Why expansion now drives 50% of new ARR

After working across sales, support, customer success, and RevOps, and having worked with something like eight or ten heads of RevOps, I can tell you we're at a fundamentally transformative moment for GTM.

What I want to share with you today comes from an executive, board, and investor perspective. Because sometimes in RevOps, we don't always get that context, and I think it's crucial for understanding where we're headed.

The growth crisis hitting software companies

Let me start with the uncomfortable truth: revenue growth is declining at public software companies. Full stop.

If you're working at a traditional enterprise SaaS company, you've been dealing with revenue growth challenges at a macro scale for the past few years. The data from Cap IQ really drives this home: in 2023, about 57% of companies were classified as high-growth. By 2025? That number has dropped to just 27%.

Everyone's shifting down to low and moderate growth categories. And that's creating real pressure. There's tremendous pressure from investors because, well, they still want growth. They always want growth.

So where's that growth going to come from? Increasingly, it's coming from existing customers.

The economics are forcing a shift to expansion

Here's what the numbers tell us about customer acquisition costs. New customer CAC is running about $1.50 to $2.87 for every dollar of revenue you bring in. Existing customer CAC? That's sitting around $0.60 to $1.70. So we're talking about new customers being two to three times more expensive at minimum.

Now you might be thinking, "Well, that's always been the story." And you'd be right. But here's what's changing: that gap is actually widening. We're seeing a 14% year-over-year increase in new customer CAC relative to existing customer CAC.

What does this practically mean? There's going to be a huge shift in focus to expansion ARR. Right now in 2025, about 40% of total ARR comes from expansion; that's a 5% absolute increase, which is pretty significant. For companies over $50 million, about half of all new ARR is coming from expansion.

I know I'm throwing a lot of numbers at you, and I'm sure some of them are glazing over. But here's the big deal: expansion is increasingly important for us in GTM and RevOps.

And that's going to have really important implications for the type of work we do. Because traditionally, we've been focused pretty heavily on new customer acquisition, it's been the CRO's main focus. That's changing.

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Revenue Operations AllianceRebecca Stewart

The catch: better economics with fewer people

GTM teams are under strong pressure to find growth in existing customers, but here's the catch: it has to happen while improving economics. We've all got to find ways to do it cheaper.

Want to know what's really happening in the market? There's a rationalization going on in GTM. According to a study from Pilot.com, the top two functions that saw significant layoffs over the past couple of years were customer success and sales. Not operations. Not legal. Not HR. Not some back office function. Customer success and sales.

What's happening, and these are real examples I've seen, just resized a bit, is that these functions are being combined into what they're calling "growth teams." Who knows what the term will eventually be, but right now they're growth teams. The CCO is getting moved out or tucked under the CRO. CS is getting paired with sales and RevOps, and they're all focused specifically on driving growth in existing customers.

This is happening while headcount is frozen and hiring reductions are in place. And RevOps? We're being tasked with deploying productivity improvements somewhere. Somehow.

This is really important because it's a new remit in ways that maybe didn't exist even a few years ago.