Cross-selling: 6 hurdles to clear
A blueprint to prepare for, or course-correct cross-selling motions in B2B SaaS for new product additions
Why cross-selling is a good idea
Cross-selling new products is one of the sexiest growth levers you can pull. It's a new product to work on and if successful, has tangible benefits in driving stickiness (GRR) and expansion revenue (NRR) with your existing customer base. In theory, it’s efficient as well. According to a 2022 KeyBanc Capital Markets SaaS survey, acquiring a new customer is 3x the CAC of selling to an existing customer. In the same survey, the median percentage of new ARR contributed by expansion (vs. new logo acquisition) was 30% for $5-10M ARR companies, but 58% for $20-30M ARR companies. This suggests that (a) increasing wallet share within existing customers is a typical lever for driving profitable growth, and (b) it can help drive predictability in revenue growth, reducing reliance on increasingly more expensive new logo acquisition.
There are multiple levers to expand within an existing customer so just a quick level set on these definitions. Note that details and applicability may vary based on the packaging and pricing model from business to business.
Price increases - a CPI (consumer price index) increase of software, typically annually, justified by rising costs plus ongoing innovation of the product.
Usage upsells - expansion driven by increased volume of usage. This can be users, data, tasks, or other activity that is correlated with the value of the software.
Upgrades - package upgrades inclusive of purchasing a premium tier of the same product but with a collection of higher value features, functionality, and services.
Product add-ons - differentiated product capability closely sold as an add-on to a core package. This typically applies to a narrower reach of your customer base but is perceived as high value when it is applicable.
Cross-sells - adjacent product offerings sold separately with a distinct value proposition, sometimes to the same persona but often to a net new persona as other products. This can be through a build, buy, or partner strategy.
But it’s hard…introducing 6 hurdles to clear
This post focuses on the last and arguably most ambitious lever: cross-selling new products. It’s high reward, but also high risk. And if you’ve ever missed aggressive cross-sell targets, you’ll know how painful it can be. Below are the 6 most critical hurdles to clear before you put a new cross-sell motion into market (or course correcting post launch).
I’m using “hurdles” intentionally because in practice it’s unrealistic to expect sub-scale companies to have everything solved before embarking on new product ventures. In some cases, internal growth targets or external market pressure may necessitate an accelerated path. So, don’t treat these as individual “do not pass go” stage gates, but if you find the warning signs resonate for 3 or 4 hurdles below, that’s a tell that you’ll face slow-downs in how quickly revenue materializes.
6 hurdles:
How to read this:
If you’re long term planning, use this as a check list of initiatives to build a strong foundation for cross-selling in the future
If you’re needing to accelerate a launch, use this list to form your plan to operationalize new product. Build in these investments into your business case and budget.
If you’ve launched a new product and are behind bookings targets, use this as a diagnostic list for quick wins to get back on track and/or for recasting expectations.
1. Do the ROI Math
This may be obvious but the hope of a grand product vision coming to life with explosive revenue can easily lure you into spending substantial resource time and cost. Next thing you know, it’s 6 months and $500k of burn later without much to show for it. Team members and the board are asking questions and you may feel the need to double down to avoid sunk cost. Repeat.
Warning sign:
ROI relative to prioritizing other expansion levers is unknown or unclearly articulated
What to do:
Do the math. Here’s an example:
Let’s take a $15M ARR business at $30k ACV equating to 500 customers. You can quickly come up with a view of the revenue potential and LOE by expansion lever (price increase, upsells, upgrades, add-ons, cross-sells). Below is illustrative with assumptions on addressability, ACV, and annual penetration or adoption. Note that the value here does not contemplate strategic TAM expansion or innovative differentiation which could tip the scale differently.
For the new product cross-sells, develop a substantiated business case. For example, at a previous $30M ARR company, we bought a company and product capability based on (a) $7-9M expansion potential within existing customer base and (b) increasing win rate since we knew 22% of closed lost deals were due to the lack of that capability
For LOE, I used a qualitative Low, Med, High ranking but you could “guesstimate” this. Don’t worry about being too precise since the exercise is weighing options relative to each other vs. signing up for budget. For example, a new product developed may require a team of 2 Developers + 1 QA + 0.5 Product Manager + 0.5 Designer. Compare that to price increases which would require lighter weight process and system changes.
This visually translates into something like the below which can be used to align the leadership team and board around the investments and areas of focus to impact Metrics that Matter for your business.
2. Product Stability: More Product, More Problems
Cross-selling new product works when your existing product is stable. If you're dealing with ongoing quality issues (bugs, defects, high support volume) it means engineering is constantly in firefighting mode. Every customer escalation pulls bandwidth away from proper discovery, design, and development of new product.
The stage gate here is simple but non-negotiable: Do you have the operational discipline and product quality to scale? If not, adding another product to the mix is like building a second floor on a shaky foundation.
Warning sign:
Engineering sprint planning is consistently derailed by urgent bugs or customer escalations.
What to do:
Allocate a portion of engineering capacity resources to address escalations and review weekly so that engineers aren’t getting pulled in multiple directions.
Instrument your customer support platform (e.g. Zendesk) and engineering issue tracking system (e.g. Jira) to tag and track customer escalations
Set a rhythm and process to review and prioritize escalations with the support team
Root cause patterns of escalations. These could be defects (e.g. there might be 20% of escalations due to a commonly used integration) or a gap in configuration capabilities (e.g. engineer is required to set up a report).
Slot initiatives on the roadmap to address tech debt, or improve internal tooling to enabling customer facing teams to support customers without engineering.
