Upselling: How to Sell to Existing Customers to Boost Revenue

Dan Morris | March 15, 2019

Woman talks on the phone while sitting in front of a computer

Competitive companies are always on the lookout for ways to generate additional profit. And it turns out one of the most effective approaches to boosting revenue while keeping costs low is to sell to existing customers.

As Sophia Bernazzani explains, “It’s 5-25X more expensive to acquire a new customer than it is to retain an existing one.” In addition, “Existing customers are easier to sell to — by a long shot: You’re 60-70% likely to sell to an existing customer, compared to the 5-20% likelihood of selling to a new prospect.”

So how do you go about selling to an existing customer? The most common methods are cross-sells and upsells.

What Is Cross-Selling?

Cross-selling is the process of selling (or at least recommending) products or services that complement an item that a customer has already purchased. The quintessential example is McDonald’s asking, “Would you like fries with that?” after a customer orders a hamburger. Another common example is found in ecommerce, when a company shows items that relate in some way to the one the customer is currently browsing. If you’re an Amazon shopper, you’ve undoubtedly seen this strategy first-hand through the “Customers who bought this item also bought” feature.

What Is Upselling?

Upselling is the process of selling (or at least recommending) an upgrade to a “more premium version” of the original purchase such as a more expensive product or higher level of service. Returning to the previous fast food example, upselling would be McDonald’s asking, “Would you like to supersize that?” after a customer orders a regular combo meal. Within the world of software, an upsell might involve a SaaS company pitching a B2B customer on a higher service plan.

While both cross-selling and upselling are profit-generating strategies worthy of exploration, we’re going to deep dive on the latter because studies have shown upsells to be even more effective. And intuitively, this makes sense, as it’s easier to persuade someone to upgrade a product they’ve already selected than to convince them to buy an additional product or service that’s related but different.

Who Can Upsell?

Now that we’ve established WHAT an upsell is, let’s examine WHO can employ the strategy. The most obvious answer is the sales team — after all, these are the employees who’ve been specifically trained in the persuasive arts. They know your product inside and out and spend their days making pitches and closing deals. Sales reps are particularly well-suited to upselling at the time of the original purchase, such as in the McDonald’s supersize combo example.

In addition to the sales team, the customer success department can contribute to upsells. The role of customer success managers (CSMs) is literally to ensure that customers achieve success with the company’s product. To do so, CSMs strive to develop a genuine relationship with each customer, understanding their individual needs, challenges, and goals. Over the course of their interactions with customers, CSMs are thus in a prime position to identify opportunities for upgrades that will benefit both the customer and the company.

To optimize upsell efforts, it’s critical to create alignment between sales and customer success. One way to ensure both departments are on the same page is to have the head of sales and head of customer success report to the same person, such as the Chief Revenue Officer. This executive should own both revenue and churn to make sure that any revenue-generating initiatives undertaken by sales or customer success will not just lead to short-term gains, but benefit the long-term health of the company.

“If your sales team is incentivized only on total revenue, they’ll spend their time on the biggest wins, new revenue,” writes Eva Klein. “If you want them to spend their time building relationships and developing customer accounts over the long-term, you’ll need to compensate differently for upsell revenue and new revenue.”

When to Upsell

Some upsells are appropriate to offer at the time of the initial purchase, as with the example of the McDonald’s supersize combo meal. In the case of SaaS products, however, it’s typically best to wait until later to pitch an upgrade, after the customer has been handed off from sales to the success team. But it’s not as simple as just waiting for a certain number of weeks or months to pass following onboarding to initiate an upsell. After all, every customer’s needs, challenges, and goals are somewhat different. So how do you know when the time is right?

According to Leslie Ye, there are five signs that indicate a customer might be ready for an upsell:

  • They’re seeing success with your product. Once a customer begins achieving significant milestones as a result of using your product, they will become more receptive to discussing a more sophisticated package. As Ye puts it, “Think of this initial success as your foot in the door you can leverage to get a bigger deal.”
  • They’re referring new business to you. In a similar vein, “If your customer is proactively sending you new prospects and leads, it’s a sign they’re extremely happy with your product.” A referral presents the perfect opportunity to reach out to the customer; first, offer your thanks and then check in to see if there are additional ways your company might be able to meet their needs.
  • Their company is positioned for a strategic shift. Whenever your customer’s company is preparing to change strategy (such as by launching a new product or reframing an existing product line), there is an opportunity to expand your services to them with an upgrade.
  • They’re focused on new priorities. Even without a major strategy shift underway, most companies are constantly battling multiple challenges at a time. Hopefully the success your product has helped them achieve will enable the customer to shift some of their attention to other priorities, which presents yet another opportunity to expand your services.
  • They’re growing. Last but not least, it’s important to pay attention to signs that a customer is experiencing growth, whether that be in the form of accelerated hiring or moving to a larger office. “This means that something’s working (hopefully, something related to your product), and that more cash is now available for your customer to spend.”

How to Upsell

So far we’ve covered the WHAT, WHO, and WHEN of upselling. Now it’s time to tackle the HOW.

An upsell conversation can be initiated with a customer over the phone, via email, or during an in-person meeting. But regardless of the communication channel you choose, the most important factor is to be genuine and authentic. As Karla Cook explains, “Sleazy … reps will try to upsell everyone and anyone — regardless of whether or not the customer actually needs the additional service — but when you focus primarily on your customer’s experience and goals, upselling benefits both you and your customer tremendously.”

A huge part of conveying authenticity is being thoughtful about the timing of the upsell, as discussed above. But another tactic that’s likely to be effective is arming yourself with facts and figures to support your pitch. As Cook puts it, “Before you hop on a call to try to convince your customer of an upsell, make sure you have the data and evidence to back you up,” which will “help demonstrate to the customer that you have her best interest in mind.”

In addition, it’s critical to be upfront with the customer about all costs associated with the upsell. “There’s no point [in] trying to sugarcoat the price,” cautions Swetha Amaresan. ‘It will only make them suspicious of you if you try to mask the real cost of the upsell.” Instead, be transparent about any one-time costs as well as the increased price going forward.

Rinse and Repeat

Finally, like any other business strategy, upselling should be treated as an ongoing experiment. After each upsell pitch, take a step back to examine what worked well and what could be improved. By adding in this reflection process, you’ll ensure that your upselling efforts become more and more successful over time — benefiting both the customer and your company’s bottom line.