For Software-as-a-Service (SaaS) companies, upsells are the Holy Grail. Upselling – selling another one of your products or more of the same after the initial sale – is a great way for SaaS companies to generate a huge amount of additional revenue at a substantially lower customer acquisition cost (CAC).

But don’t just take our word for it. Check out this survey, conducted by serial entrepreneur turned VC David Skok in conjunction with investment banking firm Pacific Crest. The survey focused on SaaS companies and unearthed some interesting findings about upsells:

  • The average CAC on upsells was $0.17 per dollar revenue, about 19% of the CAC for new customers ($0.92)

  • The companies with the highest revenues saw upsells make up a bigger percentage of all new Average Contract Value (ACV) than other companies

  • The companies that grew the fastest relied more on upsells than their slower-growing peers

So you know upsells are great for SaaS companies and products…but just how are you supposed to get them? What are the most effective and tactful ways of convincing a happy customer to buy more or other products?

Here are 4 best practices on the art of the upsell that we use here at InsightSquared.

1) Put locks on the doors of your product

If you’re giving away the farm on the initial sale, then what incentive would customers have to subsequently buy more? Forcing limits on the usage of your product will cause clients to quickly bump into those limitations and – assuming your product is great and in-demand – trigger outrage and demand.

This is a good thing! People, by nature, want what they can’t have. If they have reached the limits in terms of how much they can use your product, their want and need for more of it will inevitably spike. Consider it a teaser or a little nibble, before offering them the whole meal.

Here at InsightSquared, we use a licensing model, where customers purchase the number of licenses they want – if they have 10 employees using the product, they will purchase 10 licenses. When they find out that more than 10 employees want to use the product, they will have to buy more. And there lies the upsell opportunity.

2) Focus on getting people to use – and love – your product

Of course, setting limits to your product only works if your product is great and people actually want to use it. A huge part of upselling should focus on getting people to use – and love – your product. This means educating, not selling. Train your customers, show them the ropes and best practices, and help them get the most possible use out of your product. Map your product to their business needs and pain. Be consultative.

The best thing about the “land and expand” aspect of upselling is that while you might have made the initial sale to just one person or one part of their company – the Sales VP and sales team in our case, for example – usage of and demand for your product can grow organically once you have a foot in the door. Maybe the marketing team or the CFO realizes that they have a huge need for your product as well. They’ll see how the sales team benefited greatly and saw increased productivity by using your product, and want a piece of it for themselves too!

3) Win over the heart of a champion

This is the third point on our list of best practices, but it might actually be the most critical. You know what a sales champion can do for you in terms of helping close that initial sale, but the champion might be even more important in helping with any upsell opportunities. After all, this is someone who is embedded within the customer – while you are obviously not – and can exert serious influence.

Your champion should already be the biggest supporter and advocate for your product and company, so he or she can sell while you’re not there. Even if the selling is more subtle than overt – “Wow this feature has made my job so much easier” instead of “Hey, you guys should really buy this product I’ve been using” – it can have a more resonating impact than coming from an outsider, like a sales rep or account manager. If your champion is influential enough to have the ear of important constituencies within the customer’s company, your upsell job will be that much easier.

4) Don’t be too aggressive

Finally, the key to the upsell is not to be overly aggressive or pushy; if that is your typical sales tact, you might have to holster that during the upsell. Upsells work best when the prospect discovers on their own volition that they want to buy more of your product – think of leading a horse to a trough, rather than making it drink.

As mentioned above, it’s important to be consultative here. Don’t think of it as a slow conquering on your part, now that you have your first armies on land – this isn’t a game of Risk. You want to continue leveraging your human relationship and connection that you have made with your original contact there. Be there when they have questions. Help guide them with best practices. Point out clever ways of leveraging your product for their specific needs that they might not have thought about before. There’s no need to twist someone’s arm into an upsell – if they want and need it, they will come to that decision on their own.


There you have it, the 4 tips to mastering the art of the upsell. Put those into practice and see your Lifetime value to Customer Acquisition Cost (LTV:CAC) ratio – and more importantly, your revenues – soar!

[contentblock id=18 img=html.png]
Recent Posts