Here\u2019s why: the probability of selling to an existing customer is 60-70% while that of selling<\/a> to a new one is 5-20%. The fastest-growing companies and the best performing salespersons are those who focus on growing revenues from existing customers. Simply because it costs twice as much to acquire a new customer<\/a> than it does to sell to an existing customer. <\/p>\n\n\n\n Enter upselling. <\/p>\n\n\n\n The word may conjure images of greedy salespersons trying to sell you stuff you don\u2019t need. <\/p>\n\n\n\n But upselling is far from a bad word. <\/p>\n\n\n\n Done right, it can help you deliver real value to your customers, build stronger relationships that help you and your customers grow together. <\/p>\n\n\n\n Let\u2019s back up a bit to understand what exactly upselling is, and how it differs from cross-selling and downselling. <\/p>\n\n\n\n Upselling is simply offering an upgraded plan of the product or service the customer has already bought. <\/p>\n\n\n\n Would you like to make that a Large for just 50 cents? <\/em> These basic upsell strategies that you encounter at McDonald\u2019s and Domino\u2019s add hundreds or thousands to their revenue every single day.<\/strong><\/p>\n\n\n Besides the higher chance of conversions, the other big benefit of upselling is the lowered CAC payback time. <\/p>\n\n\n\n The 2021 SaaS benchmarking survey<\/a> found that the median customer acquisition costs (CAC) needed to acquire $1 annual contract value (ACV) for new customers was $1.67 \u2013 meaning that it would take more than a year to earn back the CAC. <\/p>\n\n\n\n In comparison, the median CAC per $1 of upsells was only $0.28, about 38% of the cost to acquire each new customer dollar \u2013 meaning that the CAC payback period was only about four months! <\/p>\n\n\n\n It\u2019s easy to see how upselling positively impacts a company\u2019s profitability by improving conversions, reducing CAC payback time, and increasing LTV. <\/p>\n\n\n\n There are two paths to design your upselling strategy. <\/p>\n\n\n\n Self-serve: Integrating upsell options within the product and the website.<\/p>\n\n\n\n Salesperson-driven: Leveraging relationships with customers and approaching them with a personalized approach based on usage data, company\/team background, etc. <\/p>\n\n\n Let\u2019s look at these in detail. <\/p>\n\n\n\n Design your product so users get a chance to first discover what an upsell<\/a> could give them. As a customer nears the product’s usage limits, include in-product nudges to upgrade the plan to unlock more usage. That way, the customers see the value of the upsell, and are convinced of the need to upgrade. This also works in the favour of salespeople because it makes them sound less pushy. <\/p>\n\n\n (Source: Buffer)<\/p>\n\n\n\n Spotify does this by integrating the premium \u2018skip\u2019 feature into the free user experience. It allows users to skip six songs per hour, after which they\u2019re prompted to upgrade. This way, users discover the feature in context and experience how it would benefit them. Though strictly not an upsell, this approach can be applied to selling SaaS. <\/p>\n\n\n\n As Joel York<\/a>, CMO of Shelf puts it. \u201cYour customer must have the need, but it must also see the value, and not necessarily in that order. You should design your SaaS product so that your customer naturally discovers and digests new capabilities just-in-time as their needs grow. Done well, this not only maximizes upgrades and upsells, it streamlines usability and simplifies adoption.\u201d <\/p>\n\n\n\n A McKinsey study<\/a> attributes 35% of Amazon\u2019s yearly revenue to its personalized product recommendations. In the SaaS context, you can use your most common usage patterns to create recommended price bundles for entry, mid, and pro levels. The bundles look attractive because you’re not forcing them to upgrade to a bigger plan with a zillion more features, rather you’re asking them to pay a little bit more for the additional value that customers like them need anyway. This way, customers have a defined tech-stack pathway as they grow.<\/p>\n\n\n\n Make your upsell visible: Offer it everywhere it makes sense. For instance, on your product pages, or as a CTA when users log in. <\/p>\n\n\n\n Delighted<\/em> makes an upsell visible with a banner and a tooltip to explain exactly what the premium Trends feature does. <\/p>\n\n\n If you don\u2019t want to wait for users to click on premium features, you can also position them alongside commonly-used available features, like Harvest does with its \u2018Import\u2019 feature. <\/p>\n\n\n You can also use a chatbot to highlight premium features that could prompt users to upgrade like Airtable does in the example below. <\/p>\n\n\n No matter how effective your in-product upselling strategies are, there\u2019s no denying the power of personalized selling.