Increasing SaaS Revenues with Upsells and Downsells

How to Use Upsells and Downsells for Your SaaS

Sometimes I feel like marketers at SaaS companies are trying to reinvent the revenue wheel…

I’m not saying that’s bad, but they’ll often try to get super creative when looking for solutions to increase lifetime value and revenues as a whole.

Browse GrowthHackers.com for a minute or two and there’s no doubt you’ll stumble onto some brilliant strategies.

Watch the video below to discover how to use 2 words to quickly boost profit and revenues:

The thing is, Software as a Service is pretty new compared to the concept of making money on the Internet.

A lot of “Internet Marketers” have a bad rep, but you can’t deny the effectiveness of some of the strategies that incredibly successful markers like Ryan Levesque, Ryan Deiss, Andre Chaperon, and many others have developed over the years.

Internet marketers have been testing and mastering revenue-boosting techniques for years, and so, long before SaaS was even a thing.

They’re more aware of the power of copywriting, drip email marketing, and paid advertising that almost anyone else…

Which is also why so many of them are able to generate hundreds of thousands of dollars within months – and so, completely ethically and legitimately.

(While a SaaS companies on the other hand might struggle to achieve half of that…)

In other words, it looks like most of them are completely overlooking the most effective, proven strategies for increasing revenues.

And seriously, I strongly believe SaaS companies have a LOT to learn from Internet Marketers. With a little bit of work, their strategies can 100% be adaptable to a SaaS.

The 2 words that will boost revenues and profit of your SaaS if you use them well:

1. Upsells, and 2. Downsells

Whether you’re a SaaS marketer or not, you probably know what they mean.

But look… are you really leveraging upsells and downsells to their full potential?

My friend Dan Martell often said techniques from Internet Marketers that most SaaS companies ignore were actually key in growing Clarity.fm, his recently acquired company.

Here are 3 things you need to know in order to implement this in your revenue model:

1. Upsells and downsells are pretty straightforward.

If someone purchases or signs up for your main offer, they’re on a purchasing momentum and there’s no better time to ask for more… don’t wait for the momentum to die.

So what should you do if a visitor signs up for your main offer?

Upsell them with additional, more expensive offers.

Now if they decline the upsell show them an additional offer, but this time, one that’s less expensive

Play around and mix and match additional offers that increase the value of your software.

Remember – You want to maximize your revenue per user, and doing it while your customer is taking a major action increases your chance of them saying yes.

2. Don’t think of upsells and downsells as ways to make more money…

Think of them as ways to increase the value your customers will get out of their initial purchase.

With that being said, the ideal way to decide what to offer as an upsell or downsell is to identify WHAT in your software is complementary to what your customer just bought.

For example, if someone signs up for a $59/month plan, immediately after sign up, it’s time to offer them an additional feature or service to increase the value that person will get from their plan.

This could be…

  • An additional $5/month for premium support…
  • A one-time fee for one-on-one training to help your user get started quickly …
  • And so on…

Look at a company like Unbounce for example:

They’re a SaaS company, and in no way do they look like spammy Internet Marketers; yet – they have a lot of additional “upgrades” to offer.

Want to add a custom domain? $5 per month per domain…

Want to add another user to your account? $10 per month per additional user…

Want SSL Encryption for your landing page? No problem, but you’ll have to upgrade your subscription to the next tier.

That alone can be responsible for a huge chunk of additional revenue. So please, don’t leave it on the table.

Finally, #3…

Be smart with your upsells and downsells.

If you have 7 possible offers don’t offer them all once, one after another, while a user is signing up.

Not only is this going to be annoying, but you’ll risk being perceived as greedy and trust between you and the user might start to erode.

Instead, you want to present them strategically. Show 1 or 2 offers during signup, others could be triggered by a certain user behavior, or only shown on specific pages or even at a specific time during the lifecycle of the user.

The trick is to always remain contextual.

Back to my example with Unbounce, they don’t ask you if you want to add more domain for an extra $5 per month while you’re building a landing page. It wouldn’t make sense.

However – You will see the upsell if you visit the custom domain section, where’s it’s more likely it’s a requirement of the user that is visiting that page.

To quickly recap…

  • Don’t leave money on the table – leverage upsells and downsells to increase your revenue per user.
  • Identify what you can add to your software that will create no more revenue… but instead… additional VALUE for a user…
  • And finally, make sure your offers are shown according to context.

In the comments below, tell me if upsells and downsells are part of your business model, and if so, what impact it had on growth. I’ll read & respond to every comment. 🙂