Cross-Selling and Up-Selling: Powerful ways to massively increase SaaS profitability

¹ But these are not the only commercial merits of customer loyalty for software publishers: because not only does the length of the subscription determine the level of profitability of the service, but its effect can be literally multiplied, by relying on two commercial weapons that have proven themselves: Up Selling and Cross Selling.

Sales representatives, the new champions of customer loyalty

Let's first quickly revisit the evolution of the sales role since the advent of the SaaS model. As we've seen in our previous articles, the function of salespeople has considerably evolved in recent years:

• Marketing and customer service (via sponsorship operations) now provide them with the majority of leads, and even nurture them to bring them to maturity.
• Above all, their role no longer stops at the point of sale of the solution, and now extends far beyond!

Extending the traditional 'sales funnel', we could now add a second, inverted funnel: that of amplifying, at the customer's end, the revenue generated by the sale of the subscription, by activating a key lever: development within the account itself.

In other words, salespeople have become the new champions of customer loyalty!

Or more precisely, the effective commercial use of the work done to ensure the solution's long-term success with the client, largely carried out by Customer Success Managers with the support of the Support team. To achieve this, they have two main tools at their disposal: Cross-Selling and Up-Selling.

Cross Selling and Up Selling : The 2 sides of the gold medal

Regardless of the sector, the business model of software vendors is now very often based on the following pricing method:

Monthly subscription cost (per user) x Number of users of the solution

For a publisher, there are therefore two levers to improve the revenue generated with a client:

1. An "Add-Ons" type of logic: adding new functionalities outside the initial scope

Then we will talk about CROSS SELLING.

 For example, a ticketing software publisher can offer, beyond the "standard" ticketing administration functionalities (reservations, multi-rate management, ticket issuing, etc.), optional modules covering ancillary functionalities, such as Marketing (sending SMS or emails to customers, for example) or CRM (management and tracking of customer data).

This allows them to expand the number of potential users of their solution at their client's site, here from the reception/ticketing team to the teams: sales, marketing, and even administrative.

2. An "Upgrade" type of logic : adding options or superior functionalities within the same scope.

Then we will talk about UP SELLING.

 To stay within the context of a ticketing management solution, the publisher will offer, for example, the management of pre-sales via a network of external distributors, multi-channel sales management, or the issuing of dematerialized tickets on mobile devices. In the context of a marketing emailing platform, this could involve specific functionalities (automated scenario) or simply managing a larger sending base (higher number of contacts).

This allows the publisher to increase the subscription price, and thus generate higher revenue with a constant number of users.

In the first case, it is therefore about extending the scope covered by the solution.

In the second case, it involves offering more advanced services (increasing the depth of the offer, in a way) within the current scope. In both cases, this requires the ability to offer modules or functionalities that complement those already in place.

With a strong focus on identifying strategic functionalities that will resonate with customers and open doors to new markets. 

 A point of vigilance, strategically: it's up to you to properly assess your ability to 'step outside' your core business and correctly meet customer requirements for less familiar functionalities! This requires defining and implementing an appropriate strategy: internalizing skills or partnering with an expert player/publisher, for example.

If this aspect is well managed, the impact of this customer capitalization on your MRR² and the resulting competitive advantage can prove decisive. More than ever, customer loyalty has therefore become a commercial function in its own right!

1: Read our article on this topic:

Define the right business model : the great challenge for software vendors !

 

2 : For "Monthly Recurring Revenue"