Upselling for subscription businesses

Ask most experienced entrepreneurs and business owners their secret to success, and they’ll tell you that isn’t grabbing new customers off the street. Instead, it is upselling your existing ones.

But what is upselling? And how can you upsell your current subscription services to make more money? Read on to find out.

What is upselling?

Upselling is a marketing strategy designed to encourage customers to buy more expensive “premium” or “feature-rich” services. These products are often higher-margin than standard offerings and provide fatter profits. Many online businesses combine upselling with cross-selling techniques by offering add-ons to increase the total value of the order.

In the context of a subscription-based pricing model, upselling means transitioning customers from entry-level recurring fees to more expensive subscriptions that provide additional useful features.

Upselling is essential for a couple of reasons. First, it increases the lifetime value of each customer to the firm, improving the return on their marketing efforts. And second, it helps you to form deeper, longer-lasting relationships with your customers.

How to upsell products and services in your subscription business

So, with that said, let’s take a look at some of the techniques that you can use to upsell products and services in your subscription business.

Identify customers who would benefit from additional services

Upselling isn’t about playing a sleazy game where you place customers on teaser rates and then sell them on your actual products later on. Instead, it is about finding individuals who genuinely stand to benefit from additional services.

The primary purpose of upselling is to show a client how he or she might benefit by going onto a higher subscription tier.

Thus, if you sell to B2B companies, you’ll want to focus on the cost-benefit from making the switch. For consumer-facing subscription services, you’ll want to focus on things like convenience, enjoyment and functionality to make the value proposition clear.

Provide immediate value, then offer more

By far the best way to upsell is to provide value through your primary services and then point out to customers how much better their lives would be if they upgraded. Make it clear that they are leaving a lot of value on the table if they choose to stick with your basic tier.

Providing immediate value with your entry-level products shows customers in no uncertain terms that you’re able to provide value right off the bat. This fact makes it easy to prove to them that there are even more benefits available if they upgrade.

Time your approach

Knowing exactly when to upsell to a customer on subscription can be a challenge. A lot of companies set “milestones” that trigger the beginning of the upselling process. So, for instance, a customer who subscribes for six-months could be said to have reached a critical point where they may be open to higher-tier services.

Of course, different subscription businesses offer different products and services, meaning that the precise timing will differ.

Natural opportunities to upsell might include things like:

  • When a subscriber maxes out their current allowable quota for a product or service

  • When a subscription continues for an extended period, such as six months, nine months, or a year

  • When you have threshold data indicating that a subscriber might benefit from a premium service

  • When you have data that a customer is actively looking for an upgraded service.

Provide a transparent pricing breakdown

If you’re trying to upsell, you need to make it eminently clear what your customers get for the increase in monthly fees. Being opaque confuses them and makes it challenging to figure out the real value proposition.

If possible, provide a table that breaks down the different tiers you offer and the features or benefits that come with each. Lower-price subscriptions might include basic things, such as the service itself, while more advanced subscribers could receive personal assistance, consulting, around-the-clock technical support, and so on.

Fundamentally, it is up to you to design these perks, but make sure that you make them compelling. Customers sat on the lowest subscription need motivation to upgrade if you want to upsell.

Use social proof to extol the benefits of premium subscriptions

Even if the value proposition of your premium subscription services is apparent from your marketing material, the majority of customers will remain cautious. While your products might be compelling, they still want “proof” that they will benefit if they decide to part with their hard-earned cash.

The best approach is to use evidence of how your existing customers have benefited from signing up for your premium subscription. This “social proof” is a potent way to convince others that you do offer the value you say that you do. Try forwarding customers to independent reviews and testimonials.

Pitch ideas, not just features

Customers are often willing to part with a lot of money if the subscription business can clearly set out how it will transform their lives. Offering a list of additional features is helpful in this regard, but it can never be as powerful as telling a story. Subscription companies that make it easy for their audiences to imagine how higher-tiers will fit into their lives are the best equipped to upsell.

And finally, learn what a fabulous subscription service really means to your customers

If you want to make a lot of money as a subscription business, you need to do what all the best brands do: learn what it is that your customer really wants from your service.

Asking them directly can help, but sometimes customers don’t know what they want until you give it to them. Many people, for instance, didn’t realise that they wanted a service like Amazon Prime until the eCommerce giant provided it.

Ideally, you want to find ways to get inside your customers’ heads and see the world from their perspective. You want to be able to explore not only their immediate goals but what they want to get from your services long-term. If you can create compelling solutions, then most clients who can afford them will pay more.