Upselling can feel a little greedy, right?
After all, you’ve already convinced a prospect to buy product A, do you really need to push them to buy product A+? Are you asking for too much? Or are you stuck in poverty mode and sabotaging your profitability?
Upselling is actually one of the best things you can do for your SaaS business and your customer. You’re not just helping yourself to more money, but you’re also ensuring that your customer gets the best product to meet their needs.
Let’s talk about how to effectively upsell your SaaS products with confidence and no guilt.
What Is Upselling?
Upselling encourages the customer to buy a higher priced and more valuable product. It requires strategy because customers are more likely to go with the cheaper option when given the choice. You have to show the customer why they should open their wallet a little wider and pay more.
Upselling is different from cross-selling.
Cross-selling asks the customer to buy additional, related products that complement what they’ve already purchased. While you can use both sales techniques, it’s often a better strategy to choose one (so that you don’t overwhelm the customer by being too salesy). You’ll get more bang for your buck by upselling.
However, it’s important to note that upselling is not always appropriate and shouldn’t be the go-to sales tactic for every customer. Don’t encourage every customer to spend more. Only work on those whom you genuinely feel will benefit from the upgrade. (We’ll discuss that more below.)
Set Up the Upsell
Upselling is a sales technique, which means that it should be implemented methodically and not willy nilly. Here are a few things you can do before asking for the upsell to boost your chances of conversion:
Don’t go for a lengthy trial.
Most SaaS offer a free trial. It’s effective and a good idea for most. However, your trial should not extend beyond two weeks. (Our trial is 15 days.) The goal of a trial is to give the prospective customer a taste, but if your trial goes on for too long, your prospect will lose their initial excitement and may not even be interested by the end of it. This obviously won’t help you upsell them to the higher product.
Reach out to them immediately after they’ve signed up.
Whether you have the bandwidth to pick up a phone and call them or you send out a simple, personalized email, do reach out to your prospective customers with a quick note of thanks. This helps you build trust and rapport right away. But, you’re not just thanking them. You’re also being sneaky and finding out why they signed up for your product in the first place. This will help you figure out if the new user is a good candidate for upselling in the future. Always pre-qualify your upsell prospects to find out what they need and want in a SaaS product.
[tweetthis] Always pre-qualify your upsell prospects to find out what they need and want in a SaaS product. Here’s how: [/tweetthis]
Build-in the upsell.
Ideally, your product should have the upsell built-in. For example, if you use the tiered pricing model, you may pre-determine when the user should move from one tier to the next (i.e. if they’ve reached a specific number of users or interactions or subscribers). This gives you a valid reason to send out the “upsell” email.
Understand Why the Customer Purchased
When you know why your customer purchased, you’ll know whether you should offer them a different product.
Fortunately, you can find this out easily through surveying.
During the trial and then again after they’ve purchased your product, reach out to the customer and ask them simply, “What is your goal? How can we help you achieve that goal?” Give them a list of prepared answers so that you can quickly and easily segment your customers.
This knowledge will set up the types of upsells that you offer in the future.
Survey Your Customers
Another important reason to survey your customers is so that you know how they feel about you. It would be a very bad idea to try upselling a customer who’s teetering on the edge of churn. Your upsell may push them over the edge.
Instead, it’s best to sell to customers who are happy with your service. If they’ve experienced value from what they’ve purchased, they’re already primed for the next product.
Send out a Net Promoter Score (NPS) survey periodically (and definitely before attempting an upsell).
Don’t Give Them Too Many Options
When upselling, don’t give the customer too many options. If you offer more than one option, it feels like you’re more focused on money than on their success.
Understand the customer’s goals and pain points and choose the one product that meets those needs.
Reach Out to Churning Customers
Can you upsell a churning customer? Without a doubt.
Not every customer who’s ready to leave your SaaS is doing so because they’re unhappy with your service. Many times, they leave because they don’t believe your product is a good fit for their needs—and they may be right.
Don’t expect your customers to know about your other product unless you tell them about it. You can rescue some churns by upselling them to a better product fit for their needs.
Ask your churning customers why they’re planning to leave, and look for opportunities to promote your other products. It never hurts to try.
Choose a Product With a Small Price Differential
Don’t try to get your customer to pay too much for your upsell. That’s a guaranteed and quick “no.” Customers can be upsold by 25% to 50% of the original price that they’re already paying.
The reason why it’s hard to get them to pay more than that? Customers can justify a marginal price increase from $100 to $125, but it’s a lot harder to move from $100 to $200, especially on an unproven product.
Don’t fight your customers. Ease the transition by offering gradual upsells.
Offer a Demo
Don’t use a demo to attract every customer. Why? Not every customer will benefit from an upgrade. Only focus on providing demos to customers whom you’ve pre-qualified.
Also remember that a demo isn’t the same as a trial. It should be a quick video-based introduction to how your product works. Show why the product is a good fit for the customer (aligned with their goals). The objective with a demo is to excite but not overwhelm.
Make Transition Easy
If your customer decides to accept the upsell, they should not encounter any difficulty. Make it easy for the customer to transition from their current product. It may also be a good idea to provide a quick guide to help them see how to use the newer product. It may be obvious to you, but not to your customer.
If you don’t handle the transition correctly, your customer may cancel the upsell or leave your SaaS altogether. Be an ever-present guide to their success.
Don’t just do one upgrade offer and think that’s it. You need to follow up with your customers because they may have overlooked the first upgrade offer.
Offer the upsell in two specific places: In the app and over email. In the app, you can display a dismissible banner with an offer to upgrade. Email is a tad trickier. You don’t want to bombard your customer with too many offers, but you should give them more than one nudge.
One way to do this is to create a series of emails that you deploy over one month’s time. Send a weekly (and unique) upsell email with different motivations to upgrade. Create a mix of motivations.
In email one: Share benefits that align with the customer’s stated goals for using your product (you’ll find this out through surveys).
In email two: Share a case study that reflects the pain points of their customer persona.
In email three: Offer to provide a quick demo, as explained above.
In email four: Restate the benefits (not the features) of your product. You may also choose to incentivize your upsell with a discount.
The good news is that if they’ve bought from you once, they’ll buy from you again. The even better news is that if you convince them to upgrade to the right fit, not only will you increase the customer’s lifetime value, but you’ll also improve your customer’s success with your product.
Here’s what to read next:
- The SaaS Guide to Creating Sticky Customers
- 7 Easy Ways to Upgrade Your Customer Experience and Reduce Churn
- How to Use Emotions to Convert Prospects into SaaS Customers