In your journey of nurturing a relationship with your customer, there comes a time when your customer is ready for more. It is a clear indication that your product is adding enough value to the customer’s business. And when that reaches to the most optimum level, it becomes necessary for both the parties to grow their business. Hence, upsell is the clear outcome of such a situation.
Upsell is the practice of encouraging a customer to buy a higher version of the product that is more expensive than the one they are already using. When I say upsell, this word sounds more relevant from the seller’s point of view. But in reality, it is an event where both sides, buyer and seller, are equally involved. You don’t just sell your higher version product only to gain more profit. That high-end product should add enough value to the customer as well. Only then it makes a win-win situation for both the parties to go for such deals.
Apart from the most obvious benefit of upsell to the business, which is an increase in revenue, there are many more reasons why SaaS upsells should be executed.
- Higher ROI: Every business has to spend the customer acquisition cost initially. They pay the cost with an intention of recovering that later through further expansion of the business. Through upsells they are able to increase their return on investment.
- Increase in Customer Lifetime Value: It is one of the most sought after metrics in SaaS customer success. Companies expect every customer to stay for long term and spend more on their business. Upsell is the great means of achieving that goal.
- Increases customer loyalty: When customers are exposed to more products and wider services of a business, a deeper relationship is formed between the two. Through upsells, you are providing more touchpoints and hooks for a customer to sink-in more in your product experience.
- Greater experience: A higher version product is naturally more advanced in performance and rich in features. This allows for the customer to leverage their experience with the product.
- Business needs: Most of the time customers don’t even realize what further needs they have in their business operations until a CSM guides them towards more advanced features. When they upgrade, they can achieve much more than what they thought was possible before.
- Better service: It is always better for the customer to expand their business with a company that already knows them. This way, they can have a customized support through the customer success upsell of the existing vendor. This is far better than buying a new product from another company where the customer journey would have to start from the beginning again.
Upsell vs Cross-sell
Both, upsell and cross-sell are closely associated but they are not the same. Upsell relates to the upgradation of the same product with more advanced features. While cross-sell is more about selling different but related products that can expand the customer’s usage experience. It is more like suggesting the customer to buy complimentary products along with the main one they already purchased. Upsell goes with the depth of the product while cross-sell goes with the breadth.
As a customer success manager, you need to always keep the customer’s interest in mind. You are in the frontline of your organization facing the customer. And the upselling deals you make with them should always be in alignment with what they really need in their business. You need to be very careful that you don’t send a wrong notion of mis-selling to your client. The best ways to execute upsells can be discussed below.
Track usage limits
The most impactful upsell technique is through tracking the usage limits of the customer. You already know what is the maximum point a customer can reach while using your basic product. Until they have already hit that limit, there is no point in approaching them for further deals. So, you must wait for the right time until they have exhausted their usage limit with the current plan to suggest them to upgrade to the higher plan or version.
Show in-app upsell opportunities
Another way to know whether the customer is ready for upsell or not is through in-app features. In this, you can show the advanced feature within the basic product itself. Only difference would be that they won’t work until the customer chooses to buy the higher version. This will help you make them aware of upselling opportunities without even approaching them personally. After a fair amount of hitting those locked features, the users would know the right time to purchase it. And the whole purchasing experience can be automated through a link that they need to click on from within the app.
Collaborate with other teams
A customer success upsell is a team effort. There might be multiple touchpoints your customer would be making with your company. You need to leverage all those interactions to make the best possible upsell offer that is hard to say no to. For example, when a customer has an open ticket for any support issue, that would not be the best time to approach them for upsell. Likewise, when your product team releases a new version, you can reach your customer who had previously shown interest in the features that are included in this new release.
Use customer health score
Customer health score is the north star metric of your customer success platform. Through this you would be able to know the customer accounts who are most loyal and satisfied with your product. All you need to do is to use the customer health score to identify the top performers and propose upselling to them. The most loyal and happy customers are more likely to consider any new offers you make them. And if your offer is genuinely valuable to them then selling them would be much easier.
Finally: Avoid these upselling mistakes
Upselling is a practice that is the fruit of nurturing a long-term relationship with your customer. The best way to ruin that relationship is by considering the customer as just a number. No matter how important you think is upselling, it can never surpass the retentionship of your customer. So, don’t approach them without preparation and without their contextual solution that you have to offer them.
Assuming that customers would always remain the same would be another mistake. Staying updated with the customer’s current scenario is a must if you need them to consider your offerings. Always analyze in your discussions with them as to how their needs have evolved and what other changes are incorporated in their organization.
Upselling is an art that every CSM has to practice in their work life. Only through this, they can ensure more value addition to their own as well as to the client’s business. It is always different from the fresh sales as during upselling, you already have a fully formed relationship with your customer. So, most of your tasks about knowing the customer is already done. You just have to match the right timing and upselling would work just the way you want it.