How to Upsell to SaaS Freemium Users: 9 Proven Tactics
Have you ever let a salesperson convince you of adding some kind of “add-on” to your order?
Like what a little-known company by the name of McDonald’s does when you order food .
They say something like “Do you want to supersize your Big Mac?”
Well, the other day, that happened to me (but not with a Happy Meal)..
I was really excited to buy my new car.
I got the APR I sought. Even the paint job I wanted. And I was ready to sign when…
…it happened…
The finance manager handed me over a little pamphlet detailing all the “added benefits” of my purchase for “just $7 more per month.”
But hey, $7 sounds like not a lot. The problem is it adds up over time.
Admittedly, he actually convinced me to go for it.
And for that, I tip my hat.
He had officially upsold me.
You see, upselling is a technique where you entice a customer to buy more.
And you can do this by providing upgrades, expensive items, or other add-ons to their purchase to increase the dollar amount of the entire purchase.
And when you do it correctly, it can be a real game-changer for your SaaS business. Especially when you have freemium users…
But it’s easy to do it wrong too (and hurt your brand).
That’s why I’m sharing this resource with you today. To tell you:
- How upselling lets you boost your average customer value and maximize your profit per sale.
- 9 proven tactics you can use for upselling to your SaaS freemium and/or trial users.
- And examples of SaaS companies using these upselling tactics so that you can copy them and see sales conversions grow.
Whether you follow upselling tactics to SaaS freemium users, or techniques for upselling, you’ll see a major spike in your sales conversions.
Now let’s review this first…
Important Background on SaaS Upselling...
As a SaaS company, you should be looking for any way to get new people into your brand ecosystem.
And it’s a lot easier to sell to existing customers than it is to acquire new ones.
By offering a free trial or a freemium version, you lock people in.
That’s the hook.
Over time, they start to crave more.
Then that’s when they’ll upgrade.
According to Invesp, 65.5% of SaaS companies offer a free trial or demo.
Meanwhile, just 12% offer a freemium plan.
But offering a free trial or a freemium version of your product or service opens things up.
It allows users to see what you have to offer.
And the rewards outweigh the risks.
Say you have 1 million users.
You only need a small percentage of them to become paying customers to make it all worthwhile.
To put things into perspective, Jason Cohen of A Smart Bear claims Dropbox has about a 4% conversion rate.
And Dropbox is considered an enormous success!
For the average conversion rate for SaaS freemium models, it ranges all over the place.
Although Dropbox is just 4%, other companies like Slack see a 30% conversion rate, as reported by Nir and Far.
It really isn’t set in stone.
As for the free trial conversion rate average, customer growth expert Lincoln Murphy suggests about 25%.
Again, these are just rough estimates.
Hopefully, yours is even higher.
So let’s finally dig into the first tactic for effective freemium upselling.
#1 Tactic to Nail Your SaaS Freemium Upsell: Reach Out to New Customers With an Onboarding Email Sequence
Email is one of the most effective marketing strategies you can use.
According to Litmus, you can expect a 4,200% ROI.
So if you’re looking to make a freemium upsell, you better follow up with new sign-ups on email.
You see, they signed up for your free plan for a reason. They’re still hesitant.
This is the time to provide value.
Nicepage does a good job of doing this.
After a few nurturing emails, Nicepage sent me a 50%-off discount email.
With the discount, it makes the customer much less hesitant.
Now a paid plan doesn’t seem as high risk.
Moreover, Nicepage is using FOMO with the “Next 3 days only!”
A lot of people experience FOMO, especially millennials.
Ticketmaster used time-sensitive FOMO to increase its conversion rate by 7.6%.
#2 Tactic to Nail Your SaaS Freemium Upsell: Set Triggered Milestones & Follow Up
Another way to nail the freemium upsell is by following up with your free users when they reach a point where they might need an upgrade.
This could mean your users approach their allotment for the number of videos they’re allowed to edit with your app.
Or it might mean a user tried using a premium feature.
You see, you want to be there to remind them about your superior offer at the right time.
Consumers don’t want to hear from you with random spam messages.
According to Epsilon, 65% of consumers are tired of irrelevant brand communications.
Take team management platform, Asana, for example.
When your team reaches the max number of teammates allowed under your plan, Asana sends an email reminder.
#3 Tactic to Nail Your SaaS Freemium Upsell: Make the Long-Term Commitment More Attractive
With a subscription-based business model, your main objective is to cut down your churn rate.
According to Recurly Research, the average churn rate for SaaS companies is 4.79%.
Not bad compared to other industries.
But you can always improve it.
When it’s time for your free users to start thinking about an upgrade, price will be a key factor.
As reported by LoSaaso, 27% of B2B buyers are influenced by price points.
So one way to make your service more price friendly is through a discount for long-term commitments.
In other words, make your yearly package cheaper than your monthly package.
Canva is a perfect example of using this tactic.
If a user were to pay monthly for the Pro plan, that would cost $155.88 per year.
