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How to drive contextual upsells and increase expansion revenue 

If you want to grow your business quickly and efficiently, you shouldn’t neglect the revenue possibilities of account expansion. 

For many businesses, their existing customer base forms a highly lucrative and easily-accessed source of new revenue. 

But picking this low-hanging fruit depends upon having something to offer that builds on and enhances the value you are already providing. It also depends on communicating that offer in the most effective way.  

That’s where contextual upselling comes in. 

What is contextual upselling? 

Upselling is the practice of generating revenue for your business by selling more to your existing customers through upgrades. In a SaaS context, this means moving users up from basic packages towards premium ones. 

“Contextual upselling” means introducing the value-add offer to users “in context”. That is, at the point in their activities when they are most receptive because they are displaying an explicit interest in or need for the features of the enhanced package.

Though “cross-selling” also encourages customers to spend more money with you, cross-selling is focused on promoting different products to users rather than getting them to invest more in one. 

The below image demonstrates the difference between upselling and cross-selling

Image explains the difference between upselling and cross selling

For reasons we’ll explore in this blog, the best ways to promote upselling and cross-selling are rather different.

Why is upselling important in SaaS? 

Let’s just take a step back from contextual upselling for a moment, and explain why all SaaS businesses should prioritize upselling to their existing customers: 

  • According to Harvard Business Review, it costs between 5 to 25 times more to acquire a new user than it does to retain an existing one 
  • A study by Marketing Metric has shown that – across all verticals – the probability of upselling an existing customer is between 60% and 70%. For new prospects, it’s between 5% and 20% 
  • Productled has found that it is three times cheaper on average to expand account revenue (through upselling and cross-selling) than to acquire new paying customers 

So, how can it be so effective? 

Because successful upselling targets your customers and offers them more of the value you’re already providing. By now, they already know you and trust you to deliver the best.  

The challenge in upselling is always in knowing what to offer, when to offer it, and how to make it as easy as possible for the customer to buy. That’s why context is critical. 

5 Sinful upselling mistakes 

Most unsuccessful upselling approaches fail because they don’t take context into account adequately. Here are five classic mistakes to avoid: 

1. Pushing too often or pushing too early 

If a customer has dismissed a suggestion to upsell, they’re unlikely to go for it if you simply keep showing it again and again. In fact, you’re more likely to irritate them and risk them churning.  

Contextual upselling succeeds when it recognizes, anticipates, and offers to solve a user’s needs. 

When you put an upsell forward, it should make sense in the context of where the user is at, what they use your product for, and what they are doing at that precise moment. 

If a user’s situation hasn’t changed, why would they want to see the offer again? 

Similarly, if your product hasn’t proven its value yet, an upsell offer is likely to be taken badly. You have to earn the trust before the suggestion will be viewed as an offer of help.

2. Out of context upselling

Add “pushing at the wrong time or in the wrong place” to the above.  

Why do many cold callers get a touch reception from people who really would benefit from reviewing their life insurance? 

It’s because the person on the other end of the call wasn’t thinking about those topics at the time – so the message comes as an interruption. It is not “in context” with their present actions, and so, it is often viewed as unwanted pressure.  

Imagine seeing this model in Loom, just after you log in. 

out of context upselling

What are the chances of you paying attention to it before you manage to use the app to record a video? 

At this point, you’d just ignore the pop-up and carry on with your task in hand. Hence, such out of context upselling doesn’t perform well. 

3. Misunderstanding your users’ needs 

Are you upselling the right solution for your users’ needs?  

If you try to get them signed up for the upgraded premium version of a feature they haven’t used on the basic package, they’re unlikely to convert.

However, if you provide a free trial, they’ll get an insight into the premium version and will be enticed to go with it! 

Contextual upselling depends on knowing what customers are looking to achieve with your product and anticipating their needs with your suggested solutions.

4. Being opaque about pricing 

Upselling works as a revenue growth strategy because you’re focusing on people you already have a relationship with and who have a degree of trust in you – that is, your successful customers.  

