Expansion is product working. New logos are growth working.
Neither one lets you rest. Sigh.
Expansion revenue and new logos both read as growth. They’re not the same signal, and treating them like they are is how you end up confused about what’s actually working.
Trust me, I’ve been there. I’m your blended number guy. This is a letter to myself more than anything else.
Expansion first
Expansion: when existing customers grow their spend, upgrade to annual, or add volume. It proves the product is working.
When a customer switches to annual, they’re making an investment and a bet. They’re locking in because they believe they’ll keep getting outsized value from what you built.
That’s conviction that you want to see. And with consumption or volume-based pricing, expansion can happen naturally if you’ve found the right customers. When customers grow — adding logos of their own, scaling their operations — they expand with you because their business requires it. You’re embedded in the workflow and part of a system of tools and of work that is helping them grow.
That’s worth pausing to recognize the win. It means you built something sticky enough to matter in their stack. That’s awesome, but it isn’t the whole story.
It also means you can’t take full credit for the number. Some of what you’re measuring is gravity — the customer’s growth pulling your ARR up with it, not just your own work. The danger is you start to think you figured it out. You let the expansion rate tell you that everything is working and you can breathe. That complacency is a trap.
It’s no time to pause. It’s time to push and keep adding value, to keep finding ways to harvest more of it. Let your eye come off that ball and things slip.
New logos
New logos are a different signal. Where expansion proves the product works inside accounts, new logos prove the go-to-market or growth machine works.
They answer a harder question: can you find and close the next customer, and the one after that? Expansion shows depth. New logos show repeatability.
The benchmarks are clear on this — at early stages, the overwhelming majority of new ARR comes from new logos, not expansion. Expansion only starts to carry the load at real scale.
Honest read from me: Our mix doesn’t match those benchmarks right now. We’re skewed more towards expansion than new logos.
And sometimes when new logo acquisition lags, there can be this instinct to burn it down. Rethink the ICP from scratch, throw out the playbook, rebuild the motion. I understand that pull. There’s something appealing about the idea that the right pivot will unlock everything you’ve been stuck on. But that’s the trap version.
If you have traction (like the expansion noted above + won deals) you have usable data. It might not feel like a lot when you’re first getting going, but those data points are real. You have to look for the opportunities in whatever traction you have and test and amplify from there. Don’t start over. Amplify.
Refreshing the growth side
For us, that meant going back to first principles on prospecting, but without blowing up everything we’ve been doing.
One thing we learned: titles carry less meaning than we expected. We went looking for heads of customer success and kept finding that the person who actually owned the problem sat somewhere adjacent to that title – above it, across from it, however the org happened to be drawn.
So we stopped filtering by title and started filtering by mission. What is this person responsible for? Revenue-driving activities pre and post sale, wherever they sit in the org, whatever title they happen to have. That’s a different search, and it’s been more productive.
A GTM operator I spoke with last week did something similar for a client. Before he changed anything about their outbound motion, he went back through every won deal — the personas, the triggers, the pitch that actually landed. He studied what was working before he touched what wasn’t working. Analyze the wins before you change the motion. It sounds obvious when you say it. Most teams (ahem, like me) skip it.
Small teams need this more
With a lean team, you can’t be equally focused on everything. Right now our expansion rate looks healthy, so the priority shifts to new logos.
Expansion rate can slip quietly if you don’t pay attention to it. So I’m thinking about tripwires. I’m putting in place health checks on the expansion rate, so we know when to put the focus back there. If month-on-month expansion drops below a certain threshold, we’ll revisit the amount of attention going to expansion vs new logos.
When that happens, maybe we spend the next quarter leaning into expansion instead. This isn’t crisis response. It’s a planned trigger that should force us to look at this mix again before either side becomes a panic.
In sum:
Expansion is the product working. Keep shipping.
New logos are the go-to-market working. Keep hunting.
It’s a constant shifting of balance and neither side of the scale lets you rest. That’s the fun part, though.
Which side of growth needs your attention today more than the other?
TTFN,
Peter