How to upsell your users to maximize revenue
A deep dive into how B2B SaaS company Mural.co upsells their customers and expands their MRR.
Every major tech company, including Slack, Hubspot, Adobe, Dropbox and Shopify have prioritized upselling every square inch of their product. But surprisingly, we haven’t seen a great framework for how to think about this work. Until now.
Today, we're diving into what is the right way to upsell your customers and how it can supercharge revenue growth.
Guest author Murali Kundasi shares his home-grown Upsell framework. Murali’s background is: Group PM @ Mural and has been within the product space for 10+ years. For more from Murali, make sure to follow him on LinkedIn.
Terms to know:
Customer Journey: The stages of your user’s journey are awareness , evaluation, purchasing, onboarding, continuous usage, expansion, and renewal or upsell.
Category Defining New Products: refers to innovative software solutions that create or redefine a market segment and how a customer solves a problem - i.e. using AI to auto reply to your messages in slack.
Reverse Free Trial: The reverse trial pricing model puts free or lower tiered users in a timed free trial (usually 14 to 30 days) with access to all paid capabilities. Once the trial ends, they revert to their original plan with limited features.
Upgrade / Cross Sell: selling higher-tiered services or additional products to existing customers, in turn increasing the customer's value and the company's revenue.
Follow this five-step process to maximize your upsell rate:
Map each feature to the right gating mechanism
Create your plans to match with your GTM strategy and customer journey
Identify the right moments to upgrade and the channels to upgrade
Identify the right upsell experience to increase desirability
Reduce friction to maximize your upsell rate
Understanding your customer journey:
Prior to diving into this, some of the pre-requirements to apply this framework are:
Knowing your GTM (Go-To-Market) (Only offer Annual Plans for larger firms, Offering free trials to smaller firms, etc.)
You know your user personas / needs (solo entrepreneur, the IT department, the networker, etc.)
You have different tiers of pricing and packaging to cross sell them into
To showcase how to apply this framework we will be walking through how Mural.co has leveraged it:
Mural.co is a digital workspace for visual collaboration that enables teams to brainstorm, plan, and manage projects effectively using interactive, digital whiteboards.
Let's start off by mapping out Mural’s user personas
Single User
Small Teams
Head of Teams (Marketing, etc.) or departments
Enterprise
Step #1: Group your features into 3 gating mechanisms
Murali identified 3 key gating categories to group Mural’s features: Usage Based, Availability, and Depth of Capabilities.
Usage Based: Features that are integral to the core product value, hard to explain, have a cost to the business (AI) or it’s a feature that is brand new to a new market or category. As these features are hard to explain - a “show and tell” approach is required to maximize your upsell rate.
For example the end user can’t grasp the value of Mural whiteboards without actually playing around with it. You will want to cap these features and give them a “taste” of the value prior to upselling them.
Examples:
Cap the # of whiteboards you can create in Mural
Number of workspaces you can create within Mural account
Minutes available in the Free zoom call
Availability: Easily explainable features that are visually compelling and are industry standard often fall under this umbrella. As these features are easy to explain it’s more about figuring out if and when they will adopt it or not and how much value it is providing to the end user. Most of these features have standard offerings and are well understood in the market. As the value is unlocked only when they use the feature, leveraging a reverse trial will optimize your conversion rate.
Examples:
SSO functionality to drive enterprise adoption
2 factor authentication and audit logs
Depth of Capabilities: In this case, users already have a baseline understanding of the value the feature provides so you’re just upselling them to a more advanced version of what they’re already using. Locking this functionality and not providing value prior to upgrade will work to maximize upgrade rates because the user has already seen the value with the base feature. Breaking down features by basic and advanced versions gives flexibility in packaging the features to drive this specific growth lever. E.g. Slack includes both advanced and basic admin controls in all its plans because allowing anyone to invite team members is crucial for its growth. This approach ensures that admin restrictions do not hinder the spread of Slack in lower-tier plans.
Examples:
Rooms to organize and store Mural have two levels - Public or Private
* Mural pricing page
Grammarly app actions that are limited in free vs unlimited in paid plans.
Grammarly Pricing page
Step #2: Define the plans to match with your GTM strategy and customer journey
The below framework helps define the plans using the right gating mechanism.
