- On this blog post, you'll learn:
- What is upselling;
- Top benefits of using an upselling strategy;
- How build your upselling strategy.
Are you looking to make more money? Most companies will look into acquiring more leads and increase the size of their funnel. It works, of course, but we'll let you in on a little secret: they are sitting on a gold mine without taking advantage of it, and you probably are too. And that's the company's customer portfolio.
Do you see how genius this is? Since they're already your clients, your investment in acquisition will be really low - so, high revenue with minimum investment, which leads to high ROI. Plus, this won't invalidate any new acquisition strategies, or occupy too much of your SDRs and Sales Reps' time. What strategy you'll use for this? One word: upselling.
What is upselling?
As Neil Patel puts it, "upselling is getting your customer to make a higher cost purchase than he or she originally planned", and we couldn't explain it any better. Most marketing and sales professionals will be familiar with the McDonald's case and the combo strategy they use: do you want a burger? Well, for a bit more you can get fries and soda with that. But how does that apply to B2B sales? We'll give some ideas on how to upsell.
Let's talk about two main cases:
SaaS usually have a monthly subscription business model and plans with feature restrictions and storage limits, right? Well, upselling would be when customers buy add-ons on that same software or increase their plan in order to have more storage or features.
This is a great example of low investment upselling, since the client will come to the conclusion they need more all by themselves. All your company needs to provide is a self-service checkout option or send in-app alerts to inform the client they are reaching their contact or storage limit, offering the option to get more.
Easy, quick and with a high revenue potential!
2. Complex sales products
Selling high tech and niche products is already a challenge, right? You need the right customers, the right approach, a simple sales cycle and an offer they can't resist. Different than products/services with monthly subscriptions, products that require a complex sales process have a high ticket, which makes it very risky to try an upsell before the purchase.
However, there are ways to make it work:
- Don't make an offer that increases in more than 50% the price of the product;
- Construct the upselling on the idea of discount, especially if offering two different products. This will increase your chances of making the sale;
- Don't be too insistent or you might scare the client away;
- Think of upselling after the original sale is made, also using the discount argument.
But of course, these strategies will only work if the upsell is relevant to the customer. Remember that!
Benefits of using an upselling strategy
We have briefly talked about this at the start of this blog post, but let's get more into it and present the main benefits of having an upsell strategy in your business.
Here are the metrics you'll increase with upselling:
- Return on Investment (ROI): your investment in upselling will be next to zero when comparing it to the costs of acquiring and nurturing a new customer. You have an enormous revenue potential on your hands, as well as a large number of upselling options.
- Customer Lifetime Value (LTV): this is pretty logic, but when you have a recurring contract of $ and the chooses to upsell 2% of $, you'll be getting 1.2 x $. So, for the remaining duration of your initial agreement, you'll have a higher revenue. This means that customers increased their LTV, and you increase your revenue.
- Increased Average Ticket: the topic above pretty much explains this one as well: by making a client spend more overall, your ticket per client will increase as well.
- Customer Retention Rate (CRR): offering upselling options will ensure that your client always gets what they're looking for, decreasing the chances of churn due to changes in fit or the solution becomes outdated. This means more retained customers (and so the upselling cycle continues).
Plus, you'll have continuous growth options: by offering the right options, customers will upsell more and stay with your company for longer, generating more revenue. Meanwhile, your sales team will keep on focus its main efforts on converting new clients.
Remember, upselling doesn't substitute anything, but it is a great add-on to your sales strategy.
Who does upselling - Customer Success or Sales?
Ideally both, as well as Marketing. Upselling concerns the entire company, and needs everybody's collaboration to make it efficient. We'll break it down for you:
- Sales and Marketing will be responsible, along with the CEO, for drawing the upselling strategies, define pricing and build the sales arguments, depending on the chosen strategy.
- Marketing will also be responsible for creating content focused on the advantages of upsell for the client. This is useful when email marketing and automated nurturing is used for that purpose.
- Sales will identify the opportunities for upsell on negotiation, if appropriate, and close deals that have more chances to grow on the long run, of course.
