There was a time when a customer was only seen as a one time buyer by the companies. Then it evolved into the subscription based business model where customer retention became a prominent aspect. A lot of studies and efforts were taken by the organizations to gain customer retention in the business. It involved nurturing a long-term relationship with the customers. Once they succeeded in this, further opportunities emerged in the areas of customer expansion.
Companies started realizing that there are possibilities of expanding their businesses with existing customers too through upselling and cross-selling. Hence, with these numerous benefits of a long-term customer, the focus shifted on building customer relationships and earning loyalty. It became equally important as acquiring a new customer, if not more. According to a study in Bain & Company by Fred Reichheld (the inventor of net promoter score), just a 5% increase in the retention rate can result in the increase of profit by 25% to 95%.
With so much profit margin being fetched from the existing customer, reaching out to them for further expansion of the business has to be executed with utmost care too. Below are a few important steps you may consider for approaching customers for upselling or cross-selling your products.
Know your customers
Before you even think of placing your product for upselling, you should have a buyer persona in place. It is the semi-fictional representation of your target audience. It is made based on the market research; real data of your customers; and few inferences you can draw through their behavioral patterns. This will give you a better understanding of your audience. And it would let you decide on the kind of saas upsell strategy you would apply for them.
To increase the effectiveness of your sales pitch, become aware of your customer’s business goals and their challenges. It always makes sense to know their problem first for which you are going to present a solution. Through this you will have enough idea about the kind of response they would give to your offer. And if you can guess that in advance then you can improvise well enough while having discussion with them.
Wait for the right time
Upselling and cross-selling depends on your well executed timing in the journey of customer life-cycle. They usually come at the later part of the journey after the initial adoption of your primary product. After the customer-onboarding, it takes time for them to realize that your product is actually adding value to their business.
There are many metrics to measure the customer engagement that you can use. Through the right saas upsell metrics you would be able to know if the customer has adopted your product. The strategies you would use for product adoption is a topic for another article. But only when the customer has passed this stage, would they be happy to promote your product to others.
This is exactly the time when they would be most ripe to explore your new products or features for further enhancements of their business operations. Their satisfaction of earlier experience they had with your product will boost their confidence to shell out more money on trying out new offerings. If you hadn’t waited for this time then most likely your attempts for upselling would be unsuccessful.
Train your team
The job role in your company which would mostly be facing your customer is that of a Customer Success Manager (CSM). In their attempts to provide greater service or customer experience, the CSM might overlook the opportunities of customer expansion. If you provide them proper training and include upselling as a part of their goals then they would be watchful to catch the right opportunities at the right time.
It needs them to be an active listener. There are various times when they would be interacting with customers regarding the product usage. It is exactly in those conversations should they be able to identify the evolving needs of the customers. Even before the customer has reached a stage where they could identify what more they need, a CSM can make them aware of those needs. And while highlighting their requirements they can present them with a solution by offering them to buy higher versions of the product.
Customize your sales and marketing communication
One of the common mistakes companies make while communicating with an upselling customer is that they use the same message or email with them that were used for a new prospect. Research shows that an existing customer has a totally opposite psychology than a new one. The success rate of selling to an existing customer is 60 – 70% while to a new customer it is only 5% to 20%. Hence their communication should also differ in these terms.
The sales and marketing team created emails keeping the mindset of a new audience in account. Hence, they must have been more generic and abstract to give a brief about the product to a first timer. But your existing customer has already gone through that stage.
So, you have to really understand their specific pain-points, their challenges, their questions in order to offer them a specific solution that fits their needs. In a saas upsell strategy the placement of your product is of utmost importance and should boost customer loyalty and persuade them to act on it.
With the above stated measures an upselling approach can surely be designed to accomplish your goals. Although the sales team is brought in at the last moment of upselling, it is the main responsibility of a customer success manager to groom the client. It takes months or sometimes years of customer engagement before they are ready to do more business with you.
Remember that it takes a lot of time for the customer’s trust to build and later on just one mistake can cost you to lose them permanently. Hence, it is your prime responsibility to always avoid misselling just to fulfill your goal towards customer expansion. The ethics and transparency of your intentions play an equally important role in the growth of your business. If you really want your customer to succeed and can show them truly how they can derive value from your products then growth of your business with them is inevitable.