My blog post Seven requirements for successful up-selling listed the third requirement for successful up-selling. You need to have the right staff motivation and incentives to be successful.
Based on the sources quoted in that blog, SaaS providers who are successful at up-selling have lower selling costs for those up-sells and higher growth rates. Intuitively up-sells are easier sales because they are to existing customers and therefore less expensive and can help accelerate growth and this is also supported by facts.
Whether up-selling is done by sales staff or customer success staff the same criteria applies, they need to be motivated and have the right incentives to be successful and maintain customer satisfaction. There are 5 approaches you can use which are explained below.
- You can provide no special incentive beyond measuring your staff on customer satisfaction. Although this may work for highly motivated customer success staff it is unlikely to work with sales staff. It can also work if there is a high motivation by the customer to acquire additional products. This method definitely avoids any sort of conflict with a trusted advisor relationship with the customer. However, there is almost always a better approach to up-selling incentives.
- As an additional step beyond #1, you can measure your staff on customer satisfaction but balance that with measuring the level of up-selling achieved. If there is a specific & measured success objective on up-selling with an associated merit increase then this can be successful. However, this is still much more appropriate for customer success incentives than sales incentives.
- A spiff is another useful way to provide an incentive for either sales staff or customer success staff. It can either be monetary, a gift, a gift certificate or other alternatives. Generally spiffs are of modest monetary value but whatever spiffs are selected they should have real monetary value to be successful. Spiffs are a good way to motivate sales staff to do some up-selling on existing accounts while looking for other new significant opportunities. However, spiffs are a much better approach for customer success and account management staff who are mostly paid via salary. Since the monetary value is modest there is little incentive to cause any customer issues by up-selling anything that is not of significant value to the customer. However, this approach does provide significant incentives to pursue up-selling opportunities.
- Closely related to spiffs is a pure commission plan. The difference is that there is a percentage based on the value of the up-sell for a commission plan. It has the same advantages as spiffs but is more structured.This approach can work well for sales staff as part of an overall sales compensation plan.
- The highest level of incentive is to provide commissions, assigned upsell quota and quota relief. This works well for sales staff but is really counter to the idea of customer success. If the motivation of customer success is to focus on up-selling and they can’t be successful without up-selling there can be significant conflicts with the idea of being a trusted advisor.
If your account management strategy is based on the trusted advisor concept the incentive plan I would recommend is #3, using spiffs. Hiring the right staff that is inherently motivated for customer satisfaction, merit increases based on successful customer satisfaction and growth, along with the addition of spiffs in my observations results in satisfied and growing customers.
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