Stop chasing new customers

Hi Everyone,

When growth slows, the first instinct is to chase a new segment or launch a second product. But the faster path is usually selling more to the people who already buy from you.

The tricky part is knowing which move is right for your business right now. We put together five questions to help you decide.

Five questions to ask before you expand

Before you invest in a new customer type, a new market, or a second product, answer these honestly. If you say "no" to two or more, you're probably better off going deeper with the customers you already have.

1. Are your best customers staying and spending more?

Look at revenue from customers who've been with you for 12 months or longer. Is it growing, flat, or shrinking? If existing customers aren't buying more over time, expanding your market won't fix the underlying problem. It will spread it across a larger base.

2. Could your team close a deal without the founder stepping in?

If you or your co-founder still need to be in the room to close, the sales process isn't repeatable yet. Expanding before that's solved means you'll be stretched across two markets, closing deals in neither efficiently.

3. Do your best customers look like each other?

Pull up your top 10 accounts by retention and revenue. If they share a clear profile (similar size, industry, buying process), you have a well-defined core you can sell more into. If they're all over the map, you haven't found your strongest fit yet, and going broader will make that harder.

4. Can you describe why customers leave, with specifics?

If your churn reasons are vague ("budget" or "timing"), you don't understand the problem well enough to know whether expansion will help or hurt. The companies that expand successfully can name their top two or three churn causes and have already started fixing them.

5. Is your expansion idea based on customer pull or internal push?

The safest expansions start with existing customers asking for something adjacent. The riskiest ones start with a team brainstorm about where the market might be heading. If customers aren't pulling you toward the new segment, treat it as a guess until you can prove otherwise.

Here's what happens when you get this wrong

Ramp and Brex both sell corporate cards and spend management solutions. They competed in the same market with similar capital.

Brex expanded into SMBs, e-commerce, and enterprise simultaneously during 2020–2021. By mid-2022, co-founder Henrique Dubugras said they had to make "a super hard decision to offboard" their SMB customers. Two rounds of layoffs followed, cutting roughly 30% of the company.

Ramp went the other direction. They narrowed outbound to Series A/B startups with a specific pain point and tailored their messaging by listening to every sales call. Meetings per rep jumped from 4 to 40 per month, and the company reached $100M in annual revenue in about two years.

Go deeper

👉 First Round Review: How Superhuman Built an Engine to Find Product-Market Fit – the original framework for measuring how much your best customers love your product, with a step-by-step method to increase that score

👉 First Round Review: Paths to Product-Market Fit – interviews with founders at Airtable, Vanta, and Plaid on how they found and deepened product-market fit

👉 ChartMogul: The SaaS Retention Report – data from 2,500+ businesses on how retention drives growth, with benchmarks by company size and stage

👉 SaaStr: Ramp's First $100M ARR – how Ramp's CTO describes scaling by narrowing the target market and making asymmetric bets

Coming up tomorrow

Tomorrow, we'll walk you through the three mental models that cover roughly 80% of the decisions you'll face as a leader.

P.S. Curious – is your business in a narrowing phase or an expanding phase right now? Let us know.