Upsell vs. Cross-Sell: How B2B SaaS Firms Boost Customer Lifetime Value
In today’s B2B SaaS landscape, you need to do more than just rely on new prospects for sales. In fact, more than half of surveyed SaaS companies consider upselling and cross-selling to be high priority.
Larger SaaS companies with low churn rate all had one thing in common: they continuously cross-sold and upsold to over 33% of their existing customers.
The big takeaway? Cross-selling and upselling can be key to driving revenue for a B2B SaaS firm.
In this post, we’ll go over:
- What is upselling and upselling?
- Upsell and cross-sell strategies
- Upselling and cross-selling examples
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What is upselling and cross-selling?
Upselling and cross-selling are 2 sales tactics that allow businesses to tap into their existing customer base to gain more revenue.
While these terms are often used interchangeably, there are key differences between them:
- Upselling: Selling an enhanced and upgraded version of a product at a higher price point
- Cross-selling: Selling a complementary product that provides additional functionality for a better customer experience
They’re sometimes collectively referred to as “suggestive selling”.
Let’s look at how upselling and cross-selling work for a B2B SaaS company.
Say you’re a SaaS company that specializes in a CRM platform. If you were to upsell to a customer, you may encourage them to purchase additional licenses or a higher tier CRM with more features. You’re selling the same product to the customer, but you’re enhancing the features to make it more appealing to them.
If you were to cross-sell to a customer, you’d encourage them to invest in another product within your suite. For example, you might entice your customers to buy a marketing automation solution you offer to go with their CRM. You’re selling a different product to the customer, but you’re enhancing their customer experience by offering a complementary product.
Benefits of SaaS cross-selling and upselling
Going through all that effort to tap into an existing customer base may sound exhausting, but there are several benefits to suggestive selling.
The 3 biggest benefits of SaaS cross-selling and upselling are: shortened sales cycle, increase in customer lifetime value, and increase in customer satisfaction.
Shortened sales cycle
The B2B SaaS sales cycle is notoriously long because it often involves large, expensive purchases where you have to win over multiple stakeholders — rather than just one individual consumer. The process of selling to a new customer is almost always longer than tapping into your existing customer base.
Studies show that the probability of selling to an existing customer is approximately 60-70%. That’s because these customers already see the value in your product and trust in your brand; it takes less effort to convince them to invest in your offerings. When you contrast that to the 5-20% probability of selling to a prospect, you can see why suggestive selling actually takes less time and effort.
Increase in customer lifetime value
Second, many SaaS companies are drawn to the increase in customer lifetime value. Customer lifetime value (CLV) is the total amount of money a customer is expected to spend with your business during their relationship with you. This means that increasing CLV will inherently increase your sales revenue.
Think about it: if your existing customers are spending more money during an upsell or cross-sell, your average customer’s spend has increased.
Increase in customer satisfaction
As a customer’s business scales, so will their demands — and their reliance on you. By upselling to your customers, you’re providing them with products and services that can meet their growing needs.
Not only that, customers will also become aware of your other offerings during a cross-sell. They may not know that you can ease their other pain points, so cross-selling them complementary products will improve their overall customer experience with you.
A best practice here is to only cross-sell or upsell products that will enhance your customer experience. We’ll touch on why this is important later, but the main reason is to make sure your customers are truly benefiting from your product recommendations.
B2B upsell and cross-sell strategies
Now that we have a clearer picture of the importance of suggestive selling, let’s jump into tactics.
Your overall goal should be to increase customer satisfaction — not just sell random products to increase your sales. Because SaaS businesses are often subscription-based, it’s best not to drain your customers financially before their contracts expire. That way, they’ll be less tempted to jump ship to your competitors.
In most cases, your salespeople and customer support reps are responsible for suggestive selling. That’s because they’re the ones continuously interacting with your existing customers and helping them get familiar with your product.
There are 7 overall strategies they can use to boost their upsell and cross-sell chances:
- Learn how to identify key opportunities
- Develop active listening skills
- Only promote relevant products
- Learn the ins and outs of every product
- Focus on the value for the customer
- Do not increase overall price by >25%
- Use a CRM that helps identify opportunities for you
Learn how to identify key opportunities
How do you pick out which customer to contact for an upsell opportunity? The answer is simple: look for customers who already love your product. That’s because they’ve already bought into your brand, so it’ll take less convincing to upsell them.
If you’re struggling with where to start, we recommend going through third-party review sites — such as Trustpilot and G2. Since these reviews are unbiased representations of you as an organization, you can easily pick out positive reviewers and go from there. Be sure to read through their reviews before connecting with them; you’ll often be able to identify which products to sell them on that way.
Looking for key opportunities also requires you to understand when to reach out for an upsell within your buyer’s journey. We highly recommend reaching out periodically to make sure your customers are getting the full value of your product.
Be sure to review your B2B SaaS sales process and identify when would be a good time to reach out. A few factors to consider include:
- How complex and customizable is your product?
- How many users do your customers expect to use your product?
- Do you have any compliance restrictions associated with your product?
- How much time does your customer spend on making decisions?
Develop active listening skills
As your reps get your customers on the phone, they need to actively listen for suggestive selling opportunities from real-time conversations. More often than not, customers aren’t aware of your full range of offerings. By quickly recommending relevant products to your customers as they discuss their needs, you increase the chances of them converting.
We recommend checking in with your customers several times during the onboarding process. Not only can you make sure that your customers are maximizing their ROI, but you can also make sure that all of their pain points are alleviated with your solution. If you’re curious about what other best practices your reps should follow, be sure to check out “Best Practices for B2B Customer Onboarding Process.”