Nothing erodes that trust like making users think you’re trying to get one over on them. 

Your upselling activities should be completely transparent, particularly about costs. Research has shown that, in eCommerce, extra charges that were not apparent upfront (e.g. shipping, taxes) are by far the biggest cause of cart abandonment.  

It’s the same in SaaS, so make sure all costs and other blockers are made clear from the beginning, and you’re not automatically including paid-for add-ons in the packages offered without letting customers know. 

5. Frustrating your users’ intentions 

This is similar to the point about sneaky pricing.  

It is generally a bad idea to let users start on a workflow only to tell them at some point along the line that they need to upgrade their account to finish the task.

It may win you some upsell revenue, but the ill will it generates in users when they have to pay extra or when their time is wasted may cost you more in the long run.

There are smart ways to do this – for example, Spotify limits the number of tracks free users can skip. When they reach that number, users are warned that future skips are only available to premium members.

This provides some value to the free users (and the promise of more when they upgrade) and it doesn’t attempt to frustrate them.

Now, let’s look at how to upsell, the right way. 

11 Great contextual upselling ways to drive more sales 

There are loads of tactics you can use for contextual upselling. Here are some of the most effective: 

1. Track behavior to trigger in-app message prompts 

Remember Microsoft’s Clippy? 

Track behavious to trigger in-app message (contexual upselling technique)

This character would pop up to offer useful suggestions in Microsoft Word when your actions suggested you were trying to perform particular tasks.  

It didn’t work especially well at the time, but today’s software – and product managers’ close understanding of user journeys – means that it’s simple to offer highly contextual onboarding and support experiences in-app.  

Tools like Userpilot enable you to track in-app events and define your own “goals” (groups or sequences of user actions), which then trigger experiences that help users to realize value and progress along the customer journey.  

Userpilot upselling model

Source: Userpilot

And this can be applied to upselling as well.  

For example, a user who regularly looks at pricing plans, reads help articles about premium features, tries clicking on greyed-out features (see above) etc., is signaling their readiness to talk about upgrading. 

With the right tracking, you can trigger in-app models at the right time, like Loom does in the image below. 

loom upselling model

Source: Loom 

If you design triggered contextual experiences that simplify upselling, then you need not lift a finger to close the deal!  

2. Draw attention to premium features in basic navigation 

Many SaaS products reserve access to certain features to higher tier users, but nevertheless include them in all customers’ user interfaces.  

As long as it’s made clear to those basic users what they can and can’t access – a common practice is to “gray out” functionality that’s unavailable – this can be a good way to raise awareness of what customers have to gain by upgrading in a way that’s subtle and not pushy. 

Microsoft team upselling model

When users click on these features, it’s also common practice to open a pop-up window that explains why it’s not available and how to get it – making it as easy to upsell as possible. 

3. Meter feature usage 

We’ve already mentioned Spotify in this context. A great tactic can be to allow basic customers to use premium features up to a point and then let them know that further usage is restricted.  

This is effective because the customer has demonstrated a clear need for an upsell through their actions. It could hardly be more “in context”! 

However, you run the risk of frustrating customers if – from this checkpoint – it’s not really simple and easy to upgrade and continue with their task. 

Spotify softens the blow here by phrasing the upsell barrier as the user having “discovered” a premium feature, which is a clever bit of psychology! 

Spotify upselling model

Source: Spotify

4. Vary the message format 

Customers on Dropbox’s free tier get regular reminders of the restrictions they face and invitations to upgrade to remove them. 

How do they prevent this from irritating users? 

Well, firstly the notifications can be dismissed and they don’t stop users from working.  

Secondly, Dropbox mixes up the messaging format – sometimes using modals, sometimes slide outs, and including a persistent, discreet “Upgrade account” link on-screen at all times.  

Source: Dropbox

By changing the format of the message, Dropbox gets users to reconsider their options each time.  

5. Renewal reminders 

When a customer’s subscription period is due to end, don’t just wait for it to happen.  

Even if you have automatic renewals set up, the end of the contract period is an opportunity to upsell that you shouldn’t ignore.  