<\/p>\n\n\n\n If you only talk to customers for transactional purposes, they won\u2019t trust you when you’re pitching your upsell. Make time for regular check-ins with your customers to understand what their experience has been like, what roadblocks they\u2019re facing, how they can unlock your product\u2019s full potential, and recommend the best or better -personalized solutions for them. You have to remember that your product is one of many that customers use. It\u2019s unlikely that they will remember \u2013 or even have the time to \u2013 reach out if they have any problems or needs.<\/p>\n\n\n\n a) Leverage memories, milestones, and accomplishments. <\/strong>Time your upsell according to your customer\u2019s journey with you and the product. This could be a call\/email when your customer completes X months with your product, or Y tasks, or Z engaged users. Key company milestones (funding, new launches, key hires, etc.) are also great opportunities to introduce an upsell. <\/p>\n\n\n\n b) Personalize your interaction<\/strong> and show them exactly how your upsell adds value in the context of their use case. So, if you\u2019re pitching an upsell closely following a fundraise, you could show them how your upgrade could provide more visibility into new marketing initiatives, target more subscribers, etc. If you\u2019re approaching them after a team expansion, pitch the upsell with a plan that is personalized for their new team. <\/p>\n\n\n\n c) Add an element of urgency. <\/strong>By linking a time-bound upsell to a milestone, you could leverage your customer\u2019s sense of accomplishment. <\/p>\n\n\n\n What does this look like? Let\u2019s say you sell an email automation SaaS. Here\u2019s what your personalized upsell email<\/a> could say:<\/p>\n\n\n Talk to your customers to understand exactly what features unlock maximum value for them. You could use this information to offer customized bundles that let your customers combine a basic plan with X number of premium features. <\/p>\n\n\n\n Or you could offer usage-based upselling or metered pricing where you offer a combination of tiered pricing plus <\/strong>overage fees. This gives them the option to pick a base plan that makes most financial sense for them, while also giving them the flexibility to increase their usage only when they need it \u2013 say specific times of the year, or for a few users. <\/p>\n\n\n\n TextMarks, a business SMS platform charges a base subscription for each of their plans. Users can pay for overage instead of upgrading their plans.<\/p>\n\n\n (Source: TextMarks<\/a>)<\/p>\n\n\n\n A pilot program could, for example, allow a 10-user team to use a premium offering for say, 30 days, at the cost of one user. The benefits of such a program are easy to see: b) Buyers can first understand how valuable the tool is for the team, and use that to measure value for the company. <\/p>\n\n\n\n Use your customer\u2019s support queries as an entry point for an upsell opportunity. For instance, you could respond to a Support query with a personalized email and a customized offer that helps solve their problem.<\/p>\n\n\n\n Here\u2019s an example. Suppose your email marketing product has a feature (video blocks) that your customers are unable to use on their current plan. You could use this customer problem to pitch a customized upsell. <\/p>\n\n\n\n [Re: Unable to add video blocks]<\/em><\/p>\n\n\n\n Hello [Name],<\/em><\/p>\n\n\n\n I just learned that you\u2019re having some trouble with adding video blocks to your emails. Video blocks are an advanced feature on our product, but I\u2019d love to talk to see how we can help you use this to design emails with higher CTRs. <\/em><\/p>\n\n\n\n Could we speak today to understand your requirements and how I can integrate this into your current plan?<\/em><\/p>\n\n\n\n Cheers,<\/em> Reach out to customers after a referral to pitch an upsell with a \u2018product ambassador\u2019 or \u2018star user\u2019 discount.<\/p>\n\n\n\n Airtable has a referral program that gives users credit that they can use to upgrade to a premium plan. <\/p>\n\n\n By thoughtfully pricing your referral credits based on the pricing of your upgraded plans, you can nudge your customers to make the most of their referral credits to upgrade.<\/p>\n\n\n\n Design your upselling approach to <\/p>\n\n\n\n Then, you have the backing of the employees who have used and a measure of the value derived from your product, to pitch the best financial offer to the management without relying on heavy discounts. <\/p>\n\n\n\n Upselling, at its core, is a customer happiness and satisfaction strategy. It depends on knowing how engaged your customers are. And for this, you need the right systems, tools, and data to segment your customers, and identify engaged and happy customers.