How do you convince customers to upgrade?
This is one of the most important questions you’ll tackle as an SaaS. While acquisition may be your number one concern, don’t overlook upgrades as a crucial part of your customer acquisition and retention strategy. Not only can an upgrade give the customer more of what they need, it may also increase your customer’s lifetime value. That’s a win-win.
But upgrades often get a bad rap. Some businesses are reluctant to use upgrades because they can come across as slick or gimmicky.
However, at its core, upgrading isn’t a smarmy sales technique– it’s about building relationships with your customers. Really. You’re in business to help your customers win and the best ways to do that are by:
- Understanding who your customers are
- Creating a product or service that aligns with your customers’ needs
- Developing an ongoing relationship with those customers
- Offering tweaks and upgrades to your product that proactively address your customers’ current needs
In this post, we’ll address the last point.
Let’s discuss how to use what you know about your customers to convince them to upgrade to a product or service that better suits their needs.
But first, a word of distinction:
Before we dive into the details of upgrading, let’s discuss the difference between upsell and upgrade.
Upsell is when you convince the customer to buy a new product that may also complement their original purchase. Learn more about upselling here.
Upgrade is when you convince the customer to buy an enhancement to the original purchase. While you can apply most of the following advice to both upsells and upgrades, we’ll focus on upgrades in this post.
Here’s the good news: upgrading is a lot easier than you think it is. You’ve already succeeded at the hard part, which is converting a lead into a customer. Now your task is to get that customer even more invested. But how?
It starts by asking yourself one question:
What’s in it for the customer? In other words, what will the customer gain from this upgrade?
It’s easy to make a list of features, but features don’t persuade– benefits do. Customers want to know if the upgrade is worth the hassle, and it’s your job to convince them.
A lot of SaaS make the sometimes fatal mistake of pushing an upgrade just because it’s new. But some customers aren’t impressed by novelty. Some actually prefer the tried, true, and proven, and aren’t willing to be beta testers of your new product. So, keep that in mind.
Make sure that the motive behind your upgrade offer isn’t just about pushing your latest product. Your upgrade offer should be about improving the life of your customer. For this reason, it should be tailored to that individual customer’s needs and only offered if it truly can help them succeed.
Fortunately, you don’t have to do some form of Vulcan mindmeld with your customers to figure out what they need. To find out when and if your customers may be willing to upgrade, incorporate the following:
Allow customers to self-filter. During onboarding, ask customers why they purchased your product. This will allow you to determine what offers to suggest in the future.
Ask for feedback about your product. Feedback is a direct way of finding out what your customers want and need that may currently be lacking in your service. Use surveys to collect customer feedback regularly.
Monitor your customer behavior. How do customers actually use your product? What features are most popular?
Keep an eye on customer complaints. What do customers complain about? What problem does your product either create or is unable to solve?
By learning about your customers, you can create the customized upgrade offers which are much more attractive and intuitive.
Focus on Timing
Have you ever ordered a pizza online? Once you’re ready to check out, you’re hit with so many upgrade offers that it feels like you’re running through a Ninja Warrior obstacle course.
While it may seem ridiculous if you don’t want any extras, these upgrade offers are pretty lucrative for the pizza industry. In the US alone, big pizza sold $44 billion last year and at least some of that was due to upsells. Fifty cents for dipping sauce here and two dollars for breadsticks there can add up when multiplied by the estimated eight million pizzas ordered every single day.
So what does pepperoni pizza have to do with your SaaS? It’s all about timing.
To convince your customers to upgrade, you’ve got to ask at precisely the right time. For example, you probably shouldn’t ask a customer to upgrade right after they come to you with a complaint. It’s not that you can’t ask, it’s just that you won’t be as effective as you could be.
The most effective time to ask the customer to upgrade is when they’re actually in ‘buyer’ mode. In other words, the customer has already decided to buy, is holding a credit card in their hand, and is about to click “submit”. This is your golden opportunity to convince them to pry that proverbial wallet open just a little bit wider.
They’re excited about your brand, they’re hopeful that your product will help them, and they’ve already justified the purchase. Now is the perfect time to gently push an upgrade.
Of course, you can offer an upgrade at any time during the customer’s lifecycle. For example, you may choose to offer an upgrade after a customer has hit a specific limit or reached a milestone in their journey. Or you could offer an upgrade because you’ve recently tweaked your product and you believe the upgrade will benefit the customer.
Educate The Customer
There are two ways to educate your customers about the need to upgrade their service: the right way and the wrong way.
The wrong way is to market your product. You’re focused on why your product is so great and how it’s better than anything else on the market. That’s slick advertising, but it’s not educational.
The right way is to focus on your customer’s perspective. What do they need to know to make an informed decision?
Testimonials and case studies are excellent for convincing customers to upgrade. You can use actual examples to show how others have benefited from upgrading. You’re not just selling a product, you’re selling a result which is much more compelling.
Give The Customer More Options
Another easy way to get more upgrades is to simply give more options to your customers. Circling back to the pizza example above, when you go to check out, you’ll get hit with several different upgrade opportunities. Don’t want breadsticks, what about dessert?
That’s the same tactic you should consider for your upgrade. Instead of just presenting one option, consider presenting two or more. This way, the answer isn’t a binary “yes or no” to the upgrade, it’s more like a “this or that” to the multiple upgrade options.
But here’s the fine print: Don’t overwhelm your customers with irrelevant upgrade offers. Keep your offers focused on features that you’re sure will actually benefit your customers, based on research you’ve gathered from feedback, behavior, and customer self-filtering.
Before you go, check out these additional posts:
- The Psychology of Pricing: How to Convince Prospects to Buy Your Product
- The Art of Closing a Sale: How to Set Your New Customer on a Delightful Path