How Upselling and Cross-Selling Can Improve Your SaaS Sales Performance

Upselling and cross-selling are two powerful sales techniques that can improve the sales revenue of any business, but especially those offering SaaS.

Let’s take a look at the basics of cross-selling and upselling, the differences between them, and the benefits they can have for your SaaS business. 

We’ll also look at some of the challenges associated with these sales tactics, and give you our top tips for upselling and cross-selling that’ll help you to overcome them.

What is Upselling?

Upselling is a sales technique that retailers can use to try and increase the amount that a customer spends on their purchase. In order to achieve this, the customer is encouraged to invest in a more expensive version of the product they’re buying.

For example, say a customer has shown interest in signing up to a mid-range plan from your SaaS business. Upselling would be suggesting an alternative plan that provides premium features, at a slightly higher price point.

Upselling is employed by many businesses to try and increase their average order value (AOV), and therefore boost their revenue. Research shows that upselling accounts for up to 40% of company revenue in over 60% of businesses. 

Image Sourced from Hubspot

What is Cross-Selling?

Cross-selling is another sales tactic employed by many businesses. Rather than suggesting more expensive purchasing options, cross-selling involves the gentle suggestion of additional products or services that complement what the customer is already buying.

For example, if a customer adds a $400 laptop to their online shopping cart, you could offer them accessories such as a laptop case or wireless mouse, or services such as a product protection plan.

It also plays a key role in bricks and mortar stores, where purchase decisions are frequently made once the customer has already entered the store. For example, displaying batteries at the end of an aisle that contains electronic toys is a method of cross-selling.

What are the Key Differences Between Upselling and Cross-Selling?

While cross-selling and upselling are both effective strategies for influencing purchase decisions and boosting revenue, there are distinct differences between the two approaches that you should be aware of.

Why are Upselling and Cross-Selling Crucial for SaaS Businesses?

Upselling and cross-selling can both have a range of positive impacts across an organization, particularly for SaaS businesses. 

These strategies can be especially valuable in the SaaS industry, where nurturing sales leads and converting them into paying customers is vital.

Increased Average Order Value

Upselling is more geared towards increasing the average order value of a prospective customer, i.e. getting more money out of them in one sale, rather than establishing a steady source of income. This can help to rapidly accelerate the profitability of your SaaS business.

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This is an important factor in maximizing the ROI of your marketing. You’ve already spent the marketing dollars to get your lead to the point of making a sale; once they’re there it’s in your best interests to secure the biggest sale possible.

Increased Customer Retention

Successful cross-selling has a very positive impact on customer retention. Introducing prospective customers to products and services that you know are useful to them is a great way to improve the customer experience, keeping them coming back to you for repeat business in the future.

This in turn helps to increase the customer lifetime value (CLV) of your customers by extending the lifespan of your customers. Rather than simply making one purchase from you and never coming back, the customer is more likely to return to make additional future purchases.

Reduced Customer Acquisition Cost

Upselling and cross-selling your products and services helps to save you money when it comes to customer acquisition cost (CAC). Businesses in the SaaS industry typically have a relatively high CAC, so reducing this can have a large positive impact on your bottom line.

Image Sourced from Qualtrics

By utilizing cross-selling and upselling, SaaS businesses can sell more to high-intent leads, allowing you to maximize the revenue generated from a single campaign. There’s less need to run individual campaigns for every individual service or upgrade you offer, thereby reducing the dollars spent on acquiring new customers.

Potential Disadvantage of Cross-Selling and Upselling

Upselling and cross-selling are effective techniques for boosting your revenue, as long as they’re used properly. Use them incorrectly, and you risk annoying your customers, and potentially losing sales altogether.

Poor Customer Experience

It’s all too easy for cross-selling, and particularly upselling, to appear as an aggressive sales tactic to your customer. If you push too hard for a customer to upgrade their purchase or make a follow-up transaction, you can end up leaving them with a negative perception of your brand.

Similarly, customers can become dissatisfied if they’re bombarded with lots of cross-selling emails following a purchase, so use them sparingly if they’re part of your SaaS marketing checklist.

