Software as a Service (SaaS) is a business model that sees centrally hosted software leased to a customer as a service. The live service model provides the customer with greater convenience and the company with more dependable revenue.
B2B SaaS typically involves large deals with multiple stakeholders, so the buying process tends to be fairly long. The longer a customer takes to convert, the more expensive it is.
An expensive customer acquisition means a company needs to work hard to increase Customer Lifetime Value (CLV) – a customer’s total value to a company – which is an important metric when trying to increase profitability.
Enter cross-selling and upselling.
Cross-selling and upselling are two tried-and-tested methods of increasing CLV and profitability and are vital to making SaaS a success.
This article will dig into all aspects of SaaS upselling and cross-selling, including building a foundation for up- and cross-selling, crafting compelling offers, building trust and loyalty with customers and measuring and analysing results.
Understanding SaaS upselling
Upselling is the practice of persuading customers to buy the higher-value package with more features at a higher price point.
Upselling has numerous benefits to a company.
Firstly, it is easier to sell to an existing customer than to a new one. Therefore, it makes sense to spend energy maximising relationships with existing customers.
Secondly, the more business you do with a customer, the more the acquisition cost to CLV ratio shifts in your favour. They only need to be acquired once!
Thirdly, deeper relationships create loyal customers. With access to your service with the greatest value-add, customers get a better experience and are less likely to jump ship.
Understanding SaaS cross-selling
Cross-selling is selling additional, related products or services to a customer.
Cross-selling shares many benefits with upselling. Using multiple products can deepen perceived value and make a customer less likely to leave. Think about Apple and how its array of integrated products both elevate the overall experience and make buying a competitor’s products a pain to even contemplate.
The downside is that cross-selling can feel like winning a new customer and can add to acquisition cost. This makes it harder to shift that all-important acquisition cost to CLV ratio in your favour.
However, a customer cross-sold on a few products then has the potential to be upsold on each.
How to prepare for successful upselling and cross-selling
Cross-selling and upselling success in SaaS is much easier when your organisation has a customer-centric culture. Your customer success team will be of great help here.
All touchpoints need to be slick to maximise your upsell potential, none more so than onboarding.
Megan Brickley, Head of Customer Success at Cognism, emphasises the power of a smooth SaaS onboarding process:
“Having a strong onboarding process really sets the tone for your relationship with your customers. It’s the time when they’re reminded why they purchased your tool and they’re starting to see all the benefits they initially heard about in the sales process.”
Deciding which customers to upsell to
All customers should be exposed to cross-sell and upsell messaging and have the option to buy more from you. Your website, pricing strategy and copy should all encourage the purchase of your best and highest-value services.
However, you might want to target upsell/cross-sell on those customers most amenable to deepening your relationship. Your customer success team should be able to provide sales with useful intent data, which can include:
- Which customers respond to surveys, provide feedback or leave reviews?
- Which customers use the service to its fullest extent?
- Which customers open emails?
- Which customers have logged customer support tickets?
These data points can help you identify and capitalise on key selling opportunities by supplying sales with helpful customer data.
But which metrics are most important to track?
Upsell and cross-sell metrics
At Cognism, we find these four most useful:
We’ve talked about Customer Lifetime Value a few times already; that’s because it’s the guiding light of upsell and cross-sell. The success of cross/upsell can roughly be measured using CLV.
Time spent on upsell and cross-sell provides ROI data on your cross/upselling efforts.
Average Order Value (AOV) tells you the average spend per order across your whole business. Upsell and cross-sell have a big role to play in AOV uplift.
Lastly, Conversion Rate (CR) effectiveness of cross/upsell efforts.
Cross-sell and upsell tools
Salespeople have many tools available to help them achieve uplift in all these metrics. Below are four software types. We recommend the first two as a baseline, but all four make for a well-equipped sales team.
- Customer relationship management (CRM) software can help you track customer interactions and identify potential upselling and cross-selling opportunities.
- Sales intelligence software can help you research your customers and identify their needs. A good solution, such as Cognism, will integrate with your CRM and sales enablement platforms.
