Upselling Can Help Stem Churn and Increase Retention: Study

Posted on by Beth Negus Viveiros

circles churnUpselling customers within the first three months of their contract can help companies stem churn and increase retention by 30 percent, according to a new report.

Sixty-two percent of clients that were not upsold within their first three months churned within two years, according to a survey from Vendasta. Selling a small to medium sized business (SMB) one more product shows an increased retention rate of nearly 20 percent, while upselling four products boost that to 80 percent.

Clients who engage weekly with vendors have a 26 percent higher retention rate than those who do not. Knowing your market may be key to creating engagement and loyal relationships: Vertical-specific providers showed a 15 percent higher SMB retention after two years than non-vertical sellers.

The study looked at 100,000 SMB client accounts. Churn can be a particularly serious issue for software-as-a-service (SaaS) providers, who may need customers to keep renewing every month. The survey showed that disengaged users churned at a rate of roughly 70 percent, while 90 percent of engaged users were retained.

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“Getting clients to engage five times within the first month of service was found to have the greatest impact on increasing retention,” according to the report. “Having clients engage with solutions as early as day one to establish the value of what’s been sold and incorporate it into their regular routine can improve their retention rate by 20 percent.”

The report suggested three key strategies for better customer retention:

  1. Sell based on client needs: Address problems that the customer may not even know they have. Anticipate customer needs and help them to continuously re-evaluate their relationship with your company.
  2. Keep customers engaged: Get your customer involved with your brand, the sooner the better. Have a strong on-boarding plan in place to create a strong experience from the start, to answer their questions and make them trust you as a valued partner.
  3. Provide the right solutions: Don’t just focus on selling them more. Focus on giving customers what they need, so they will trust you when you suggest something new. Create vertical experts within your brand to make the right recommendations to solve your customers’ problems.



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