Managed Security Services Pricing Models: Land and Expand

“Land and expand” (L&E) is a business strategy in which customers usually sign up at one of multiple potential entry levels and then purchase additional products and/or services later on. Once you have your foot in the door, it becomes much easier for you to cross-sell and upsell than if you push a higher-end solution or take an aggressive sales posture from the outset.

L&E is highly strategic since it requires a longer term perspective. As a result this approach is a solid fit for many managed security services providers.

Why Should You Choose Land and Expand?

In many cases, managed security service providers (MSSPs) struggling to attract new customers believe that their problems stem from the cost of their services. L&E allows you to test that hypothesis by offering several different levels of products or services at different prices, making it easier for them to “land” new clients with a smaller starting offering.

All too often, customers will move on from an MSSP early on because they need additional services that the MSSP does not offer, or because they feel lost and adrift after the sale. L&E is also intended to solve this issue of attrition by encouraging you to “expand” your engagement level with existing customers.

How Do You Get Started With Land and Expand?

Generally, MSSPs using an L&E approach tailor their offerings in a way that allows their initial cost-effective solutions to appeal to the top customer problems or priorities in a preliminary way while higher-end solutions address the problem in a more holistic or comprehensive way. After successfully onboarding and supporting a new customer, the MSSP expands their value to the customer to solve additional problems or sell new services to the customer. The idea behind L&E is clear: It is usually easier to persuade an existing client to upgrade its services than it is to acquire new clients.

This means that strong post-sales connections are crucial for any MSSP hoping to practice L&E. If you wave goodbye to your clients once the sale is done without looking in the rearview mirror, then you lose the opportunity to cross-sell or upsell later on. The time during and immediately after the sale must be a highly positive experience in order for your customers to be open to future buying decisions.

In addition to a strong sales team, you also need a solid engineering team to provide assistance during and after the transition. Your customers need to feel supported throughout the entire installation process — and a smooth, well-supported implementation is essential in order to present a positive first impression.

MSSPs using L&E often adopt a subscription-based licensing model, which fits their strategy better and also projects an aura of confidence about their offerings. Rather than obliging the client to pay a lump sum up front, you imply that you have faith in your abilities to win your customers again and again by the time that they decide whether to renew their subscription.

Who Is Land and Expand Right For?

Although L&E is probably one of the most versatile approaches to pricing, it is also not an easy feat to achieve. Many smaller MSSPs have employees who wear many hats, such as tech workers who also pitch in on sales. However, an L&E approach stands the greatest chance of success when used by a larger MSSP with separate dedicated teams that are able to support this model.

L&E can be difficult to pull off, because it requires your entire company to be collaborating and operating with the same customer-first mentality. From the initial sale all the way to the point of expansion, you need many different departments to embrace the task of customer acquisition and retention. If you are going to start using L&E as a managed security services business strategy, you better be ready to go all-in.

Land and Expand: Real-World Example

A real-life MSSP that is successfully using the L&E model offers customers a basic report after an entry-level vulnerability scan that highlights the results from all of the IPs within their network. Customers interested in receiving a report that includes the scan results from their external IPs purchase the next level service which costs slightly more. Basic pricing is available for one time scans or discounted bundles can be purchased at a discounted rate for quarterly or monthly options.

It is common for MSSPs using the L&E approach to offer a bundle pairing product capabilities with training and certification, thus increasing the value to their end-user. All this means is that once customers have graduated from their entry-level solution, they have several options for where they want to go next.

In order to increase the likelihood of customer expansion, the MSSP deploys dedicated teams at each stage of the process:

  • First, a sales team promotes the entry-level solution to potential customers.
  • Second, an engineering team follows up immediately after the sale in order to answer any lingering questions and to make sure that the implementation worked and continues to work smoothly.
  • Third, a customer success and retention team performs routine checks with the customer on a monthly basis throughout the year in order to better support the customer and make renewals and upgrades more likely.

The greatest benefit of L&E is that no customer is ever taken for granted. The MSSP is always making the most of their lowest hanging fruit and customer satisfaction rises due to better support and communication throughout the relationship. Often, the conversion rate rises and time to cross-sell/upsell decreases. It’s not surprising that asking for a small spend up front to build trust and prove yourself naturally facilitates larger purchases in due time.