What are the most common mistakes to avoid when upselling during a software sales contract renewal?

A big mistake we make as sales people is only showing up when it's time to renew the agreement. The best sales professionals stay engaged with the client throughout the life of the agreement. By staying engaged, you can address any issues along the way. Then when it's time to renew an agreement, your client has confidence to continuing working with you. This confidence does two things. One, it protects your business from competitors. Two, your clients are more willing to discuss options for upgrade and upsell. Stay engaged with your client during the life of the agreement and your client will stay engaged with you when it's time to renew the agreement.

The main reason is not understanding the customer's application or requirement. Probably, the objective is not achieved in the deal.

In addition to reviewing CRM and internal collaboration with those that worked on the original sale, ongoing and consistent post sale communication, collaboration, meetings, and ensuring customer satisfaction from the original sale should alleviate this issue. You’ll understand the customer, the correct contacts to work with, their ongoing objections/concerns, the changes to the organization as well as in their industry. A major reason I have seen upsell opportunities fail, is due to lack of providing relevant product and offering updates (possibly demos/trials/POC’s) to the company as when renewal time comes, the customer is already having a bad experience by not being informed and feeling like the original sale was transactional.

A mistake would be making the offer before find the benefit or problem it would solve for the buyer. Identify their incentive to buy.

Understanding the customers needs is the most important task that will insure a promising partnership in the years to come. Failing to understand customer needs will surely lead to a short term partnership as the prospect will then move on as the object of the partnership was not achieved. One should insure that they understand that the success depends on how far we are able to satisfy the prospect by achieving the desired results quickly

Once you are in the prospecting stage and you are pushing for closure or upsell you need to understand why is there a delay. Is the delay because the prospects still has some doubts to be cleared on the level of service that they are signing up for or it is the pricing. Once we are able to identify the issue we need to resolve it step by step and insure that there are no doubts left in the prospects mind. This will insure a smooth closure.

Absolutely, pushing upsells too hard or too soon can turn customers off. It's better to focus on building trust over time and consistently delivering value. Look for the right moments to offer upsells that truly match the customer's needs, using positive feedback or product data to guide your approach. Upselling should feel natural, not forced.

In my experience, a warm welcome as a new customer, a great onboarding experience, having excellent customer support, being provided proper expectations of milestones (of success) and timeframes for future meetings around renewals up front, will allow the customer to know when these conversations will happen and there will not be a concern for “pushing too hard or too soon”.

That's a crucial point. In upselling, it's a mistake to just talk about features or prices without showing the actual value or ROI. Customers need to see how an upsell will benefit them. Use solid metrics, testimonials, or success stories to demonstrate its worth, and point out what they might miss by not upgrading, like improved efficiency or competitive advantages. The focus should be on how the upsell meets their specific needs and goals.

The most important task post sales is to monitor the performance of the service provided. Are we close to achieving the KPI of the prospect or will it take more time. If it is going to take more time then we need to communicate the same to the prospect with plan on how are we going to achieve what we promised out of the service we are providing. This will result in a complete confidence of the prospect and if we are able to achieve the desired goal as per the plan then we can easily try to upsell.

Dismissing customer objections when upselling is a no-go. Objections are often just calls for more info. It's important to listen, respond respectfully, and be prepared with clear answers to common concerns like budget or timing. This approach is key for successful upselling.

Leaving an upsell process unfinished is a common error. Upselling needs ongoing communication and follow-up. It's important to keep engaging with the customer, reminding them of your offer's value, and guiding them towards closing the deal with effective techniques.

I have found great success in partnering with internal resources to be available during renewal meetings, but they only join the meeting when a question/concern comes up where they are the best resource to handle in the moment. Ex: you have an upcoming meeting to discuss renewals and potential questions/concerns might come up where another internal team/dept would be better to handle that discussion. You partner with that team/dept to have resources scheduled during your meeting time and you then reach out to them to join the meeting or a chat to handle the question/concern. This provides an amazing customer experience and will help move the discussions along instead of saying “I’ll get back to you on that”.

A point to keep in mind is that the economic context can vary and greatly affect one of the two parties, so from my experience it is important to define minimum and maximum currency fluctuation. For example if the contract is in U.S. dollars, the change of currency to local currency can bankrupt a business; Finding a middle ground with some flexibility allows the client to maintain a long term relationship without being affected by inflation, devaluation, or new and/or reforms that complicate things, especially in emerging markets, defining from the beginning those ranges exchange and also managing long periods (e.g. 3 to 5 years) allows at the time of renewing the contract to adapt to the new socio-economic context.

Having weak utilization current state while going into an upsell coupled with a weak adoption/utilization plan future state. Upsells are specifically designed to 'hedge bets' for the future with your customers; they generally can lock in an incentivized rate for a longer period of time, which guards them against pricing changes that can happen in companies, sometimes, year over year. If you don't have a plan that fits the need of how they will further consume and use your product, you run the risk of a future down-sell, unhappy customers, and worst of all, potential churn of the account.