The journey up: Understanding customer expansion as a dynamic process

By J. N. Halm

Business is a matter of hunting and farming. This, I insist. Management legend Peter Drucker backs me. He says, “The purpose of a business is to create and keep a customer.” The creating is the “hunting” and the “keeping” is the farming.

Interestingly, for decades, businesses have focused intently on the first part of that equation—creating customers, acquiring them, bringing them through the door. The “hunting” is where many businesses focus their attention. However, the second part, keeping customers, has proven to be where the real challenge lies. More importantly, it is where the real value resides.

In today’s competitive marketplace, simply keeping customers is no longer enough. Businesses must find ways to expand their relationships with existing customers. This means getting customers to buy more products, use more services, upgrade to premium offerings, and deepen their engagement with the brand. Customer expansion has become crucial for firms to ensure survival and growth.

However, there is a problem with how most businesses approach customer expansion. The dominant approach in both academic research and business practice has been what can be described as siloed management of multiple expansion behaviours. Businesses treat upselling as one initiative, cross-selling as another, premium upgrades as yet another, and customer engagement as a separate program altogether. Each expansion behaviour is managed independently, often by different teams, with different metrics, and sometimes even conflicting strategies.

This fragmented approach misses something fundamental about customer relationships. Customers do not experience their relationship with a business in silos. They experience it as a journey. A groundbreaking study published in the 2025 edition of the Journal of Retailing has challenged the traditional siloed approach and offered a more holistic framework for understanding customer expansion.

The research was titled “The role of customer experience dimensions in expanding customer-firm relationships: A customer expansion journey approach.”  Using a uniquely rich dataset from the Spanish telecom market covering 12,496 customers over four years, and applying advanced hidden Markov modelling techniques, the researchers provided an empirical illustration of how customer expansion actually works.

The study advocates for what the researchers call an expansion as a journey approach. Rather than treating different expansion behaviours as separate and independent, this approach models the customer expansion process as a journey comprising a number of states. These states can be inferred from customer expansion behavioural manifestations and represent varying intensities in the interdependencies and ties between the customer and the firm.

When a customer first engages with a business, they are at the beginning of a potential journey. Over time, based on their experiences and the value they derive from the relationship, they may move upward along this journey, deepening their relationship with the firm. They might buy additional products, upgrade their service plans, or engage more frequently with the brand. Alternatively, they might move downward along the journey, reducing their engagement, downgrading services, or eventually churning entirely.

The key insight is that these movements are not random or independent. They are part of a continuous journey where the customer’s position at any given time influences where they might go next. A customer who has just upgraded to a premium service is in a different state from one who has just downgraded, and these different states have implications for how likely the customer is to expand further or to contract their relationship with the firm.

The study goes further by adopting a multidimensional view of the customer experience. The researchers investigated the roles of various experience dimensions in determining consumers’ upward and downward movements along the expansion journey. These dimensions include recency, peak, trend, and fluctuation.

Recency refers to how recently the customer has had experiences with the firm. Recent experiences tend to be more salient in customers’ minds and therefore have more influence on their current perceptions and future behaviours.

Peak captures the best or worst moments in the customer’s experience. Research in psychology has shown that people tend to remember the peaks of their experiences—both the highs and the lows—more vividly than the average moments. Peak moments, whether positive or negative, have disproportionate influence on customers’ overall evaluations and subsequent behaviours.

Trend describes the direction in which the customer’s experiences have been moving over time. Is the quality of service getting better or worse? The trend in experiences matters because customers not only evaluate their current state but also extrapolate from recent trends to form expectations about the future.

Fluctuation refers to the variability or consistency in the customer’s experiences. Some customers receive consistently good service, while others experience wild swings—sometimes excellent, sometimes terrible. This variability affects how customers perceive the relationship and their willingness to deepen it.

The researchers found that these different dimensions of customer experience play distinct roles in determining whether customers move upward or downward along their expansion journey, and at what rate they make those movements. This is a critical insight because it suggests that not all aspects of customer experience are equally important for driving expansion, and their importance may vary depending on where the customer is on their journey.

From the above discussion, it is apparent that businesses need to fundamentally rethink how they approach customer expansion. The siloed approach, where different teams manage different expansion behaviours independently, is not just inefficient—it is fundamentally misaligned with how customers actually experience and develop their relationships with firms.

Instead, businesses need to develop a holistic view of each customer’s expansion journey. This requires integrating data and insights across all touchpoints and interactions to understand where each customer currently sits on their journey and what might influence their next move.

The multidimensional nature of customer experience revealed by this study also has important practical implications. Businesses often focus heavily on improving average customer satisfaction or overall experience scores. However, this study suggests that such aggregate measures may mask important dynamics. The recency, peaks, trends, and fluctuations in experience may matter as much or more than the average experience level.

For instance, a business might have excellent average customer satisfaction scores, but if individual customers are experiencing high fluctuation—sometimes great service, sometimes poor service—this inconsistency could be hampering customer expansion even as overall satisfaction remains high. Similarly, even if current experience levels are good, negative trends in experience quality could signal trouble ahead, as customers may perceive the relationship as deteriorating and become less willing to expand their engagement.

The study’s focus on the Spanish telecom market is particularly noteworthy. Telecommunications is an industry where customer expansion is critical. Telecom companies typically offer a range of services—mobile, internet, television, landline—and encouraging customers to adopt multiple services is key to profitability. Additionally, telecom is an industry characterised by intense competition and relatively easy switching, making customer retention and expansion especially challenging.

For businesses looking to implement the insights from this research, several practical steps emerge. First, organisations need to integrate their customer data systems to enable a holistic view of each customer’s journey. Customer expansion cannot be effectively managed when data about purchases, service interactions, complaints, and engagement activities are trapped in separate silos.

Second, businesses need to develop metrics and monitoring systems that track not just aggregate experience measures but also the specific dimensions identified in this study—recency, peak, trend, and fluctuation. Understanding how these dimensions are evolving for each customer can provide early warning signs of potential downward movement on the expansion journey and opportunities for encouraging upward movement.

Third, customer-facing strategies and communications should be tailored based on where customers are on their expansion journey. A customer in an early stage of their journey with the firm requires different approaches than one who has already deeply integrated the firm’s products and services into their life. The expansion as a journey approach suggests that businesses need journey-specific strategies rather than one-size-fits-all expansion programs.

In conclusion, this research offers a fundamentally different way of thinking about customer expansion. Rather than viewing expansion behaviours as discrete, independent transactions to be managed separately, the expansion as a journey approach recognises that customers move through states of varying relationship intensity based on their multidimensional experiences. By understanding where customers are on their journeys and what experience dimensions drive movements along those journeys, businesses can move from reactive, siloed expansion efforts to proactive, integrated journey management. In a business environment where growth increasingly depends on expanding relationships with existing customers rather than simply acquiring new ones, this shift in perspective could not be more timely or more important.

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