• Lower Cost to acquire revenue
• Higher Growth

Per the survey the cost to acquire a dollar of ACV (Annual Contract Value) is much lower for up-sells, a median of $1.18 for $1 of ACV for new customers versus a median of $.28 for up-sells. A difference of more than 4X !!

Higher Growth companies also have a lot more of the ACV coming from up-sells than lower growth companies as shown by this chart from the survey.

Given the importance of up-selling what are the keys to being successful at up-selling and why are some businesses more successful than others?

In this blog post I’ve identified seven requirements for successful up-selling. Future blog posts will explore each of these in more detail.

• The Right Customer
• The Right Staff Skills
• The Right Staff Motivation & Incentives
• The Right Product Structure
• The Right Information
• The Right Tools
• The Right Customer Attitude – Happy & Satisfied

The Right Customer

This is an area that is often ignored or neglected but the up-selling process starts here. Are you marketing to the right future customers and are you acquiring customers who have the needs for your full product? If not, your future up-selling opportunities will be limited and no amount of time and energy can overcome having the wrong customers who just don’t need your product that badly.

The Right Staff Skills

Does your customer facing staff, whether they are account managers or customer success staff, have the skills to up-sell? They should be able to talk to the right levels within the organization, identify possible opportunities, nurture, close and help implement those opportunities?

The Right Staff Motivation & Incentives

Does your business provide the right incentives for your customer facing staff to focus the appropriate amount of time on up-selling activities? The key here is the right balance. Although a primary purpose of a customer success organization is up-selling many organizations avoid giving quota requirements because they fell this undermines customer trust.

The Right Product Structure

There are a variety of ways to structure your product to facilitate up-sells and some are more successful than others. Structuring and pricing your product based on # of users or on amount of storage used may actually inhibit some natural up-selling for new or additional uses of your product. Aligning your pricing and customer value in a direct way is ideal. Revenue sharing is an excellent example of that alignment but there are other ways to do that when revenue sharing is impractical.

The Right Information

Do your customer facing staff have the information they need to successfully up-sell? A successful up-sell requires customer organizational information, product information, product usage information and knowledge of the customer’s business and business goals. Without this information up-selling can be a haphazard process that erodes customer trust.

The Right Tools

There are a variety of tools that can facilitate successful up-selling including CRM systems, account planning systems and customer success systems. In addition strong communication templates and educational materials are key to giving a consistent message.

The Right Customer Attitude – Happy & Satisfied

Of course the customer has to be happy and satisfied with their current use of your product and trust the organization and people. The customer needs to feel that the recommendations of your customer facing staff are in the customer’s best interests. They also have to feel that the on-boarding or implementation process was successful. They should feel that past up-selling provided value to them. Remember this is a relationship, not a transaction.

If you address the above seven areas you will be much more likely to be successful up-selling your product. Each of these topic areas will be addressed in future posts.

–Paul–