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The Surprising Psychology of Customer Expansion

Posted in: Buyer Engagement, Sales and Marketing Management

For more than two decades, sales and marketing have relentlessly focused on “acquiring new logos.” But what happens after a prospect becomes a customer? Should teams use the exact same message when renewing or up-selling existing customers?

Over the last decade, most companies have moved away from a one-time sale of products to subscription-based business models. Today, the vast majority of the average business’s revenue – analysts estimate 70-80% – comes from existing customers in the form of renewals and growth.

Meanwhile, the majority of sales and marketing leaders see no need to differentiate their messaging approach between customer acquisition and customer expansion. And more than half feel that provocative messages – what companies use when communicating with net new prospects – are still applicable in a renewal scenario.

But research proves otherwise. A series of Corporate Visions studies found that using a provocative message with existing customers, when trying to renew or expand business with them, actually increases the risk of losing them to competitors by at least 10-16%.

The buying psychology between prospects and customers is 180-degrees different. And to sell more effectively to both prospects and customers, sellers and marketers need to tailor their message to match that psychology.

The Psychological Difference between Prospects and Customers

Over the years, a number of psychological studies have shown that when faced with a decision, the majority of people tend to stick with their status quo. And most of the time, they aren’t even aware of how this Status Quo Bias affects their decisions.

In a sales and marketing context, Status Quo Bias can either be a friend or foe. When organisations understand how buyers are framing their decision to change versus staying with the status quo, they’ll be better prepared to change their minds and keep them as customers when competitors come knocking at the door.

But as the research highlights, how marketers and sellers speak to their buyer’s Status Quo Bias needs to change with the situation at hand. In a customer acquisition scenario, they need to disrupt and defeat the buyer’s status quo to convince prospects to change and choose them. But in a renewal or expansion scenario, they should defend their position as the customer’s status quo and reinforce the relationship.

How to Reinforce Status Quo Bias in Sales Messaging

Customer acquisition messages should drive big changes and mentality shifts in prospects. But “big changes” aren’t always the objective when helping existing customers make the decision to expand or renew their business.

In fact, according to one B2B sales study, a messaging approach that reinforces an existing customer’s natural Status Quo Bias increased intention to renew by 13% relative to the provocative messages.

Corporate Visions research also found that during upsell conversations, reinforcing the emotional aspects of the customer partnership was most effective in making change seem safe to customers, as long as they’re changing with the company, not away from it to another competitor.

Buyers are naturally more inclined to remain with their status quo than change to a new solution. But that doesn’t mean companies shouldn’t make every effort to defend their incumbent advantage. Customers are constantly being pitched by outside vendors who are eager to win their business. Don’t give them the opportunity – be the best partner and trusted advisor to your customer that you can be, and the true value that this brings will win the day.

Selling Across the Entire Customer Lifecycle

Messaging isn’t a one-size-fits-all effort that can be universally applied across the entire customer lifecycle. Customer retention and expansion has its own demands, pressures, and buyer psychology. Sales and marketing need to craft renewal, price increase, migration, and apology messages that reflect that psychology.

Adapting messaging and skills for these must-win moments means understanding what research reveals about effective customer engagement. In the new book, The Expansion Sale, sales and marketing leaders can get research-backed message frameworks and the skills needed to tell an effective story in four key commercial moments with existing customers.