Upselling strategies can improve your upsell rate drastically, leading to the financial growth of the company. However, we need to start with the basics before we can learn about upselling strategies.
What does Upsell exactly mean?
According to the Oxford dictionary, Upsell as a verb means ‘Persuade a customer to buy something additional or more expensive.’
In the SaaS world, Upsell means persuading your customer who is actually deriving value from your product, to upgrade to a more expensive plan as that might be even more beneficial to them. It may allow the customer to achieve their goals faster or may help them solve other similar issues using the upgraded version of the product.
Depending on your product, you may provide better features, more accounts, etc. in an upgraded plan.
Why is Upsell important?
Most of the companies focus on getting more customers. Well, that should be one of the major focuses of the SaaS company but that should not be the only focus of the company.
It costs several hundreds of dollars to acquire a new customer in B2B SaaS. And even then, a customer might take several months to start deriving value from the product. As the ROI is achieved only after a lot of time, it’s difficult to grow the company just by acquiring new customers.
This is where upsells come into the picture. The main advantage of upselling is that the customer is already aware of the product and knows what value they are gaining from it. Hence, it is much easier and faster to convince them to upgrade to a higher value plan.
Now the question arises: How can you improve the upsell rate in your SaaS company?
Below are 5 upselling strategies that can help you improve your upsell rate
1. Understand your customer’s needs
Whether to upsell to a certain customer or not depends on their needs. Maybe a certain set of customers might love your product but they don’t need to upgrade. So, even if you convince these customers to upgrade, eventually they will downgrade to the level they were before and it might affect your relationship.
Hence, your customer should both be happy using your product and be able to derive more benefit if they upgrade; only then should you try to upsell your product to them.
For that, you need to understand what your customer actually wants from your product and what all your upgraded plans can deliver. For example, a certain customer may want to achieve their goals faster while another one might need more seats. If you have an upgraded plan specific to these needs, you should try to upsell to these customers.
These type of customers have the highest chance of upgrading because they will be deriving more value from that plan.
2. Make the customer understand the value
Once you have identified the customers who you should upsell, it is time to actually upsell to them. But if you want to take the path of least resistance, you should exactly be able to tell your customers what specific things will they be able to improve, if they upgrade. The more specific you can be, the easier it will be to convince the customers.
For example, if an upgraded plan can help your customer achieve their goals faster, you can upsell by saying that you will save a lot of time or you will save hundreds of hours or save upto 600 hours per month by upgrading. You can easily see that the third option is most likely to convince the highest number of customers to upgrade.
In this day and age, everyone wants ROI. So, if you can show a positive ROI from an upgrade, then the customer is highly likely to do so.
3. Build an upselling plan
Do you have a specific plan for upselling? Or do you convince your customers whenever you feel like and in whichever way you want to?
No matter how good or bad you are at upselling, you cannot improve and progress if you do not have a plan and learn to measure the results.
An upselling plan should consist of when, how and what should be communicated. That way you can measure the conversion rate and improve it. An upselling plan will also help you standardize the process and help predict how much revenue will you be generating from upsells.
4. Segment your customers
Just like you should not onboard all your customers in the same way, you should not have the same upsell plan for all customers.
Number of upsell plans will depend on the use cases and also the different product plans that you have.
For example, stable businesses and startups should have different upsell plans since their expectations and requirements are different. Similarly, a customer who wants a specific set of features and another one who just wants more accounts will have different upsell plans.
A person who just wants more accounts will not want to know about your premium features as those will not be of any use to him/her.
Segmenting your customers in a proper way and building custom upsell plans for each of them will increase your conversion rates drastically.
Though it will take time and resources to build additional plans, it will be worth the effort because you will be able to easily target the pain points of the customers.
5. Use Customer Feedback & Ratings
The feedback and ratings of the customers can help you improve your product and make sure you grow in the ever-changing market.
There are 2 major ways in which you can get customer feedback:
- Customer Success Platforms: This is the easiest way to know how the customers are using your product and whether they are satisfied or not. The health scores take into consideration millions of data points and predict the current condition of your customers. A Customer Success Platform helps you quantitatively measure customer feedback and ratings. If customers don’t like a certain feature, you will be able to see that people have stopped using it. This indicates that there is something wrong and needs your immediate attention.
- Communication with the customers: These include calls, chats, online and offline meetings, etc. It requires a little more effort but you get detailed insights that will help you figure what the exact problem is.
You should use both to get a 360 degrees view of what the problems are and how you can make your product better.
Upsells can help you increase the ARPA of a customer from 20% to 100% depending on various plans that you have. Hence, if given appropriate attention, upsells can lead to massive growth without putting in too much effort.
So, don’t be blind to the potential gold mine near you! Use the above upselling strategies and see the results for yourself.