Are you Focusing Enough Time, Energy and Money on Upselling?

By: Taylor McKinley  |  April 28, 2017


The most successful Software-as-a-Service (SaaS) companies today rely heavily on their customer base for growth. They still have a maniacal focus on acquiring new customers, but they also understand their customer base is a gold mine. How much of your new Annual Contract Value (ACV) should come from current customers? A 2016 Pacific Crest survey of over 300 SaaS companies found the median percentage of new ACV generated from existing customers to be 15%. However, the very best companies have even higher rates! Find your revenue range below. If you’re not above the median, keep reading.

% of New ACV Coming from Upsells & Expansions to Existing Customers

This same survey also reiterated what most companies naturally feel but don’t always quantify – it’s much cheaper to close an upsell. The average cost to acquire $1 of new ACV was $1.13, while the cost to upsell $1 into an existing customer was less than 30 cents.

If you’re committed to driving more upsells, here are 3 steps to consider:

Reinvent your onboarding experience

The number one contributor to driving more upsells is a successful onboarding experience. However, most companies have underinvested in this function of the business. Here are a few ideas for how to reinvent your onboarding experience:

  • Start with a dedicated onboarding team. You’re fighting an uphill battle if your onboarding team is a shared resource with customer service.
  • Personalize the onboarding process. Customers want to think you know them and that they’re getting special treatment. If you are selling into multiple verticals, ensure you are making the onboarding process for each one unique and relevant.
  • Focus the onboarding team on sticky features. Know the features that delight your customers and keep them around and make training on these features a core part of the onboarding process. You might even consider incentivizing your onboarding team on adoption of these features.
  • Use a tool like WalkMe, which guides a new user through the app.
  • A/B test multiple experiences to see which one results in greater customer usage. More usage will result in the company wanting to expand the license count.
  • Create a 30/60/90 day follow-up plan with the customer to ensure they’re ramping their use of the product and not hitting roadblocks.
  • Make sure you capture the right information about your customers (What products did they purchase? How many licenses, seats, etc. did they purchase?  What did they pay for those products?  What pain points led to the purchase?). Some of this seems like basic information, but don’t take it for granted that your team has a fool proof process for capturing this data.  Make capturing this data in your CRM part of the definition of a successful onboarding and help your team appreciate why this information is important for future revenue opportunities.

Once you’ve successfully onboarded new customers you’re on the right track. The next major challenge is figuring out who at your company should be responsible for upsells.

Structure your team appropriately

Option 1: Sales Team

(Where this works: Enterprise sales)

In some organizations, the sales team is responsible for both new sales and upsells.  In fact, in Mainsail’s Bootstrapped Survey from 2016, 44% of companies surveyed had Sales responsible for upsells. This setup can be challenging, as closing the first deal is often very different than managing a customer over time to an upsell.  However, it works best in an enterprise sales environment, where each rep owns a small number of accounts and is constantly managing relationships and selling to different business units. In some respects, the first deal is just a way for the sales rep to gain a foothold. Each subsequent deal still involves a complex sales process, involving multiple people and requiring a more consultative selling model. Reps get to know the customer extremely well; rather than transition ownership to another team, it’s best to allow this type of sales rep to continue the relationship and manage the upsell.

  • Accounts per rep: 25-50
  • Compensation: These sales teams are typically compensated the same on upsells as they are on new sales, with commission plans that typically pay 10-13% of first year ACV and have a 50%/50% base/bonus split.

Option 2: Customer Success Team

(Where this works: Selling more of the same product to the same people in small and medium sized businesses(SMB))

Increasingly Customer Success teams are taking on the responsibility of driving upsells. This is a good fit in cases where the upsell involves selling more of the same product to the same buyer, especially in the SMB, where sales cycles can be relatively quick and involve a small number of people. Customer Success Managers (CSMs) typically spend their days tracking a customer’s usage of the product, satisfaction, usage of licenses, and support tickets. They can naturally use this information to identify an upsell opportunity and formulate a quick pitch. Typically, this includes pointing out the value the customer is getting and the potential users that they could add. It’s a straightforward conversation that doesn’t require a long, complicated sales process. In this situation, introducing the sales rep back into the process would only slow things down.

  • Accounts per CSM: 50-250
  • Revenue to manage per CSM: $1-4M
  • Compensation: CSMs are often compensated on net revenue retention (starting revenue – churn + upsells), with an 80/20 base/bonus compensation model. Note that even if this group doesn’t own upsells, they should still be focused on net revenue retention. Good SaaS companies have net revenue retention of over 100%, great SaaS companies can exceed 115%.

Option 3: Dedicated Upsell Team

(Where this works: Selling a new product to the same person or the same product to a new person at small and medium sized businesses)

Some companies build dedicated upsell teams, whose sole purpose is to call into the installed base and sell them more. This is a good fit in SMB sales where you’re selling a new product to the same team or the same product to a different team. Both scenarios require a sales cycle, which includes educating the customer, meeting multiple parties, running demos or evals, and negotiating a deal. You don’t want to distract your customer success managers by having them pulled into a sales process. You also don’t need your more expensive sales team to close these add-on deals.

  • Accounts per rep: 50-200
  • Compensation: Like the sales team, these teams have a 50/50 base/bonus model and their commissions are based on a % of new ACV generated. However, they typically get a smaller % than the sales team, ~7%.

Keep your metrics separate

Many sales forecasts, conversion funnels, win/loss analyses and retrospectives are wildly inaccurate because they combine data from new sales and upsells. New logo sales typically cost more to close, take more time and convert at a lower rate. If you don’t separate new sales and upsells, you’ll get blended metrics that don’t provide insight into your new logos sales funnel or your upsell sales funnel.  Make sure to set different goals in terms of new opportunities, conversion rates, time to close and cost to close.

Successfully driving more upsells can be challenging, but the results are worth the investment. Start with a fresh look at your onboarding process, identify the right team to focus on upsells, and make sure you are tracking the right metrics. Good luck!


This piece represents the opinions of Mainsail and the statements contained herein that are not historical facts are forward-looking statements. The opinions and forward-looking statements are based on current expectations, beliefs, assumptions, estimates, and projections about the industry and markets. Opinions and forward-looking statements contained herein are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Mainsail Partners is under no obligation, and does not intend, to update any forward-looking statements to reflect changes in the underlying assumptions or factors, new information, future events, or other changes.

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Taylor is a Partner at Mainsail Partners and works with Mainsail’s portfolio companies to drive improvements in product management, customer success, and engineering.
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