Land and Expand

Land and expand is a sales strategy that, if you have worked anywhere in the tech industry, you have likely encountered.

The theory is that a sales team focuses on landing a small deal with a new customer and then expands its reach across teams, departments, and divisions within the same client for other services or different projects.

For Sellers

The 'land' phase of the sale allows sellers to establish a relationship with a new customer through a smaller, entry-level product or service. This low barrier to entry makes it much easier to turn a potential buyer into a customer.

The 'expand' phase comes through the seller's ability to expand their offerings over time, upselling features, upgrades, complimentary products, or even having a warm introduction to other areas of the business.

From a sales perspective, it makes a lot of sense. You have a suite of services that you know will bring a lot of value to your client, but building trust and a relationship is important for both the seller and buyer.

There are several downsides to this approach with customers. Selling this way is resource-intensive. Time, manpower, and resources all must be put into a customer who has only made a small purchase to date. The seller has to dedicate resources to new customers and significant resources to managing ongoing relationships and upselling. For a smaller business, this can be significantly difficult on a limited budget.

Land and Expand can often lead to higher lifetime customer value, but the initial sales cycle may be slower than other strategies. Expanding across a business from the customer's initial purchase could take a significant amount of time. During this time, there is also a risk that a competitor may demonstrate their overarching value to the customer while you are taking a smaller, more incremental approach.

For Buyers

As a buyer, there is always a significant risk when working with a new partner, particularly if trying to achieve something of key strategic importance. There is a temptation to reduce risk by working with a supplier you know cannot offer everything you want but can get you what you need. This can be fine on an isolated project, but over time, your growth may become stifled by not taking risks with other untested providers that can innovate from what you need into what you want.?

Allowing a seller to 'Land and Expand' can mitigate this risk. By starting with a small investment and gradually expanding, buyers can assess the seller's performance, reliability, and compatibility with your organisation. The initial piece of work may go successfully, but you might not want to take things forward. Starting small helps you find the right long-term partners.

Finding the right partner through smaller, initial products, projects or workshops can also help shape your strategy. As the seller gains a much deeper understanding of your business, the outside perspective can highlight change recommendations you might miss. The seller has to take a fully personalised approach to selling further into your business. Not only will they tailor their solutions to your business needs, but the right partner will also share their insight on what else you can do to improve.

There are potential long-term risks of working towards a 'Land and Expand' buying strategy - the most significant is future integrations. If you find a great partner and they stop innovating their products and services, it will hold your business back. Future technologies that you can bring into your business may have compatibility issues, leading to potential disruptions and costs.

You can mitigate this risk during your Land phase by ensuring your partners take the time to understand your architecture and bring a solution that allows for ongoing innovations or simply works as a plug-in, pull-out offering within your existing architecture.

While sounding like a pirate invasion, Land and Expand is an excellent way for buyers and sellers to work together and forge long-term partnerships. The underpinning aspect of this sales approach is the customer. To expand, your selling partner has to show they can work with you for the long term. They are investing in your success with their own time and attention. You are no longer looking for a provider to solve a single issue but one that can help you through your business growth and navigate challenges with you while helping drive innovation. That type of trust and understanding is built over time, so when you meet that company that impresses you through a traditional tender application but isn't proven enough to take on the big project, bring them in to run a workshop or work through a smaller project. You might find a partner that can help you change your business for the better.