A recent survey from Pacific Crest Securities shows the substantial impact that up-selling can have on your SaaS business including:
- Lower Cost to acquire revenue
- Higher Growth
Per the survey the cost to acquire a dollar of ACV (Annual Contract Value) is much lower for up-sells, a median of $1.18 for $1 of ACV for new customers versus a median of $.28 for up-sells.
Higher Growth companies have a lot more of the ACV coming from up-sells than lower growth companies as shown by this chart from the survey.
Up-sells don't just happen automatically you need to have the right people focused on it with the right incentives. You also need to have your product structured and priced appropriately.
As a simple example the picture above is an up-sell offer from Constant Contact. From within the application they license a variety of images to use in newsletters. The convenience and price make them an attractive option to use.
David Skok, general partner at Matrix Partners, has also done an analysis on the full survey. This survey is one of the best I know that covers a wide range of information about private SaaS companies of varying sizes.
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