Phase 1: Focus on product usage in the early stage of the customer journey
In the initial phase, our goal is to boost awareness and retain new users and we do that by enabling features that drive adoption in the free plan. Usage is the preferred gating mechanism because users derive immediate value from using the product, which not only enhances user engagement but also amplifies product awareness—a crucial goal in this stage. When usage is not possible, depth of capabilities is used because it allows the user to use the base functionality of each feature and engage in core actions. Availability is least preferred as it limits the awareness and availability of features to users.
Phase 2: Focus on driving virality
Features that drive virality is prioritized in this stage. Virality is defined as user growth (# of user sign-ups per week / per month). Depth of capabilities and availability are the preferred gating mechanisms for features that drive virality because they allow admins to spread the word to their team and others when they reach an “aha” moment (invitations, permissioning, etc.). E.g. Slack admin permission has limited functionality in lower tier plans to avoid the admin from limiting virality early in the customer’s journey.
Phase 3: Focus on expansion
Features that drive additional use cases to increase stickiness are prioritized in this stage. This is similar to phase 1 with a focus on driving usage of non core features. Based on the features, any of the gating mechanisms can work. E.g. All integrations are available in high tier plans of Slack, Figma and Mural to support workflow creation whereas AI is usage based as there is cost to offer AI services.
Phase 4: Focus on scale and controls for enterprise admin
At this stage the target user persona changes from the end user to the buyer and most of the features are to help IT admins scale or manage the product as part of their enterprise toolkit. Most often this is your top tier plan and has all the bells and whistles you can pack in the product.
Once you’ve identified the right gating mechanism per feature then enforce your entitlements to ensure your users only get the specified access based on their subscription plan.
Step #3: Identify the right moments to upgrade and the channels to upgrade.
When and how to upgrade your user depends on the customer journey, engagement levels and gating mechanism used in the plans. In general, the right upgrade moment is when the user is deriving maximum value from the product on a specific plan and is highly engaged.
For usage based, it is when the user is close to the usage limit. E.g. Mural displays the usage of Murals and upgrade prompts as the user is close to exhausting their free murals.
The upgrade moment for availability features is based on their customer journey. Eg. SSO upgrade prompts work better when the workspace memberships are rapidly increasing and the user has reached double digit memberships.
For depth of functionality, it is based on their engagement and usage of the base features. E.g. Mural upsells private rooms when the user is creating public rooms.
If the user is more engaged and is at the early stage of the customer journey, low friction channels like self-serve make sense vs. if the user is not engaged and at the later stages of the customer journey, sending them to a human assisted flow will maximize conversion rate. Sales assisted or sales driven channels are best suited at the later stages of the customer journey as the needs are complex and involves multiple user personas - end user, IT admin and buyer.
Step #4: Identify the right upsell experience to increase desirability
Even with the right upgrade moment, the user may not upgrade right way but having the right upsell experience drives the desirability to upgrade.
Category defining new products (0-1 Features) tend to see high adoption from your early adopters but will not be adopted by the masses without the right education. To increase the desirability for mass adoption, additional education is needed with links to the webinars, video recordings or support articles. E.g. Slack AI uses case study and ROI estimates to inform users the value of their add on.
As a product gets commoditized and well understood, less education is needed. E.g. Showing a simple plan comparison page with the listed features is sufficient. E.g. Mural has a simplified plan selection page as the whiteboard market is mature.
The general guidelines is to educate the upsell value when the product category is new and not mature. However, as the product gets mature and commoditized, focusing on showing why your product is more valuable than other products in the market ends up being more crucial i.e. Discounts or social proof.
Step #5: Reduce the friction to purchase
Once the user is ready to purchase, make the purchasing experience as easy as possible. E.g. Mural updated its check out flow from 4 screens to 1 screen where the user doesn’t need to switch screens to select the plan type, memberships or payment methods.
Most product teams can easily optimize this stage with an off the shelf solutions like stripe checkout.
There was a time when the core of a PM's job description was primarily focused on shipping great products.
Now, the emphasis is on creating impact and driving outcomes. As markets have become more competitive, the focus on increasing revenue and hitting goals becomes even more crucial to your career progression.
If you’re interested in joining our free workshop that focuses on how to level up your revenue impact as a PM, fill out this google form: https://forms.gle/PRGtcuLUv5FTgxU89