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Acquiring a new customer may cost five times more than retaining an existing one. On the other hand, your current customers already know how your product solves their challenges and pay for its value. This is commonly an untapped source of SaaS revenue growth.
So, how do you sell more to your existing customers without incurring high costs? It’s by investing in efficient SaaS sales strategies: Upselling and Cross-selling.
This article is your detailed upsell vs cross-sell guide for SaaS. Let’s dive in.
Upselling and cross-selling are sales tactics that empower SaaS businesses to tap into their existing customer base and market additional or higher quantities of products.
Upselling refers to offering your existing customers a higher version of the same product. For example, you could upgrade a customer from your Pro plan to Enterprise plan.
15five, a performance management platform, showcases upsell prompts to users with managerial and admin roles. The product also promotes premium features in the main app menu where the users can see the list of features that encourage them to upgrade their plans.
Cross-selling is the process of selling additional products that compliment the initial purchase of your existing customers—for example, offering integration add-ons, assigning a dedicated account manager, or selling an additional module.
Notion, a popular productivity software, utilizes cross-selling to promote its tools to its existing customers. It built engaging campaigns at the time of the launch of Notion AI. The customers were put on a waitlist to explore the feature.
They were asked to share a unique link with their connections to advance their position on the waitlist. Every share was rewarded with loyalty points that could be redeemed for free credits or subscription upgrades when the feature was launched.
Here is a quick TL;DR of how upselling and cross-selling differ.
Upselling and cross-selling supplement net new sales, at a much cheaper acquisition cost. 44% of SaaS businesses revealed that they generate 10% of additional revenue through upselling and cross-selling.
Let’s explore a few more benefits of upselling and cross-selling in SaaS.
The first SaaS deal is often just a foot in the door for larger cross-selling opportunities years later (aka the land and expand approach). Certain categories like project management software or email productivity are sometimes ‘trialed’ by a small department before being rolled out to the rest of the company. Acquiring customers for small deals that later turn into big deals is a very strong CTLV signal in SaaS.
The longer your customers use your product, the more likely they are to stick around. Upselling and cross-selling strategically offer the right kind of features/products to your customers and to make your contract more ‘sticky.’ This engagement makes it harder to switch to competing companies.
It is much easier and more affordable to drive sales from existing customers than to find potential customers through marketing and lead generation. As your current customers become more sticky, you can persuade them to upgrade their plan or sign up for additional products without utilizing intense marketing tactics to acquire new customers. Thus reducing the money you spend on customer acquisition.
Boost application discovery by allowing customers to actively explore your product features. Share personalized feature suggestions to make the discovery process more tailored. You can create a centralized catalog of all your tools that customers can refer to for browsing your offerings. Do not allow complete access to these tools. This will create a good opportunity for upselling or cross-selling.
Simplify this experience by allowing self-service upgrades to customers via a centralized portal. Enable them to upgrade, increase quantity, or add new products to their subscriptions.
Segregate your customers according to their demographics, buying behaviours, and preferences, and define your customer segments. Track how these different customer groups are interacting with your product. The goal is to identify power users, users who are at risk of churning (churn risks), and inactive users.
Understand how each of these customer groups is utilizing your product. You can then tailor your selling strategies to their needs and desires.
Connect with your power users and present them with your offers they cannot resist. Regular users of your product are well aware of its features. They know the value your product brings to their businesses. These customers would be quick to subscribe to a premium plan or invest in an add-on tool. However, you must present your offerings at the right time for better conversions.
Trying to sell to customers who are already at a high churn risk is challenging. Being too promotional might backfire and push them to churn faster. Understand the reason for churn and take measures to convert these churn risks into power users.
Reach out to inactive customers to understand their issues and try to resolve them. This will increase your chances of retaining them and boost your revenue.
Analyze your existing products to discover unmet customer needs. Take measures to fill in those product-customer gaps for successful customer retention. White space analysis helps you spot upselling and cross-selling opportunities for a refined sales strategy. It helps you identify which features or products are succeeding, which are failing, and the potential gaps.
Leverage white space analysis to track customers' purchasing behaviors and research customer needs. This will help you identify the products that are not explored by your customer or new ideas that could help them with their requirements.
Remember, selling irrelevant features or products will fail. It might also hamper your relationship with your existing customers.
Offering your upsell or cross-sell deal too early may make you too pushy and annoying. And doing it late may make you lose the opportunity altogether. Hence, finding the right time is essential.
Monitor key growth events like funding, M&A, hiring announcements, product launches, etc, to identify expansion opportunities.
You can also utilize data providers to discover non-obvious events like customer business expansion across new geographical territories, adoption of new technologies, and more. Matching key events with upsell and cross-sell opportunities will enhance the relevance of your offerings. This indirectly will increase the chances of successful conversions.
Educating and training your team is the last step in building a solid SaaS upselling and cross-selling strategy. Create playbooks, checklists, and interactive guides to empower your sales and customer service teams to sell your products. Include product presentations,, pitches, and more resources to help your team close the deals. Provide them with a plan of action to handle objections from customers.
Integrate expansion and renewal software into your sales and customer service processes to boost their efficiency. Introduce automation to streamline repetitive tasks, and review and refine your playbooks as per your learnings and customer feedback.
Cross-selling and upselling happen before the customer contract is up for renewal. This requires calculating prorated subscription amounts and adjusting the payment schedules to account for the increased contract. Cacheflow is the best subscription management software that manages your entire subscription process. It offers excellent functionality that complements your upselling and cross-selling initiatives.
Remember, upselling and cross-selling are necessary for SaaS companies looking to drive revenue growth and maximize CLV. Skyrocket your sales efforts and grow your revenue with this upsell and cross-sell SaaS guide in 2024.
Book a demo today to learn how Cacheflow can help you manage your subscriptions and grow your revenue.
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