Categories Articles, SaaS

“Would you like to Supersize your meal?” is the classic upsell.

As a McDonald’s customer who has already purchased a meal, it’s not going to be tough for you to be convinced to buy more of that same meal. You love the product, you’re hungry, and McDonald’s has made it so easy for you to get more of it. For just a few more cents, you can upgrade from a medium to a large meal and get more fries, more soda.

McDonald’s has already gotten you in the door, paying their “cost” to acquire you, the customer, and that’s the beauty of the upsell – most of the heavy lifting has already been done. They’ve gotten you hooked on their delicious product, and now you want MORE!

Software-as-a-Service (SaaS) companies could learn a lot from McDonald’s and their Super Size upsell model.

And, just like McDonald’s, it’s all about identifying the right customers to target with your upsells.

Developing new sources of revenue is great, but give me more expansion revenue any day of the week.

- David Skok

Renowned SaaS expert David Skok has professed his love for expansion revenue, i.e. expanding the revenue you bring in from the customers you already have. The guy who orders the medium Big Mac meal is happy with your product (evidenced by him being here at the counter) and is about to become a customer; convincing them to buy more product is a lot easier than going out on the street or to Burger King and convincing someone else to come in and give Big Macs a shot. Even customer acquisition costs (CAC) at McDonald’s are high.

SaaS companies are no different. Acquiring customers – hiring in sales and marketing, running expensive ad campaigns, spending time on the phone to demo and sell – is pricey. According to a 2013 SaaS survey conducted by Skok, the average CAC for new SaaS customers was around $0.92 per dollar revenue. For upsells? A scant $0.17 per dollar revenue.

Learn More About SaaS Metrics»

But not all of your customers will be ripe for upsells. In fact, if you are too aggressive about foisting more of your product onto them, they might be turned off you and your company altogether. For a SaaS company, it is critical to focus on upsells, but even more important to focus your upsell attempts on the right potential customers.

What do Potential Upsell Customers Look Like?

In a word: happy!

It stands to reason that the customers most likely to want more of your product are the ones who are already happy with your product. But it goes deeper than that; the best upsell customers are also your most heavily engaged ones. How can they demonstrate that engagement?

  • By using your product – This is an obvious place to start. Customers that aren’t actively using your product are not going to be impressed when you try to upsell them. Find a report, like this one below, that can track how engaged each of your customers are in a given time period.
  • By deeply using your product – Logging on once a month should not qualify as a customer “using your product.” Depth of usage is also important – are your customers using all parts of your product? Are they exploring its various capabilities and getting actual value out of it? Having a report that can track which parts of your product are most frequently used is helpful for upsells.
  • By broadly using your product – One active user in the whole company should not qualify as a customer “using your product.” Breadth of usage is also important – is there widespread adoption of your product? Are there many users at the company who would not be able to survive on a day-to-day basis without your product?

Focus on engagement and usage, and upsells will find you. It’s really as simple as ensuring you have the happiest and most satisfied customers, from onboarding through guiding them on best practices and maximum value of your product. Work on helping your customers find success with your product, and the upsells will come rolling in.

Beyond engagement and pure product usage, there are other evidences or signs that a customer might be ripe for upsell. A customer who tweeted that they “don’t know how they lived before they got your product?” A company who you heard recently underwent a massive hiring spree to double in size? A startup who just received a big round of Series B funding? These are all potentially great upsell opportunities.

Your happy, regular and repeat customers want more fries and larger sodas – they just might be shy about asking for it. It’s on you to identify who these happy customers are, and how to give them more of what they want and need.

 

Subscribe to InsightSquared's Blog

     

Get InsightSquared's latest Sales & Marketing Analytics blog articles straight to your inbox.

 

Recommended Posts

Leave a Comment

Start typing and press Enter to search