Want Upsell? Improve Retention

Improve Retention

Author

Gary Chan
November 05, 2024

Want upsell? Improve retention to 60% 🎯

Here's how we increase upsells with retention 📈

Why is customer retention important for PLG SaaS businesses?

Upselling to PLG customers requires excellent retention rates. As highlighted in Lenny's Newsletter on Retention benchmarks, understanding and improving retention is key to business success. 🔑

What is good retention

Although retention is widely considered to be the most important metric to get right when building (or investing in) a business, it’s also one of the least understood. Why? Because unless you’re a growth expert or an experienced investor, you’re often relying on anecdotes, dated blog posts, and misguided benchmarks.

www.lennysnewsletter.com/p/what-is-good-retention-issue-29

The Path to Upsells: Activation and Value Realization

Activation: The First Step

Getting value happens during the activation phase. 🚀 Users need to consistently use the product to unlock advanced features. These advanced features are the key to upsells, making improved retention a direct path to increased revenue. 💰

Building Discovery into Your Product

To improve retention and unlock upsells, it's crucial to build in discovery of advanced features and showcase new use-cases for advanced features.

Examples of Advanced Features:

  • Edit functionality ✏️

  • Customize 🎨

  • Add ➕

The Freemium Strategy

The  🆓 freemium tier should include essential features that provide immediate value. Users must understand:

  • How to use the essential product effectively 🛠️

  • How to derive value from essential features 💎

  • How to involve colleagues in the process 👥

As users interact with each other, new use-cases naturally emerge, encouraging continued engagement.

Implementing a PLG Strategy

When launching a PLG strategy, ensure customers pass the first activation point through onboarding calls 📞 and tech touches 💻. Then, nudge users towards the second activation point. 🏁In compliance-focused products, there are often numerous issues to address. As users fix these issues, they make positive progress, creating a sense of accomplishment and value. 🔧

Building Retention Patterns

By informing end-users about tasks to fix and complete each week, you establish a retention pattern. 🔄 Within your tech touches, focus on:

  • Introducing new use-cases

  • Facilitating the discovery of advanced features

This approach allows users to raise their hands 🙋‍♀️ and become Product-Qualified Leads (PQLs).

The Retention-Upsell Connection

Without improving retention and ensuring customers understand the product's value, users will never progress far enough to unlock advanced features and find value in the premium tier. 🔐 By focusing on retention, you're not just keeping customers – you're paving the way for successful upsells and long-term growth. 📈Remember, the journey from free to premium is a process. By guiding users through this journey with strategic retention efforts, you create a natural path to upsells and increased revenue for your PLG SaaS business. 💼

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I am Gary Yau Chan. 3x Head of Growth. Product Growth specialist. 26x hackathon winner. I write about #PLG and #BuildInPublic. Please follow me on LinkedIn, or read about what you can hire me for on my Notion page.