055. Upselling and Cross-Selling for B2B

Foreign. Hello everyone, this is Emilio Garcia. Welcome to another episode of Demand Gen Studio. With me, as always is Gabby Garcia. How are you, Gavi?

Hi Emilio. Feel fine. How are you?

Good, good. I hope everyone listening is having a great, great day. Today we are going have a conversation about upselling and cross selling for B2B companies. As you know, we usually on Demand Gen Studio we cover topics related to more of the attracting or brand awareness kind of topics, even conversions and acquisition. But I think it's important to also pay attention to the definitely smaller but relevant cohort of people that is your customers. And, and so I think the understanding the impact that upselling and cross selling can have on the revenue and sales velocity of your company, it is really, really important. So that's, that will be the topic for today. I don't know if before we start, Gabby, you have any comments?

Yeah, I think that the topic that we're going to discuss today is really important because of the advantage that it has on the, on the B2B market market today. And I guess that we are going to discuss each one but I want to introduce the people, get a con context on it. And we know that today's landscape as we call it on B2B is really, really competitive. And upselling and cross selling are ways to. Let's just say that integrate some of the strategies that we already have and use them as a. As an advantage of, of your business for getting more customers. Not, not more customers for getting, for building that last relationship with those customers and obviously make it more effective on the revenue part. Right. So this is the main attractive of the upsell and cross selling strategies that we're gonna discuss today. So I wanna, I wanna share that.

Yeah. So let's just start right away with. It might be obvious for some of you or most of you, but for those of you that don't have a clear understanding, defining or understanding the meaning of upselling and cross selling, I will use a product because it is typically something that happened more for the B2B World on products. But it happens definitely on services as well, not just products. So let us imagine for example HubSpot. As you know, we are a partner agency and they have a great structure for upselling cross selling their products. So upselling is within a product category, a version of it that has more capabilities. So for example in the case of HubSpot they have different hubs and they sell them separately. And so you have the marketing hub which is all the marketing tools and you have the sales hub which is all the tools that a sales team might need. And you have the service hub which is customer success and forth, so forth. So they have three levels for each of their hubs. One, the first one is obviously free and the next stage is something called starter. And then you have professional and finally you have end to end price. And the idea is that some people will start on the free version just to get a sense of the tool. Typically they progress to stutter if they don't have super big needs. But. But the core functionality that make it work very very well is usually at the professional level. And enterprise is usually reserved for customers that as the name says, have a lot of organization that is larger than 1,000 employees typically. Right. There are some cases where you have different shares that might justify to move up, but typically it's for larger organizations and that will be upselling. Right. If I'm. If your clients are using the first tier of your service and they move the second tier or third, they usually increase the amount of revenue that they bring to the company and you will be upselling. Now cross selling is if you have marketers that are using your product and there's also a sales team that is in need of a CRM then they might be interested on sales hub and you will be selling to maybe a different group of people, but it will be the same account. So that will be cross selling. And obviously you can have both of them at the same time. Right. Maybe for an organization if you, the customer unlocks value, they might evaluate buying a higher tier of the product that they have and more of the business lines or products that you offer. Right. So those are. That is generally the idea behind it.

I will make it more conceptual because I know that it might be really, really, let's just say that descriptive about it. But I will say that upselling it's like the practice of encouraging existing customers to upgrade or purchase a more advanced like premium or higher price version of your product or your. Or your service that they are already using. Like you said, like if you go for, for the starter to the most valuable one on the most expensive one, let's just say on your, on your company. And for instance if. Let's just say that it's a software company or other basic type of things that you can use like I don't know, like a basic package that you have and then they might upsell customer to a more comprehensive enterprise level like you say or enter or level plan that then they can upgrade it to. And for the cross selling I will say that it's another, like you say, another. Another way to sell involves suggesting the complementary products or services that the ones that they already have or the customer have and they already purchased. In the B2B context, this could mean that you can offer consulting services along software like you said, over accommodating additional IT hardware to complement obviously a server compliment purchase.

Right.

So that, that would be like the, the concept of it. And I know that there's some ways that we can illustrate this, but like you already did perfectly. And I would just say that this, this strategies that we can use within the B2B market market are really helpful and value, they add value to their customers and that's, that's the main point to this. Add more value to that customer so you can change that relationship that you have with them.

