It is not new that the software as a service (SaaS) model has gained a monstrous space. Companies like Hub Spot, Salesforce, SAP and TOTVS are already world giants!
With the expansion of this model, other aspects of the business emerged, aimed at increasing revenue and retaining existing customers in the base.
The most common techniques these days are upsell and cross-sell.
However, not everyone very well understands the difference between these terms and how these numbers actually affect your growth.
The goal of Blue World City here is to help you understand all this. Come on?
What is Upsell?
Upsell can be defined as any purchase made by your customer that makes their plan more expensive, more premium than your simpler version.
You can, for example, increase your McDonald’s potato, or put a multimedia kit in your new car.
Was the upsell example clear?
The key point is that the products, in these two cases, are complementary to the original, improving or augmenting the initial version.
What is Cross Sell?
A cross sell is when a customer makes a purchase of products related to the original. Rather than boosting the initial version, these products support the same experience that the initial purchase would provide.
If you shop online, you’ve probably already purchased some complimentary product to what you were looking for.
For example, a sock always looks good when you buy a sneaker, right? Especially when it comes with a discount 🙂
This is one of the techniques used and popularized by Amazon, when it suggests other products with the famous phrase:
Customers who purchased this item also purchased…
Who should do it and when to do it?
Both upsell and cross-sell add value to your solution. But more than that, they should add value to your customer. Here I say perceived value, not financial value!
Bernardo, if both improve my user experience and both bring greater financial return, what is the difference between cross-sell and upsell?
- In cross sell you offer complementary products or services;
- On upsell you offer an improved version of your product or service.
With that in mind, you might be thinking that it’s the salesperson’s only role to make use of these strategies to increase the value of the sale (I’ve had this vision too).
If that was the case, you, like me, are wrong!
Both the salesperson and the customer success team (CS for intimates) can cross sell or upsell.
What happens is that the experienced salesperson already does this in an almost natural way, but for the CS team this is a new strategy, as well as the CS area itself in Brazil.
Throughout the sales process, it is natural for the salesperson to understand the lead scenario and target the solution that best suits him.
For this, it takes into account several parameters such as: budget, timing, and need for a solution, problem commitment, and so on.
This happens even in simple sales!
If you read my texts here on the blog, you will notice that in the vast majority of them I make an analogy with some sport I have already practiced. Yeah, here’s one more 😀
Currently my last endeavor has been mountain biking and, to start with, I bought a friend’s bike.
Taking the bike for a review, the salesperson asked me things I didn’t know how to answer, such as the type of terrain (road, single track or rock garden) I usually ride.
Also, he asked if I walk on courses with more climbs or with more fast descents.
After collecting this and other information I understood the reason for so many questions. My tire wasn’t the best and, for the situation I gave him, the fall would only be a matter of time.
Result: I paid the overhaul and changed the tire!
Seller role so far, right? He understood my moment, improved my experience, and got closer to his monthly billing goal.
From the moment what I will call the initial sale happens, the customer is presented to the customer success team.
This team’s main function is to develop the client so that he can reach his goal through the best interactions with the solution.
Making another analogy with the bike, this person would be responsible for guiding me in the best practices and best trails so that I can ride well.
Pedaling more and with a better pace, I will naturally evolve in the sport and most likely I will want to acquire more top-of-the-line products.
I believe I managed to make it clear that both the seller and the CS team can upsell or cross sell. What changes is when to perform!
Cross Sell Techniques
Do you know that phrase, what is not seen, is not remembered?
So, the first point for your other products to be purchased is that your customers know of their existence.
The big question here is how and to whom to mention the other business fronts or solutions you have.
After all, shouting out everything you do doesn’t usually have much effect. Right?
So how to do it?
As we have been talking about for sales of plots in Lahore smart city, segmenting your list, but in this case, of customers, is the key to succeeding in your strategy!
This segmentation can happen due to different factors such as location, usage characteristics, position of the person who uses the solution, among several others.