Figma upselling model

Source: Figma 

You might think that it’s risky to draw a customer’s attention to the renewal date – you could lose them after all.  

However, provided you have focused on making sure that they realize value throughout their lifetime – and have established yourself as a trustworthy partner in doing so – a reminder is likely to work to your advantage.  

If the value is there, flagging upsell options early will be viewed as helpful – and may well result in more sales. 

On the other hand, if you think you’re going to lose a customer, why not offer a down sell (a shift to a lower tier) as an option they may not be aware of? 

6. Anchor pricing 

Why do so many SaaS companies highlight one of their packages as the “Most Popular” or “Top Pick”? 

It’s down to a psychological principle called price anchoring.  

By highlighting one tier of your product as the norm, and then comparing it to others, you create a scale of comparative value in users’ minds that would have been missing before.  

Micro upselling model

Source: miro.com 

Then, if the price rise between “Team” and “Business” packages is moderate – as in the Miro example shown above – but there are loads of extra functionality – many users may opt for the latter as it appears to represent better value relative to the anchor price. 

Anchoring price expectations can help you to present upsells as offering disproportionate value for money.  

7. Product recommendations  

Product recommendations are big business for eCommerce. Amazon makes 35% of its revenue from cross-selling in this way. 

Source: Amazon

It works for upsells as well.

Offer a few upgraded packages in a modal or slide-out whenever a user’s behavior indicates that they could benefit from it. Keep options limited though – too many choices and it will come across as impersonal and potentially cause “decision paralysis”.  

8. Raise awareness of other use cases in email newsletters 

If a customer uses your product exclusively for one of its features, it can be hard to draw their attention contextually to others.  

So do it in an environment where discoveries and announcements are in context! 

Your email newsletter is a great tool for doing this. By pairing product information with valuable, engaging content, you will expose your users to new aspects of your product that they might not discover in their normal courses of activity.  

9. Re-engage with disengaged users on email 

In-app experiences are ideal for contextual messaging – as long as your users are in your app! 

But what about those who aren’t? 

Then you need email to get in front of them. 

Email can also be the best way to reach semi-active customers who: 

  • Are logging in less frequently 
  • Are using a shrinking range of features  
  • Are spending shorter sessions in-app 

And these emails will be most effective when they are contextually targeted to the customer’s needs and interests, as revealed by their in-app behavior.  

10. A/B test to see which approaches sell more 

Always split test different contextual experiences (e.g. message wording, UI element formats) and trigger points to see which have the biggest impact. 

It’s unwise to test one upsell approach only against the status quo.  

Yes, it may deliver better results – but how much better than that could the results have been? Multiple data points always provide more guidance for future improvements than just one.  

11. Live chat/customer support – when a problem is fixed, go for value addition! 

Contextual upselling can happen anywhere! Even when a customer has had a problem with your product: great service can turn unhappy users into promoters. 

That’s due to a behavioral phenomenon called the Service Recovery Paradox, whereby many users who receive a good resolution to a problem end up more positive about the product than they were before the problem.  

Customer service importance (graphical analysis)

Source: Geretained  

Here is the list of some of the best live chat software available in the market to choose from if you are not already using any.

Now be ready to take advantage of that bump in positivity by having your customer support agents look out for the signs of being ready to upsell (the same ones you’ve programmed into your app and email automation). 

Then, when they successfully resolve a support ticket, they can make the offer directly.  

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If you do not have a clear, well-planned contextual upselling strategy in place to drive account expansion revenue, your business is leaving money on the table. 

By linking up tailored in-app messaging and email to product usage behavioral triggers, it’s possible to automate large parts of the upselling process. 

By presenting the right offers to the right users at the right time, you’ll make it simple and compelling for customers to upgrade. 

Adina Timar

Adina Timar is the head of content at Userpilot, a product growth and adoption platform for SaaS businesses. As a SaaS Product Marketer with a passion for CX she is continuously testing innovative ways of improving the product and user experience that are mutually beneficial for businesses and customers alike.

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