Increased Complexity

A customer may have come to your website with a firm idea of what purchase they were going to make. Suddenly they’re being shown costlier versions with premium features that look much better than the cheaper option they were considering. 

However, they might not have budgeted for the more expensive option, or are unsure whether it’s really worth the extra money. In some cases, this can lead a prospective customer to get so frustrated or confused that they simply abandon their purchase altogether.

Top Tips for Upselling and Cross-Selling

Implementing cross-selling and upselling initiatives can be tricky, and getting them wrong can hinder your sales efforts rather than help them. Here are our top tips for getting upselling and cross-selling right.

Upsell and Cross-Sell at the Right Stage of the Customer Journey

There are three key points in the sales funnel where cross-selling and upselling are most effective:

1. Pre-purchase: You can promote cross-sells and upsells before a prospective customer makes a purchase decision, using the products they’ve shown interest in to suggest relevant upgrades or extras.
2. During purchase: Cross-sells and upsells can also be promoted at the point of sale, while the customer is in the right frame of mind to make a purchase.
3. Post-purchase: Once a customer has made a purchase, you can offer cross-sells via email, SMS, or when they return to your online store or sales team.

Narrow Choices

Customers can be paralyzed by an abundance of choices, and end up not making a purchase at all. It’s a phenomenon referred to as the paradox of choice: customers are dissatisfied by too few choices, but can also become overwhelmed if they’re presented with too many choices.

Image Sourced from Neurofied

The trick is to find the ‘sweet spot’ offering your customers enough choice so that they feel like they’ve found a great deal, without becoming bogged down by having to make too many decisions.

Following this logic, if your customer has already declined a potential upsell or cross-sell, don’t keep pushing.

Educate and Inform

Educating and informing your customers before a sale is a great way to promote upselling and cross-selling without overwhelming them with choices. You can help them to identify problems they might not have been aware of, and the solutions you offer that can help them overcome these pain points.

Content marketing is a great way to achieve this. You could consider using a CMS SaaS solution to help you develop a content marketing strategy that discreetly and organically promotes upselling and cross-selling to your target demographics.

Incentivize Bulk Orders

Suggesting to prospective shoppers that they buy in bulk is a good way to increase AOV, whilst also securing long-term brand loyalty. One effective way that ecommerce retailers do this is by introducing a free shipping threshold. Many customers will add products to their basket that they might not have ordinarily bought, just to reach the required spend for free shipping.

This obviously isn’t applicable for most SaaS businesses, but we can apply similar tactics to achieve the same result. For example, you could consider offering free gifts or additional services with higher value subscriptions. 

This will encourage your customers to opt for higher value plans for fear of losing out on an unmissable deal.

Personalize the Customer Experience

Personalizing the customer experience is one of the best ways to promote brand loyalty, increase positive word of mouth, and increase the average lifetime value of your customers.

Image Sourced from McKinsey

Offering personalized recommendations for products and services shows your customers that you’re paying attention to their needs, and can even help them discover solutions to problems they weren’t aware they needed yet.

Provide a Great Post-Sales Experience

The most successful businesses understand that the customer journey doesn’t end once the customer has placed an order. Providing a great post-sales experience for your customers is a great way to improve customer satisfaction and encourage brand loyalty. 

For example, you could ask your customers to fill out a survey about their purchasing experience. Not only does this provide you with valuable feedback that you can use to improve future sales efforts, but it also shows your customers that you care about their thoughts, feelings, and experiences.

It also provides an opportunity for imparting gentle suggestions of other products that your customer may be interested in.

Excel at Upselling and Cross-Selling and Watch Your Revenue Soar

Getting upselling and cross-selling right can see your SaaS business see a healthy increase in revenue, thanks to an increased average order value, and improved customer lifetime value.

Offer a personalized, non-pushy experience that guides your customers organically towards additional or increased purchases, without piling on too much pressure.

If you can achieve that, you’ll see the difference in your bottom line in no time.