4fGkMB32-zwjW7j3Y9h8YD57lW4rGZRs72fMRg347L1) Run a multi-product strategy Historically, you didn’t build an additional product until you were at $100M in revenue — if ever. Today, most companies are working on a second product before even reaching $10M in annual recurring revenue (ARR). These companies also tend to have growth that's 30%-50% higher than single-product companies. They fall into the following two strategies: - Selling across the organization to different personas - Selling to the same category persona Add upsell tiers to your pricing You don't need to necessarily create a new product, because it’s likely that you have features or services you can push to more premium tiers. One of the biggest pricing mistakes businesses make is bunching everything into just a couple of packages. The top 1% of growing apps have an average of 16.2 tiers — a lot more than your good-better-best strategy. Think through the upsell path of every buyer segment and force yourself to find something you could upgrade them to. Keep in mind that you’re looking for features that only 10-15% of users care about and are willing to pay for. Create an add-on If you don’t think you have an upgrade option then create an add-on. A feature that a majority of users don't care about, but the ones that do are willing to pay for it. That is your add-on. For good candidates, look at features being utilized by less than 40% of users in a group or tier. Customers with at least one add-on have 18%-54% higher lifetime value (LTV). They pay more and stick around longer. There is also enough pricing research that shows that 20% of your customer base is willing to pay for priority support just to have their call or email answered first. [FVN8CZZWAAEpM2v] Price based on value metrics If your pricing scales in some way — users, visits, videos, etc. — you can bake expansion revenue directly into how you make money. So, instead of having to sell a customer on an add-on or new product, you upgrade them based on their consumption. It's assumptive in the best way and this type of pricing leads to DOUBLE the expansion revenue. By adjusting the value metric you can hide a pricing shift simply by modifying how much they get with each tier or amount. Raise your prices It’s scary, we know. Especially right now. But, you're likely dramatically underpriced already. So, if your NPS is greater than 20, you have some pricing power — raise your prices. You will need to prepare now, however. Price increases can happen in September, post the balance sheet and budget blitz. Do it in the right way, but people know things cost money. If they actually value your product, then you should survive when customers cull expenses. We understand raising your prices can be daunting, so we’re here to help you do it right. Reach out for a free [pricing audit](113/bNfN04/VWNk0K2q2hKrN4VLwMx138LGW6WXg814MMKrpN8Vtb8f3q3phV1-WJV7CgV8fW7KDnQF4JwSsvW7H5DFc7tg43CN2m3375gtYQ_W8Bqy8Y5jkw5lW1K171P763v92W7d0ZWd92QW0gV51cx96xjGWVW3yT0k42mFCmtVyp8nl564TYsW7q7H858g1H8hW8Pmr_Q33L2BWW1JS_ZS5Mh0-KW10l2wD5jGPjPW2gNMCw4l1WTFW82Bm1r2bTFTgW3MkMcM7XwP9MW46-YW76m_fyyVbvGzL1JYk84V8Cx6x2tXFZNN8HQlw9yVVVGW3fNtQx3cbwdgW7K3YM96K1GNBW66xlHW7s6sBQW5cYq5s84s9-MW2k14XZ69_38gW9fPGw76K5XCPMKVxvCjGWKHW4nbdLr9dD2xP37VK1). 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