Yes, yes. So I think that's a great way to describe it and hopefully you have a better idea of what is cross selling and upselling. But obviously the next question will be where are the benefits? There's a very clear one, something that is being talked about a lot which is it is way more expensive to acquire a new customer than to retain an existing one. And that is, that is important because if you want to increase the revenue or grow the revenue of your company, technically you can go for both routes. You can try to upsell cross sell existing clients or customers or you can just go and acquire more of them. Right. At the same, at the same level. But the challenge will be the return, right? Is if you go and acquire more, they will be more expensive to acquire than to try to not just retain but cross sell and upsell an existing client. So one of the benefits is that you have someone that already got in, into your ecosystem and it probably is going to be easier to expand them to expand their consumption if they're happy with the product or service. Right? That is the big caveat. That's something that you don't have for the. For new clients that are acquiring, they have no idea what is to work with you if they have never done it before. That's one big reason. The second one is that usually upselling and cross selling allows you to tier your features or your expertise in the case of services, right. So we have seen all that, right. That the. It is true that enterprise versions or higher tiers of products and services usually have a more sophisticated situation that justify them. Like this enterprise products usually is because the company is larger and therefore needs more support and more users. But sometimes it's just the features finding on products where a brand New feature, something that took a lot of time on development, will be offered at the highest tier because that's where you can put the cost of the development of that new feature across. You know, these clients are paying more and as the cost is being amortized over time then you can lower it down and keep adding to the lower tiers to keep providing value. As you were saying, Gabby. Right. So it's a little bit easier on products because the investment is done at the beginning and after that the, the fixed cost is very low so you can move features down and using again HubSpot as an example. That happens all the time. They added some features on enterprise and professional and eventually they are moving them down into starter and even three. Right. So right now, for example, their CMS offer is free, it's limited to 25 pages. But you know, you get a website.

Builder for free, which is something that democracy have.

And if you want to expand on that, then you go and buy more. So you keep adding at the lowest year more and more value that have been amortized by the, by the users that are, you know, willing to pay a little bit more because they can this larger organization. So that's the other great thing about it. And obviously the other thing is that it's so the, the focusing on understanding the needs of your current clients or, or buyers allow you to discover what is the next product line that you need to develop and that will build the cross selling opportunities. And again, drawing into HubSpot, they started on marketing, but as they provided, you know, support and service for marketers, they obviously had in mind or discovered that marketers usually work with the sales team and they work with the customer success team. So it is, it makes sense to expand the ecosystem to all the departments that are client facing. Right. Because they share the same problems or similar problems. It's just that the client is at different stages, right? Prospect, potential buyer opportunity and finally a customer. So they could learn from their experience on Marketing Hub what they needed to do on Sales Hub eventually Customer Success Hub or service Hub. And so that's the other benefit that focusing on cross selling opportunities will allow you to increase the opportunities or products that you develop and obviously increase the range of products and services that you offer to any given client.

Those are perfectly well done explained benefits for businesses and we got the other hand for the customers, right. Which I have three at least in chains, the solutions. Right. You already mentioned that customers can benefit from more comprehensive solutions that better address obviously their needs and challenges as they might develop. Whether it is to an upgrade like you said, or for a product or a complimentary service. And this will give them great value for their investment, right? Which is the thing that they will want to obtain from you. Another one is a time saving cross selling in particular customers tons of time, right. From their investment. Like this is a regular thing providing them with one stop shop for all the things that they are related or needed. Right. And this, this will convenient for them in a highly value obviously relationship for B2B type of process. And the other one is the tailor solutions which are for the upselling and the cross selling. You done this, right? These are based on a deep understanding that the customers have unique requirements. And when you did you do this correctly, the personalization ensures that the customers will receive offers that are obviously relevant and that adds again value to them. So that's something that I want to mention too. Those are for the customers, what can they obtain or what are the benefits for the customers from the upsell and in cross settings?

Yeah. Now it begs the question then, if we understand what upsell and cross selling is and the benefits is, how do you set it up? Right? Where are the strategies to provide value and find the people that it makes sense to start working on? And here is an area where definitely you need those insights and that customization or personalization so you can better offer cross selling and upselling opportunities for your clients. It varies depending on what you offer. Obviously the industry that has managed this the best in my view is SaaS. Right. Fortunately for SaaS products you have the product itself is an application usually or a web service where in the backend the engineers can see usage, they can see where are the parts of the platform that are being used most, the areas where customers are consuming the most. Right. So again going into HubSpot and I can use other services, but you can see the economic drivers, which might be the number of contacts that you have on the database, the number of people that are using the platform, what parts of your system are used the most. And so if you combine all that data, you will see where people is finding value and in that way trigger moments where you want to, you want to offer, you know, the next level. For example, if you are offering integration.

With three or four tools and a current client is already using three of them, and your next year uploads, you know, allows you to have access to 12, then that will be a good moment to start talking about you want to move into the next level. Or similarly they are using parts or features that are related to another product. That you offer, then you can start a company. I think in general the point will be to look at how your clients are using your product as much as possible. Both passively, if you want to call it that way you can use it. And actively looking for opportunities to understand how they use their product. Typically on customer or scenarios or events. That's where for example in servicers makes more sense. You will find that the companies are best at this, take every opportunity when they have a conversation with a customer to help them solve their problem and.