<\/p>\n\n\n\n Here are a few data-based signs a customer is ready for an upsell, when you want to integrate your upsell into the product:<\/p>\n\n\n\n Step 1. <\/strong>Map the upsell potential by tracing every conversation you\/someone from your company has had with the prospect.<\/p>\n\n\n\n Step 2. <\/strong>Find out if they\u2019re using your product only for a few members of the team. If that\u2019s the case, you can start the rest of the team on a pilot program so you can show the value of your product for the whole team.<\/p>\n\n\n\n Step 3. <\/strong>The ideal time to pitch to customers is typically after a month or two into the usage. By this time, successfully onboarded users would have discovered their \u2018aha\u2019 moments, and engaged long enough to experience what makes your product sticky. <\/p>\n\n\n\n Step 4: <\/strong>Get the product team to do churn analysis to explore pain points, opportunities, and stages at which customers churn so you can do course corrections if needed in your upselling strategies. <\/p>\n\n\n\n \ud83d\udca1 You upselling path can look like this: Generate intent\u2192 Convert to opportunity \u2192 Position the deal \u2192 Offer an upgraded trial \u2192 Discuss the finance.<\/strong><\/p>\n\n\n\n Building an ongoing relationship with your customer. Invest time in regular check-ins and updates to understand their experiences, needs, and problems, instead of reaching out only for transactional purposes. <\/p>\n\n\n\n Research what your customers can afford and make it look like they\u2019re getting their money\u2019s worth. How? Keep the end value that your customers get in center focus. Even for your most loyal customers, look to increase the value : price ratio with every upsell. <\/p>\n\n\n\n1. What Is Upselling?<\/strong><\/h2>\n\n\n\n
<\/em>Our special smoked cheese on your pizza? <\/em><\/p>\n\n\n\n![\"image](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/image-explaining-basic-upselling-strategies.webp\")
<\/figure>\n<\/div>\n\n\nSAAS Companies Rely on These Major Metrics To Build Upselling Strategies:<\/h3>\n\n\n\n
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Upselling Works<\/h3>\n\n\n\n
2. How to Upsell in SaaS: Designing Your SaaS Upselling Strategy <\/strong><\/h2>\n\n\n\n
![\"image](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/image-presenting-two-types-of-upsell-in-saas.webp\")
<\/figure>\n<\/div>\n\n\nA. Self-Serve: Use In-Product Nudges to Upsell<\/strong><\/h3>\n\n\n\n
1. Gate by Usage<\/h4>\n\n\n\n
![\"upselling](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/upselling-example-in-the-self-servea.webp\")
<\/figure>\n<\/div>\n\n\n2. Offer Recommendations <\/h4>\n\n\n\n
3. Use Banners, Pop-Ups, and the Chat Option in Your Product<\/h4>\n\n\n\n
![\"upselling](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/upselling-example-of-using-banners-pop-ups-and-chat-option-in-your-product-2.webp\")
<\/figure>\n<\/div>\n\n\n![\"upselling](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/upselling-commonly-used-available-features-within-the-product.webp\")
<\/figure>\n<\/div>\n\n\n![\"upselling](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/upselling-example-of-highlighting-premium-feature.webp\")
<\/figure>\n<\/div>\n\n\nB. Salesperson-Driven Upselling Approach <\/strong><\/h3>\n\n\n\n
1. Focus On Building and Nurturing Your Relationship With Customers: <\/h4>\n\n\n\n
![\"elements](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/08\/elements-of-emergency-we-see-in-mails-.webp\")
<\/figure>\n<\/div>\n\n\n2. Customize the Upsell<\/h4>\n\n\n\n
![\"unlock](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/unlock-customized-fearures-for-the-upsell.webp\")
<\/figure>\n<\/div>\n\n\n3. Offer Pilot Programs<\/h4>\n\n\n\n
a) You make internal champions out of your end-users, <\/p>\n\n\n\n4. Upsell as Part of a Solution to a Customer\u2019s Specific Problem<\/h4>\n\n\n\n
<\/em>X <\/em><\/p>\n\n\n\n5. Offer Referrals<\/h4>\n\n\n\n
![\"upselling](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/upselling-example-of-the-referral-and-credits.webp\")
<\/figure>\n<\/div>\n\n\n6. Define a Top-Down and Bottom-To-Top Approach<\/h4>\n\n\n\n
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3. How To Identify a SAAS Upsell Opportunity <\/strong><\/h2>\n\n\n\n
A) Finding a Self-Serve Upsell Opportunity<\/h3>\n\n\n\n
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B) Finding a Salesperson-Led Upsell Opportunity: How Do You Find the Right Customers?<\/h3>\n\n\n\n
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\n
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4. Do\u2019s and Don\u2019Ts of Upselling<\/strong><\/h2>\n\n\n\n
Do\u2019s <\/strong><\/h3>\n\n\n\n
1. Make Regular Check-Ins a Habit<\/h4>\n\n\n\n
2. Don\u2019t Make Them an Offer They Have To Refuse<\/h4>\n\n\n\n
3. Narrow the Upsell Choices<\/h4>\n\n\n\n
![\"image](\"https:\/\/www.klenty.com\/blog\/wp-content\/uploads\/2023\/12\/image-of-dos-and-donts-of-upselling.webp\")
<\/figure>\n<\/div>\n\n\n