What is an Upsell?
Upselling is a sales technique used to convince existing customers to buy more expensive versions of the product they are using. For example, if a customer is signed on for a company’s lowest-tier subscription, a sales rep will try to upsell them to a mid or high-tier version instead.
Cross Sell vs. Upsell
What’s the difference between upselling and cross-selling? Cross-selling differs from upselling as the focus is to introduce and sell your customers on complementing solutions or product lines vs. purchasing a higher tier of their current product. They complement each other as reps will want to look for both cross-sell and upsell possibilities within accounts to maximize revenue opportunities.
Why is Upselling Important?
Upselling is essential for both sales reps and their customers.
The Importance of Upsells for Sales Reps
On the business side, a successful upsell equals more revenue. If a customer was paying $50 a month for a base subscription model but decided to upgrade to a premium plan for $200 a month, that’s $150 of monthly recurring revenue (MRR) from just one customer. There will always be cancellations and downgrades, but upselling counts that lost revenue and ensure businesses stay on track.
Upselling also helps with customer satisfaction and retention. A good sales rep knows exactly what their customers need to succeed. When attempting to upsell, ask what pain points your customer has been experiencing or what features would make their job easier. Then, show them what options best meet their needs. Understanding their specific wants and needs allows you to easily upsell, generate more revenue, and ensure your customer’s happiness.
The Importance of Upsells for Customers
A customer’s first reaction is usually “no thank you.” It’s a common sales objection for them to want to save money instead of spending more. However, in many cases, an upgrade offers more help than a hindrance.
As mentioned above, a higher tier with additional features may help address issues they’re experiencing. A customer needs to understand how an upsell will help them fully.
In some cases, it may also be more affordable, especially if prices are set to increase. If a base subscription price is growing, higher tier subscriptions stay as is; upgrading for additional features makes more sense rather than paying the same amount and gaining nothing of value.
Again, a good sales rep will recognize these opportunities and communicate them effectively to their customers, ensuring they’re happy with their pay.
How to Successfully Upsell
1. Research and Communicate
To successfully upsell, you can convince your customers that a premium version of your product is better than their current model. You’ll likely be met with resistance, so be prepared for objection handling.
Conduct research before and find precisely what your customer’s needs are. Find creative solutions an upgraded version can offer and tell them about it. During these conversations, ask insightful questions and actively listen. You can also use video messaging to record and share micro demos to demonstrate the differences between tier upgrades and let the product speak for itself.
Knowing exactly what a customer needs and how your product can help is essential when upselling.
2. Follow Up on Sales
If a new customer recently purchased your product, follow up and see how they enjoy it. Is the base model sufficient for their needs, or do they need additional features? Initially, testing the waters to determine if the product is right for them. Let them know what else you can offer to meet their needs.
To stand out in a crowded inbox, try sending a follow-up video message to introduce yourself if you’re new to the account ahead of or post a live meeting to summarize or outline the next steps.
3. Focus on Collaboration
Collaboration is crucial in the upsell process, facilitating effective communication and coordination among everyone involved. When it comes to upselling, numerous documents, including proposals and video content, need to be shared, reviewed, and tracked. Managing all these aspects and keeping them organized for your point of contact, as well as other decision-makers and stakeholders, can be a challenging task.
That’s where a digital sales room solution comes into play. Utilizing a digital sales room allows you to streamline and centralize all your upsell-related materials in one place. This ensures easy access to all necessary documents and enables seamless collaboration throughout the entire upsell opportunity. With a digital sales room, you can collaborate efficiently with your team and clients, providing a platform for discussions, feedback, and updates. This collaborative approach helps to keep everyone on the same page, improving transparency and productivity and ultimately increasing the chances of a successful upsell.
4. Offer Promotions or Discounts
Promotions and discounts are determined by management, but if they’re available to offer, a sales rep should use them to their advantage. Customers spending more money can be demanding, especially with a limited budget. Offering a discount while upgrading is key. They’ll be more likely to accept you’re upselling, and if they’re happy with the additional features, they will likely pay a total full price for future renewal.
Who is Responsible for Upselling?
In upselling, the question of responsibility often arises—who exactly is responsible for this crucial task? The answer varies depending on the organization and its specific sales organization structure.
In certain B2B organizations, the responsibility of upselling falls on the shoulders of a dedicated professional known as a full-cycle account executive or account manager. These individuals possess comprehensive knowledge of the products or services offered and are skilled in identifying upselling opportunities. They work closely with clients, fostering relationships and leveraging their expertise to present additional value and benefits that may enhance the client’s experience.
On the other hand, in different organizations, the responsibility for upselling may lie with the customer success manager (CSM) or customer success executive. These professionals are primarily focused on ensuring customers’ long-term success and satisfaction. By deeply understanding the customer’s goals and requirements, they can proactively identify opportunities to upsell and recommend suitable solutions that align with their needs, ultimately driving mutual growth and success.
While the specific role or title may differ, the underlying goal remains the same: maximize the value delivered to customers and foster sustainable growth for the organization. Businesses must identify the most effective approach to upselling within their organizational structure. This ensures a seamless and consistent customer experience while driving revenue growth.