- Marketing automation software can help you personalise your upselling and cross-selling messages and target them to the right customers.
- Analytics software can help you track your upselling and cross-selling results and measure your success.
How to craft compelling offers
Service bundling strategies
Bundling is a type of cross-selling that offers a group of connected products at a discounted rate. HubSpot reckons nearly two-thirds of B2B sales teams bundle products as part of their SaaS upselling and cross-selling strategy.
B2C bundling is straightforward. A retailer offers a games console, game, controller and subscription together for less than the cost of the constituent parts. Easy.
SaaS bundling is a bit more difficult, because if two services go so well together, then they might as well be merged to form a better, single service.
Therefore, it requires planning at the product level for it to make sense that products remain distinct. You should pair this with a clear customer segmentation strategy to identify which customers will benefit from multiple SaaS solutions.
The importance of personalisation and customisation
The role personalisation plays in SaaS upselling and cross-selling comes down to timing. You want to deliver purchasing prompts at the right time, based on user behaviour.
This behaviour data can be gleaned from the steps taken in section two, ‘How to prepare for successful upselling and cross-selling’. Equip your sales teams with this information to help them have the right conversations at the right time and drive AOV.
Pricing strategies for upselling and cross-selling
Pricing is one of the most powerful tools a company has to drive upsell and encourage a customer to take a bigger package than they intended.
Typically, a “Basic” package sets the price anchor, allowing you to position your highest profit package as the best value for the customer. It makes that package a no-brainer. It’s the same principle that results in you ordering a large Coke from McDonald’s every time.
Pricing strategies for cross-selling come back to bundles. The question is: What discount should I offer on the bundle?
The answer will depend on your tolerance for a trade-off between AOV and CLV, or if you need to fend off competition from a rival’s lower prices without engaging in a race to the bottom.
The role of discounts and incentives
Sometimes, the simplest methods are the most effective. Offering incentives and discounts can spur customers to renew their contracts or upgrade to a bigger package.
How to communicate effectively with customers
What are the best methods for effective communication?
All methods – voice, email, live chat, web copy, content marketing – are good methods for communicating with your customers and laying the groundwork for upselling and cross-selling.
If you’re in a big-ticket SaaS company, during onboarding, set the expectation of a mid-contract check-in. Use the time to speak to your customers; find out how they like the product and review any problems.
Periodically email your clients with content around maximising your service’s value, what related services you offer, and how they work well together.
How content helps with upselling and cross-selling
You can use content to drive engagement, reinforce the value of your services, surface news and ideas in your sector and deliver FAQ and troubleshooting information.
At Cognism, we believe in the power of content as a demand generation engine. You can produce blogs, videos, eBooks, podcasts and webinars to generate demand for your business.
How can social media be leveraged to engage with customers?
Social media is a channel for delivering great content to your clients, building authority and growing your brand.
But know this: some companies still treat social media as something that can be handled by an intern, or that all platforms are basically the same – that’s wrong.
A successful B2B social media strategy requires effort, skill and an appreciation of the major platforms’ use cases.
Here are a few tips:
- People follow people. Build a network of internal and external influencers around your corporate page.
- Create social-specific content. It can be a pain that the lifespan of a social media post is so short, in contrast with a blog that lives forever. But it’s worth it! Keep feeding the machine and the algorithms will reward you.
- Know your platform and take it seriously. This goes beyond good content – engage with followers, follow back appropriately and re-share content across your network.
How to build customer loyalty and trust
Why is trust important in upselling and cross-selling?
Trust is fundamental to all business relationships. It’s an unusual instance when someone gives money to an untrustworthy third party.
Building trust is all about delivering on promises. That includes service features working as promised, fulfilment of contract obligations, tangible professionalism across all touchpoints and communications, smooth onboarding and more. Customers who trust you are much more likely to deepen their relationship with you.
How to handle customer objections and concerns
Your sales team needs to have a response to the four most common objections:
- I don’t have the time.
- I’m not interested.