3. Product Marketing Maturity: No PMM, No GTM
You can have the best product and the best sales team, and still miss your targets if product marketing isn’t ready to commercialize the new offering. Cross-sells typically require a new messaging architecture, new value props, new persona targeting, competitive positioning, pricing strategy, and crisp enablement content for sales.
This is often the most overlooked stage gate, and the most painful miss.
Warning signs:
Answers vary from team members on what your ICP, differentiated value proposition, buyer personas, and go-to-market motions are
The sales team is "winging it" or your sales deck feels like a stitched-together Frankenstein of slides.
Sales enablement is a team sport
No owner or process for releases, beta program and go-to-market of new features
What to do:
Hire a good product marketer. Many PMMs are strong in market research, positioning and messaging but lack the quantitative and GTM enablement skills to help drive revenue generating outcomes - test for this commercialization competency.
Document ICP, value propositions, personas, proof points. Broadcast regularly to align cross-functional teams.
Develop a process with product managers for planning, communicating, and training internal team members as well as customers on roadmap and releases
Build out mechanisms with product management on discovery and ability to test demand - e.g. through usage analytics, sales & customer success feedback, win/loss analysis, churn analysis, surveys, product advisory councils, webinars.
Arm sellers with usable artifacts - talk tracks, sales decks, discovery questions, demo scripts, business case templates, kill sheets, objection handling, etc.
Institute a regular rhythm and tools for sales enablement. Align with sales leadership on training certifications and a regular feedback loop.
4. Sales Team Structure: Over-Reliant on Star Sellers
If your sales motion still leans heavily on 1–2 hero reps to hit targets, cross-selling can backfire. These same high performers are usually the best suited to learn to sell new product. However, without a strong bench, these strong sellers may get distracted by learning the new product and tank core product sales in the process. Plus, new reps won't ramp fast enough if there's no repeatable motion in place.
You need sales team maturity, not just talent and good product
Warning sign: New reps are struggling to ramp, and pipeline is disproportionately concentrated with a few individuals.
What to do:
Track and measure rep-level quota attainment, win rates, and activities
Institute standard sales methodology like MEDDIC or other. Include fields in your CRM along with sales stage exit criteria that enforce your sales methodology.
Pair greener reps with high performing reps to shadow (or track along deals in Gong or other sales intelligence tools)
Have product marketing codify best practices from top sellers and customer win stories for programmatic enablement to the full team
Create role progression from SDRs to AEs to Sr. AEs with commensurate quotas and deal sizes. Larger deal sizes having more complexity. Route leads accordingly.
5. Executive Selling Muscle: New Product, New Buyer
Cross-sells often mean selling to a different persona. This could mean selling higher in an organization due to the increase in a customer’s total spend with you or sometimes selling into a different department or business unit. If your team is great at selling to managers and directors, but the new product requires selling to VP+ or C-level stakeholders, you’re in for a rude awakening.
Executive selling isn't just a skillset, it’s a strategy.
Warning sign: Current deals stall when the buyer loop expands to include senior stakeholders.
What to do:
Ensure reps appropriately identify economic buyers early in the sales process to avoid surprises late in a deal cycle. Frequently review next steps and close plans to confirm stakeholders and approvals needed from the customer.
Bolster discovery and business case templates. Accessing bigger budgets will require more substantiation and professionalism in justifying the purchase.
Enable reps on executive-level value narratives and coaching on developing and enabling champions to sell internally within their organizations.
Bring in your exec team to co-sell early in deals. This may even take shape of a program with each of your top 20 deals having an assign exec team member assigned as part of the deal team.
Consider account-based marketing (ABM) strategies for reach and air cover inside key accounts.
6. Customer Success Readiness: Depth, Not Just Touch
Finally, you can’t cross-sell into accounts you barely know. If customer success (CS) is either under-resourced or operating in a shallow, transactional way, you won’t have the insight or relationship equity to identify good cross-sell targets.
Depending on your model, CS might mean dedicated CSMs, or it might be a blend of product usage analytics, customer marketing, and in-app engagement. Either way, you need to know who’s healthy, who’s a good fit for expansion, and have an engine to build pipeline.
Warning sign:
Your CS team can’t answer what constitutes a healthy or at-risk customer
Churn reasons aren’t known. If they’re labeled in Salesforce, CSMs stumble on the details after asking a couple probing questions.
Given a hypothesis on new product, CSMs can’t answer “who would be our top 20 cross-sell candidates right now?”
What to do:
Operationalize CS workflows. Define customer health scores that identify healthy and at-risk customers. Utilize CRMs or CS platforms like Gainsight.
For smaller customers, establish trigger points for outreach based on product usage, support issues, or engagement. For larger customers, implement regular business reviews with mutually agreed upon Success Plans.
Establish nurture campaigns to consistently distribute relevant content (e.g. newsletters, product release notes, webinars). Monitor and track engagement
Analyze patterns to hone in predictors for churn, happy customers, and upsell opportunities.
Implement customer success qualified leads (CSQLs) to track and drive progress on pipeline adds for simpler add-ons or upsells. This is practice for your cross-sell lead gen engine later on.
Final Thoughts
Cross-selling is seductive, especially when chasing efficient growth. But if you rush the process and skip the fundamentals, you’ll miss targets, burn out teams, and damage trust with customers.
Use these six hurdles as a guide to help prioritize cross-selling relative to other expansion levers, as well as to identify improvement areas in your business that will allow you to run faster and meet revenue targets more predictably.