But an upfront commitment to the year only costs $119.20.
#4 Tactic to Nail Your SaaS Freemium Upsell: Offer a Live Demo
What better way to convert your freemium users into paying customers than by showing off all your features?
By presenting a live demo, you can walk your users through all the added features that go along with an upgrade.
HubSpot uses demos to show its potential paying customers what they can expect from a paid plan.
With an in-depth rundown, free users can see how great your premium features are.
A live demo also adds that human touch to the sales process too.
And it’s a chance to make more of an impact on your existing freemium users than other tactics might allow you to.
According to Neil Patel, a demo can boost your conversions by as much as 85%.
#5 Tactic to Nail Your SaaS Freemium Upsell: Share a Customer Success Story or Case Study That Used Your Premium Services
According to Demand Gen Report, 79% of B2B buyers cite case studies as an influential factor in purchasing decisions.
That means your SaaS business must make sure its free users know about your customer success stories if you want to make that freemium upsell.
And try to make it as relevant as possible.
Is your free user in the IT industry?
Let them know how your premium services solved a business problem for an IT client.
Communicating your success stories can be done through email, phone calls, demos, or wherever else your brand and customers communicate.
#6 Tactic to Nail Your SaaS Freemium Upsell: Make Sure Your Free Users Get Maximum Early Value
As you might suspect, early value is crucial for a freemium business model.
Because this will decide how free users will perceive your SaaS company’s worth to them.
So if you notice that they’re neglecting certain free features, reach out to them.
Something like, “We’ve noticed that you haven’t been using our audience segmentation feature.”
See, you’re ensuring that your free users understand your offerings.
Another way to add value is through content.
According to SEO and content marketing platform, Conductor, consumers are 131% more likely to make a purchase after reading educational content.
ActiveCampaign uses this freemium upselling tactic with its “University.”
Through guides, tutorials, documents, and articles, users receive more value.
And it can be an easy reference for when free users have questions.
#7 Tactic to Nail Your SaaS Freemium Upsell: In-App Selling
If your SaaS company has a desktop or mobile app, you should be promoting your paid features whenever possible, without being annoying.
For example, instead of removing premium features, leave them there.
That way, if a user clicks on a premium feature, they’ll see a popup with a CTA to upgrade.
As you can infer, the idea is to allow freemium users to compare and contrast between the free plan and a hypothetical paid one.
Slack does this in a subtle way.
If users try searching for something in the chat history, Slack will notify them that a portion of the results will be hidden due to a limitation in their plan.
#8 Tactic to Nail Your SaaS Freemium Upsell: Segment Your Free Users
Segmenting your customers, as you may already know, has incredible benefits for business.
And according to software company, Braze, segmented marketing campaigns can result in a 200% increase in conversions.
For freemium upselling, this obviously means your first step is to create a customer segment that consists of free users.
But then you need to dig deeper.
This is where data such as firmographics, demographics, geography, and user behavior are important.
For firmographic segmentation, this could mean you create a segment for each industry you serve and the size of their companies.
With that, you can deliver more personalized upselling recommendations.
And you’ll be getting on their good side.
According to Accenture, personalization is something that 73% of B2B buyers expect.
Or you could go even further by monitoring what features the customer uses most frequently.
Knowing that, you can tell the customer all about how much better that particular feature would be with an upgrade.
#9 Tactic to Nail Your SaaS Freemium Upsell: Offer Better Customer Support With Premium
If your prospects are on the fence about upgrading, tell them about the superior customer experience that other SaaS companies can't match.
According to Deloitte, B2B buyers are 34% more likely to buy and 32% more likely to renew a contract if you deliver excellent customer service.
And they just might be willing to upgrade for better customer service.
As an example, cloud-based sales solution AeroLeads, reserves top-tier customer support for paid users—through chat, email, and phone.
“Support is now becoming part of the software, so by offering additional layers of support for paid users, you can make serious free users move to paid plans”
— Pushkar Gaikwad, founder of AeroLeads
Besides including the customer service perks in your plans’ landing pages, you could also include it in your sales calls, email outreach, and in your social selling strategy.
And if you are trying to upsell a free trial user, you can do what AeroLeads does and deliver near instantaneous replies to any inquiries so that trial users can trust the brand.
Conclusion
Today, I’ve outlined 9 tactics you can use to make your SaaS freemium upsell.
That way, your customers are ready to take the next step.
With these best practices, you'll start seeing your free users turn into long-term paying customers.
From onboarding new users to adding premium features, there’s plenty of ways to make sure your paid subscriptions are as enticing as possible.
But the first step to this process is acquiring your free users in the first place.
That’s why it’s important to talk with us today about AutoGrow—and how we can increase your SaaS's user base through innovative marketing solutions.
With us, you’ll see better SaaS upselling conversions in no time.
So tell me, which tactic did we not mention but should’ve?
Let me know in the comments below.
Keep AutoGrowin’, stay focused.
Mark