At the same time discover if they are happy with the service and if they are happy with the service, talked about the new things they are offering. Because most people are not aware, right? Your customers are not aware of all the things that you are working on or offering or growing. So the best example that I have quite a way is telecommunications, right? If you do it right, you will discover user is consuming a lot of data, is having a lot of devices. The next time that they call you to solve a problem, especially if you have a great experience, right? That is the one prerequisite. Then you should ask, well, are you happy with your package? Do you want to move to, I don't know, 100 megas to 1 gig of data? Are you interested on, you know, security protection or cybersecurity or something like that? So choosing moments and opportunities where you're engaging with the customer that makes sense on the service side are also ways that you can drive those upselling cross selling opportunities. It is not definitely something that you should leave to just chance. Definitely you need to build processes for that, set up a scenarios on the things that happen the most and what will be a likely buyer and a likely product consumption that will justify it. No different from your marketing efforts for prospects, right? You need to identify the type of accounts are happy, the type of buyers that would make the choice. The only layer on top of this is the the actual usage of your product. That's something that for prospects is not necessarily relevant because they have a bot. But for for cross selling and upselling opportunities that will be the extra criteria. And in the case of products that have a lot of technology behind you can just source the data directly. In the case of services where you don't have that much of information, maybe surveys or conversations asking how the the client feels about the product or service and potential needs will be the way that you find out if it's a good opportunity to upsell or cross sell.

That's really important. Obviously the the upsell and cross selling is really centric approach and a customer centric approach and highly let's just say and one of those like the data instances you can, you can actually use is that customer feedback. And it's really important because we have seen, I've seen that, I have seen you doing that which is actively seek and incorporate that customer feedback into your strategies will help you to provide obviously value and insights to what the customers are looking for. And, and you can, you can cover or uncover upselling and cross selling opportunities tailored to that. Like you might have, you have my missed at the, at the beginning of their relationship with that customer. You will might get it at the, at the end like when you have already completed, let's just say contract with them or the time that you have with them and you will find another opportunity to increase or upgrade that even cross selling or those upselling opportunities that you might have for them. And it's really important to ask obviously them what are these opportunities to obtain that feedback from them. And I guess that is really important aspect that you have to cover.

Yeah.

Now I want to shift into combining two ideas, right? The automation opportunities plus the challenges that are interrelated. So yes, you can build automation here. It is easier to do for products that are used in the form of an app or a web application. Again the way that I have seen it is it's a combination of getting feedback specifically for a specific part of the of the platform. Right. You're using a new feature or something that is, you are evaluating if it's a good entry point for an upselling opportunity. Right away you ask are you happy with this feature? Right. And simple, sad, neutral happy about it and some comments will give you insights. But once you use that, if, if a group of users are in that part of the feature or the platform a lot of times and actively using then you can trigger for example a message or an email or a phone call to evaluate if they are interested on increasing their, their use of the product for services is not as easy. Again, it will depend right on the moments that you can pick to make that upselling cross selling. One example that I have is that what the, what the hotel industry typically does, I.e. or when the travel experience typically does, which is after you take that trip, after you stay in that hotel, after you take the flight, that's the best moment. If they had a good experience, that's the best moment to upsell and cross sell them about the other things that you do. The experience is fresh on them. At other moments it's also possible but that's a great moment to take advantage of it. So for services, typically when your client is the happiest, which is after the onboarding process, is when it's a great opportunity to talk about what else can.

We do for you.

Right. So there are definitely opportunities there. Now the, the challenges and pitfalls of it is that first, that automation should not be triggered if there's not usage behind it. Right. Because then it will be tone deaf. It's well, why are you upselling me if I'm not even using that feature? Second, especially for services, is that you need to wait for that onboarding experience to happen. Right. So you saw me about this initial implementation of the service, have a clear understanding of what will be success for you and for your client or for your customer. Right. So maybe the first three months and maybe some quick wins and some internal recognition. We say all the time that for our clients, for our marketer professionals, the ones that we work with, I want to hear them telling us how their bosses are happy at what we are we are doing. That is the stamp that tell me we are doing a great job here and now we have earned the trust to talk about what else can we do for you. Until that happen, it will not be advisable to talk about increased business and our opportunity. You have to prove yourself first that yes, your user is happy, but second, usually that the boss of that user is happy as well because typically is the one that is authorizing the spending. Right. So in services happens the same. Someone offers you a services, you want to have that experience initially and after that, after they have expressed that they're happy about it, then you open the opportunities and that's the biggest, you know, challenge that you might have that you're trying to automate before you deliver value. As you were saying, Gabby, at the end of the day, yes, you want to increase your revenue, but also you want to provide value to your customers and that's the way that it should be done. Yeah.

Obviously the poor timing of relevance are important into this and one or another one that I could find there, it's.

The.

Neglecting the post sale engagement. I think that we already saw it, right. Which might be that many focus, many businesses focus only on upselling and cross selling during the initial state or state of their process. With, with a customer neglecting obviously the post sale opportunities that you might have or you might encounter a solution to that would be that you have to continue to, let's just say, engage with customers after the initial purchase and monitor the usage of the of that product or service know if they're satisfied with it proactively suggest relevant upgrades or additional services that you you can actually have on online and they might need to evolve obviously that that relationship and obviously regularly communicate those updates and offerings to to your customer. Right. So I think that's another one that not no not because you already did a let's just say sell with that customer. You might just not focus on the other things that come ahead.

Yeah, well I think we have covered a lot. Hopefully everybody found value on this one. I really like it. Thank you Gabby. All that is left to say is tune in for the next episode. We will continue to bring in more topics around B2B. Feel free to reach out and tell us if there's anything that you want to hear from us and yeah, don't miss the next one. Thank you Gabby.

See you Emilio. See you everyone.