Only promote relevant products
It’s quite tempting to inflate your customer lifetime value by getting your customers to buy as many additional products as possible. However, we highly discourage promoting irrelevant products because you can come across as not listening to your customers’ needs.
Instead, focus on your customer satisfaction. Are they getting the full value of your brand? Can their experience be enhanced by other products? If so, take the time to pinpoint exactly what product can address additional customer challenges before promoting it to them.
Learn the ins and outs of every product
This tip may feel like an obvious one, but it’s important that we emphasize this point. Help your reps learn the ins and outs of every product in your suite. That way, they can quickly identify which relevant products to promote during the call.
Do your products come in tiers? Make sure your reps understand how each tier can address specific customer needs. For example, if your customers are tight on budget, your reps should only promote a lower-tier product to avoid any friction over cost. That way, customers will still get value out of the product without breaking their bank — while your reps can still close the deal.
Focus on the value for the customer
Have you ever been tempted by bundling deals or discounted accessories? It’s a great tactic to keep customers focused on the overall value of the bundle — not its overall cost.
It’s a win-win for you and your customers. Even though you’re providing each product at a lower price point, you’re still ultimately increasing their customer lifetime value. And if you convey that the customer is getting a really good deal, they’re more likely to convert.
Do not increase overall price by more than 25%
Once again, it’s tempting to try to throw everything at your existing customer because it’s cheaper to upsell to them than acquire a new customer.
However, studies have shown that customers get turned off by the final price tag as soon as it’s over 25% higher. This means you have to be selective about which product to upsell or cross-sell to your customers in order to retain them.
Use a CRM that helps identify opportunities for you
If you haven’t already, make sure you invest in a CRM that quickly identifies opportunities on your behalf. That way, your reps need to do less of the heavy lifting to figure out which customers to upsell and cross-sell to.
If you need help implementing a CRM that helps you identify your best sales opportunities, be sure to check out our CRM optimization page. We outline how our certified consultants can help you maximize CRM ROI by blending industry best practices with our proven process.
B2B upselling and cross-selling examples
With a better understanding of the benefits of suggestive selling, let’s dive into a few common scenarios your reps may find themselves in and how to cross-sell and upsell to existing customers.
We’ll be splitting these examples based on 2 job functions: customer success manager and customer success reps.
Often a hybrid of sales and customer service, the customer success manager manages your company’s relationship with your customers — while the customer success reps are responsible for answering customer questions, dealing with complaints, and resolving open issues.
Customer success manager
Your customer success manager (CSM) acts as a liaison between your company and the client. They’re in charge of kicking off the customer’s onboarding process and identifying new solutions for existing customers.
Scenario 1: Customer is excited about your product and is seeing ROI.
Your customer is ecstatic about how your product is performing and sends their account manager an email about how happy they are. They’re trying to figure out how to continue growing a specific team that relies on your software to function.
Your CSM can upsell to your customers by providing additional licenses for new users. Make sure to emphasize how additional licenses mean boosted collaboration and productivity at the end of the day.
Scenario 2: Customer is growing other aspects of their business.
During a phone conversation, your customer mentions that they’re facing additional challenges that can’t be solved by the initial software product. After a little digging, your rep figures out that another solution within your suite can be the answer to their challenges.
Start off by recommending an additional solution that can address their pain point. Then, look into offering a bundled deal — which will provide additional value to your customer. Win-win!
Customer support representatives
As the name suggests, your customer support reps are in charge of supporting your customers. They’re on the frontlines assisting customers and are in charge of basic help duties. They’re also in charge of mitigating customer complaints by suggesting workarounds to issues.
Scenario 1: Customer raves about a product, but wished it had more capabilities.
In a review on a third-party platform, the customer is satisfied with their purchase. However, they mention that they wished the solution had more capabilities to fully address their pain point.
Respond to that specific customer explaining that a higher-tier solution can better address their needs. Your customer service reps should also focus on the value for the customer — explaining how it’s cheaper to go with a higher tier solution than implementing a whole different product altogether.
Afterwards, the customer support representative should forward these customers to the sales team. At the end of the day, sales reps are more equipped to answer any questions and close deals.
Scenario 2: Customer isn’t satisfied with a product, and mentions that they may start considering other options.
Your customer mentions during a service call that they aren’t exactly happy with the product and are now considering other options. You get the customer to reveal exactly what they’re missing from the product, and you recognize that your customer’s software experience can be enhanced with an additional product.
Take the time to listen to your customer complaints, then start finding out which additional products or upgrades can resolve their issues. By focusing on how this new product can address their unique challenges, you lower the chance of losing that customer altogether.
You may have noticed that your customer success team is in charge of saving your unhappy customers. That’s why you need to take the time to solidify your retention strategy. If you need proven strategies, be sure to check out our “B2B Customer Retention Strategies” post.
Similar to the upsell scenario, your customer service reps should also forward these customers to sales reps. Sales reps are trained to handle objections, so they’ll be able to navigate this sensitive conversation effectively.
B2B Customer Service Strategy
Learn how to turn customers into brand advocates using our free customer service strategy guide.
B2B cross-selling and upselling tactics that work.
Both cross-selling and upselling are great strategies for increasing your SaaS business’s revenue. Throughout this post, we looked at some tips and best practices for successfully implementing suggestive selling. By properly incorporating cross-selling and upselling into your SaaS sales strategy, you can increase your revenue and provide customers with a better experience.
If you’re looking to invest in sales reps who understand how to properly upsell to your customers, be sure to check out our outsourced sales service page. With our proven process, our salespeople can quickly learn your unique workflow to help you build a stronger sales pipeline.