- Is this a sales call?
- I’m using a different product.
Morgan J Ingram, the Director of Sales Execution and Evolution at Jbarrows Sales Training, provided us with a masterclass on handling these objections.
What are the best retention strategies to maintain long-term relationships?
Like all good relationships, communication is key!
Maintain an open channel between you and your clients. Respond to queries quickly. Your content strategy is also relevant here, building goodwill and reminding your customers of your value.
Some companies like to use gifts and incentives to boost retention; 80% of those that do have reported improvements in retention.
Lastly, signpost renewals well ahead of time. A cold renewal makes cross-selling and upselling much less likely.
How to measure and analyse results
Measuring the impact of your Saas cross-selling and upselling allows you to refine your strategies going forward. They will provide clues about the effectiveness of your customer success, content strategy and sales techniques.
The key metrics you want to track are:
- Customer Lifetime Value.
- Cost of Acquisition (time spent on cross/upselling).
- Average Order Value.
- Conversion Rate.
They will give you a good idea of how well your cross/upselling strategies are working. They’re also relevant to the overall health of your business.
How to analyse customer feedback and sentiment
Here are a few things you can do to understand customer feedback and sentiment:
- Use surveys to gather feedback from customers.
- Analyse customer reviews and social media posts.
- Conduct interviews with customers.
- Track customer behaviour, such as website visits and product usage.
- Use sentiment analysis to identify positive and negative feedback.
Once you have gathered feedback, you can analyse it to identify trends and patterns. Use this information to improve your products and services and develop better relationships with your customers.
SaaS cross-selling and upselling examples
We’ve used a few B2C examples to illustrate cross-selling and upselling concepts in this blog. But how about some real-world B2B examples? Let’s look at a few and note briefly what they’re trying to achieve.
1. Salesforce
Market-leading CRM provider Salesforce offers a huge range of products under its Salesforce 360 enterprise solution. The cross/upsell in the messaging (you could argue it’s both) could hardly be more evident:
“Pro tip: These amazing apps are even better together”.
They encourage you to buy a bigger package, promising synergies that don’t exist using the products in isolation.
2. Mailchimp
Marketing automation and email platform provider MailChimp offers a range of plans for its services.
Mailchimp is immediately upselling you on the Standard package, which we can determine not least due to the “Mailchimp Recommends” tab above it. The low-cost differential between Essentials and Standard means customers will opt for Standard even if they just want A/B Testing, for instance.
And look at Premium – it’s 17.5 times more expensive than Standard. If you examine the Premium features, it doesn’t seem that different. It makes Standard look like a great deal.
You can bet Standard users will be upsold on Premium when they start hitting usage limits, which aren’t made clear in this section. Customers will find the value first, then be upsold on scale. Standard is the gateway to Mailchimp’s Premium destination.
3. Adobe
Adobe offers its Creative Cloud suite, which includes Photoshop, Lightroom and other market-leading creative software products, at a sharp discount when compared to individual program licences.
Adobe really, really wants you to buy its software bundle, which it markets as Creative Cloud All Apps. Buying each app separately would cost upwards of £250 per month per seat compared to £61.99 for all of them. Only the teams with the tightest budgets and narrowest needs will opt for a Single App licence.
And if they only need two apps…well, for only £10 more, you get all of them…it’s a no-brainer! That’s cross-sell at its most obvious.
SaaS upselling and cross-selling: the last word
Here’s a reminder of this blog’s key points.
SaaS cross-selling and upselling should be a high priority for any company. The rewards are too great to overlook. They’re relatively cheap practices to implement; they drive profitability, diversify revenue, and reduce churn. Your product strategy must include cross-selling or upselling, or both.
Pricing strategies and bundling are dependable ways of encouraging customers to buy additional services.
To do cross-selling and upselling well, your company must also focus on customer service. It’s much easier to sell additional services to a customer who trusts you and feels valued.
If you’re already doing cross-selling and upselling, ask if you’re doing enough! Aim for 30% of revenue to be expansion revenue.
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