- The Customer Success team, for its direct contact with the client, will start conversation on upselling options, discretely. They might also identify clients that are reaching the limit of their plan and might want to increase the limit or upgrade to a higher plan, sending those profiles to marketing and sales for further talk.
Now that you know the necessity of collaboration between all three teams, it's time to discover how to get the customer to upsell.
How to upsell: build your upselling strategy
As you saw up until now, there are a lot of options to get your client to upsell to a higher plan or a improved feature capability, and they are mainly divided into pre and post-closing. Let's see how to work with each one?
We mentioned that this is the most risky type of upsell since you'll be working with non-clients, but the increased ticket might make it worth it. Here are the steps to build your strategy:
- Define the upselling options amongst your product listing and know them: you have the products, or plans for the SaaS, and the pricing strategy is built. Along with that, you must have some type of document that shows how these different options will correlate or compare to each other. This way, you'll not only be able to guide customers to a better decision but also use these little differences in your argument.
- See what is the trigger for each upselling option you have to offer: what criteria will you use to decide what kind of upselling option to offer? Identify what's the strong point of each product or plan and what might be useful to the client.
- Create content that can be used to help your argument: inbound marketing is a great support to sales and might even prepare the lead to an upselling option. So have articles that will show the importance of choosing a more complete software, why they should prepare to increase their performance indicators, depending on the segment of each client, of course.
- Check the success rate and improve your strategy: track which clients the sales team was able to upsell right on conversion and verify why the strategy didn't work on other cases. This will help to improve your strategy and drive even better results next time.
And remember! Don't push a product on a pre-closing client, and also don't try to close a deal just because there is a goal at the end of the month. Your lead will see it coming and might run away, leaving you empty handed.
This case refers mainly to add-ons improvements on as the ones we mentioned before, and are ideal for SaaS companies. As Neil Patel said on that same article we've linked before, "by using this approach, you aren’t making a huge or obvious effort to upsell them. The customers themselves realize the need and make the prudent decision to upsell." Perfect, right?
- Create single and combined add-ons offers: with SaaS, you need to create plans but also think about the add-ons (for storage, emails, contacts, etc.). They should be low enough to make the client want to buy them, but not so low it won't make sense to upsell to the next plan after a couple add-on purchases.
- Prepare a self-service checkout website to accept this type of transaction: these add-ons will come at a low price, compared to a standard plan, so it's not a good idea to occupy your team with these simple sales (it will interfere with your ROI) so prepare a self-service checkout service that allows customers to purchase everything by themselves.
- Prepare the Customer Success team to offer the add-ons to clients during contact: in some cases, your client will call the CS with some issue or asking some kind of information. You might as well prepare your CS team to check if they're close to the limit on any feature of their chosen plan. It might be the perfect opportunity to inform them that the company offers add-on options, when necessary.
- Add in-app notifications or alerts to your system: they will make it easy for your client to know when they are reaching their plan's limits and make a new purchase, automatically. Plus, if the customer uses a specific feature more than the others, the system might trigger a message that shows how they can take even more advantage with a more advanced plan.
- Draw and launch nurturing automations focused on upselling: if you plan on doing upselling based on features, draw the arguments on why they need that solution, aiming for the benefits, and use automation for that. Check out our blog post on lead nurturing for more!
- Check your success rate and improve your strategy (of course): follow-up monthly on how your strategy is working and see how you can increase revenue with new actions. If necessary, make adjustments to have customer revenue expansion.
Upselling truly is a great way to improve revenue. It has great potential based on multiple deals and can become a steady flow of growth for your company. So stop ignoring it right now and dig into this gold mine!
Get your Marketing, Sales and CS teams together and start build your strategy, pricing and arguments. Don't forget for define what's the best strategy for your business (pre or post-closing) and establish a well aligned process from start to end. You'll see a great increase in revenue in no time. ;)
Check out some other blog posts that might help improve your company's revenue:
- How to reduce churn: unknown practical tips to retain SaaS clients
- How to calculate and reduce customer acquisition costs
- Creating the best lead & customer segmentation for your company