How to use Upselling in SaaS

Entrepreneurs and sales experts have long known that selling to your existing customer base is good business. It’s 5 to 10 times cheaper to upsell a current customer than acquire a new one, and the average spend of a repeat customer is 67 times higher. The world’s most-successful SaaS providers take three approaches to increasing revenue: acquiring new customers, upselling, and reducing churn. For many subscription business owners, improving your revenue, and increase customer lifetime value requires designing and implementing a program for upselling.

SaaS Upsell Profitability

Source: chaotic-flow.com

Upselling in Practice

One of the world’s most-successful subscription businesses, Salesforce, has built an empire that’s worth $2.27 billion annually through a strong focus on upselling. They don’t bombard their customer base with frequent phone calls, or offer freemium subscriptions, but simply let customers come to the realization on their own that they need more service than they’re currently paying for.

Salesforce Upsell Strategy

As Joel Yorke puts it, “if you’ve ever been a Salesforce customer, you know 90% of the upgrade process…[is] repeatedly bumping into the limits of your current subscription.”

Salesforce.com Up-sell

The concept is known as application discovery, because they’re able to maintain a primarily hands-off approach until the customer decides it’s time to make the phone call. While it’s optimal to let your customers discover the value of a higher subscription business package on their own, you can’t let higher levels of service remain a secret.

Salesforce Application Discovery Technique

Here are several ways to improve your company’s upselling tactics.

1. Track User Segmentation

Behavioral data is key to maintaining a profitable subscription business. Insights on how your current customers are using your product are critical to forming segments who are most-likely to purchase an upgrade. Standardize rules within your organization on which features are most likely to present challenges to subscribers using a lower level of service, and base your interactions with highly-engaged segments around the value an upgrade would offer.

Intercom provides an awesome tool to segment your customers. They call the app “Manage your customers from cradle to grave“.

intercom segments users

2. Design for Discovery

Yorke recommends that subscription businesses design a product that grows with the users. Ensure barriers to entry are low, and your product is simple enough that new users can quickly get started and become engaged during their trial period. Design a product that has more than initially meets the eye, so customers are continually discovering new functions. This can improve your engagement rates over time, and create customers who are willing to listen to the benefits of a potential upgrade.

Dropbox is an excellent example. They keep you engaged the moment you sign up with them. They provide free space for completing one activity at a time. While Dropbox is not an great example for discovering new functions for potential upgrades, the earlier example we used, Salesforce.com Kills it.

DropBox

3. Provide Self-Service, But Keep Offering Upgrades

Your customers should never been in a situation where they realize they need more product than their current level of service offers, but aren’t able to conveniently get into contact with someone at your company. Enable self-service upgrades, so your clients have the option to upsell themselves at any point. However, continue actively working to identify customers with a “value gap;” who have a genuine need for a higher level of service. Simply offering the option to upgrade within the interface won’t guarantee that customers who need more product will make the leap on their own.

Again, Salesforce does a very good job providing upgrades through Account Managers. Here is an example email.

salesforce upgrade email

4. Use Customer Feedback

The most-essential action your company can take to minimize churn and identify critical upselling opportunities is listening. Listen to the implicit data on engagement, watch what your customers say on social media, and pay attention when they reach out via surveying or other forms of contact. Your customers are your best analysts, and by applying their feedback efficiently, you can improve the loyalty of your relationships, and offer a better product.

Salesforce Survey Email

What other upsell tactics do you use in your business? Please share your thoughts in the comment section below.

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