According to this segmentation, you can better understand your customer, his behavior, the difficulties he faces, the objectives and, mainly, what you have as a solution that solves his problem.
Understanding and segmenting your base allows you, according to your customer’s profile, to target products and services that are relevant.
Make a list of the most commonly purchased products together and work on your cross sell.
The tip may seem obvious, but speaking the obvious can make a big difference, so here you go.
Cross sell works well when a second solution is offered for a lower value than the one the customer is most interested in. Another way that also works is when the two solutions have a low value.
To be successful it is important to generate value, just like in sales.
Therefore, simply offering products because they match, will not be enough, it is necessary that they are justified considering the main objective of your customer.
The most common cross-sell path is at the time of purchase, when a seller suggests other items relevant to that experience.
However, great care must be taken when offering other products just based on why people who buy X also buy Y.
It is important to understand the moment of purchase. Sometimes buying whey protein just because you started training isn’t the best way.
First you must learn to have your training routine and improve your diet and then invest in food supplements.
As much as it is very common for people who go to gyms to buy supplements, this is not the best solution for everyone.
Who should you not cross sell to?
As in sales, selling to those who don’t have a fit can be expensive. Cross-selling to everyone also has its side effect!
Carrying out this strategy for customers who demand a lot of your services, greatly increases your maintenance cost.
This occurs when the customer who over activates his successful team buys another type of product, multiplying this demand and, consequently, its cost.
Another profile that may not be the best for acquiring new products are customers who buy, giving the impression of increasing revenue, but this only happens for a short period of time.
In this case, you have a waste of time on the part of the team and a return that may not be justified by returning before the expected period of profit.
Upsell strategies often require a little more technique and strategy.
You should never give your customer the idea that your main objective is to increase revenue.
Your main objective must always be your client’s success, after all, your solution was developed so that he can achieve his main objectives.
With that in mind, to have a good upsell strategy, you need to:
Know which features generate results
When I say which features generate results, I’m referring to the specific lead scenario. Upsell strategies work well than cross sell strategies.
This is because once the lead has a solution in mind, he probably doesn’t want other distractions. What he is looking for is something that will ease his way to success.
Offer something that makes sense
There’s nothing worse than a lack of context in sales.
Upsell and cross sell are also sales strategies! Therefore, you should always consider the lead scenario.
You must understand the customer’s needs and frustrations before offering a million options.
That way you can bring not only a feature, but the resolution of a problem that will surely help your client to have a better experience focused on your goals.
I remind you that as CS and salesperson, your goal is to help the customer, not increase revenue momentarily.
Being honest when you’re most complete solution is the best option for your client brings trust, which is the most important factor to keep your recurrence and even helps to bring in new clients by referral.
You must also make the customer think, as responsible for its success, that you are the most correct person to indicate the functionality designed to improve or facilitate their process.
Establish a Value Commitment
It’s normal that when you make a sale, you commit to solving a problem.
Upsell works the same way. Boosting the solution already used should only be done when it makes sense, in an honest and focused way on the customer and their success.
In other words, everything must be done to generate value.
Once the upsell is completed, you should follow up on the new functionality and its use, just as you did with the solution after the first purchase.
Appreciate that trusts you
If you closed an upsell or cross sell contract, great! However, your work does not end there.
So far, you’ve managed to understand the need, generate value, propose a solution to the problem, and help your customer and, to top it off, you’ve even increased your recurring revenue!
What can you do to keep this happening? Appreciate who trusts you and is loyal to your solution!
When a customer purchases one more feature, or one more product of yours, he is taking a step further in the relationship between you.
It’s like a relationship, every step forward must be celebrated and highlighted! You can do this in different ways:
- Sending a thank you letter ;
- Sending something related to your company, such as a treat ;
- Offer discounts on next steps in the relationship 😉
These would be my top tips to bring an increase in revenue from the existing customer base.