I’ve seen CROs take two completely different approaches to generate recurring revenue: 1. Push the sales team to land bigger packages upfront, securing a higher initial contract value that will presumably grow over time. 2. Focus the team on selling smaller packages or individualized products to introduce customers to your catalog, gain their allegiance, and expand the deal later. The first method seems logical - and it can work - but approach #2 is a safer bet in the market we’re facing right now. Why? There’s a lot at stake when a client signs a substantial contract. They expect the ROI to merit the budget, and if all doesn’t go as planned, they’re not going to be satisfied. Every minor issue becomes a bigger thing because the product was so expensive, and if you don’t get the adoption rate you’re looking for or the results you intended, they’re not likely to renew. You’re better off starting small, at least when people are acting conservatively with their budgets. Numero 2 optimizes the conversion path by making it less intimidating for new customers to get a taste of your brand. Offering smaller packages initially can also help reduce friction in the early stages of the funnel. Your top priority should be to ensure everyone’s getting value from your product from the start.
I know this predicament well as a seller/customer success leader. I often lead folks to a less risky contract and tell them from the outset that I’m excited to prove value to the decision makers and expand.
Focus on delivering value.......its that simple! Everything else will come naturally after that
Especially with the increased focus on post-sales as a part of the revenue motion (finally!) pushing for the big sell in acquisition can sometimes backfire with buyer's remorse, increased value expectations with no initial proof, etc. #2 is definitely more cautious, but can definitely strengthen relationships over time as well.
💯 spot on. I think the key here is to have multiple paths to acquire and grow revenue, and know what you're able and willing to support. It's the whole customer lifecycle that needs to be planned for upfront, not just how to get the first sale.
#2 requires a more patient board/CEO. Without that, you get a blend of 1 and 2 and pretty much whatever you can get in the door. If they do have patience, approach #2 gets much easier to plan and forecast long term.
The other challenge with number one is that it often elongates the sales cycle and also can contribute as you mentioned to year two contraction or churn. Land and expand needs to be structured from a compensation perspective to incentivize that behavior in order to avoid number one.
Find small wins first. Have a call today with a GTM leader who felt “oversold” out of the gates and is so frustrated now. There are some challenges with comp plans, territory reassignments and other things that incentivize pushing for it all now.
Have seen both too - each situation is unique
Fueling Revenue & Retention with Data-Driven GTM | Empowering High-Impact Teams | Revenue Flywheel Architect | Customer Success Advocate | Probably Too Excited About GTM, Data & Coaching
2moI completely agree. If your product truly aligns with a need, focus on filling that need, building trust, and investing in long-term growth—it’s more predictable. Drive adoption before expansion. Work towards profitable, efficient growth rather than immediate returns.