How to Sell a Second Product

So we’ve had a ton of great conversations over the years on SaaStr on when and how to go multi-product.  And you can see some great deep dives here from some of the top leaders in SaaS:

• How, When and Why to Launch a Second Product: A Deep Dive with Dharmesh Shah, CTO HubSpot
• The Secrets to Going Big, Going Multi-Product and Going Public with Amplitude CEO Spenser Skates
• From $5M to $100M: How to Scale a Multi-Product Startup with Lattice Founding CEO Jack Altman

Much more here:

I wanted though to do a deep dive on just one piece — a few thoughts how to sell that second product.  It’s hard enough to build a second product, with all the constraints on product and engineering.  Then how do you actually get anybody to buy it? :). Too many sort of think it will sell itself with the same team, motions, etc.  It so rarely does.

A few thoughts, really a 3-part test:

First, figure out if you’ve built an add-on or a true second product.  The difference is critical.

An add-on is just what it sounds like.  Something an existing customer, generally at the same time they buy your core product, can easily add-on.  And one that at least 10% of customers will, so it’s material.

The classic in the restaurant industry is guacamole at mexican restaurants.  Adding guacamole is one of the highest margin add-ons you can add to an order.

The same is often true in SaaS.  Can you add a paid integration to an order?  An AI co-pilot to an existing product?

If it’s truly a toggle on the pricing page to add onto an existing product, it’s probably an add-on, not a second product.  The upside is it’s much easier to sell than a truly distinct, second product, and one of the simplest ways to grow your ACV. The downside to an add-on is it usually doesn’t really count radically expand your TAM.  But again, the upside it your existing salesteam can usually just sell it.

“Want fries with that?”  If that works for your new product, sell it with your existing team.  It likely will in fact create conflict if you add a separate sales team to sell adding fries to the order.

OK, now, if it’s a true second product — ask yourself if the buyer is the same buyer as your existing core product, or a different one

Having a sales team sell 2 very different products is hard enough when its to the same buyer.  But to a different buyer?  You really need a separate sales team almost on Day 1 here.  Almost every SaaS CEO at scale confirms this.  Dharmesh and Brian, co-founders of HubSpot, did a great deep dive on this when they launched their CRM product here:

If it’s a different buyer, you basically need a separate sales team on Day 1.  Maybe it can start off as founder-led sales, but you need a totally distinct team.

Time and time again, I see an exciting new product sort of stall out at launch when the buyer is a different ICP.  They get a few sales, but nothing like what they expected.  And often draw the wrong conclusions when the second product doesn’t really take off.

If the buyer of the second product is the same, understand in the end, sales just wants to hit their quota as easily as possible.  So they’ll really just sell what’s easiest.

If it’s the same buyer for your second product, maybe you can start off having your core sales team sell it, especially if it’s not too hard to sell.  If it’s hard to sell, they’ll sort of quickly give up.  But if they can get their existing customer accounts interested, they’ll try to sell the second product … up to a point.  The point at which they hit their main quota and core goal.  Then, most sales execs sort of scale back a bit.

The reality is, when the second product is sold to the same buyer, you may make it easier for the reps to hit quota.  But you usually don’t sell all that much more net.  An important point it takes a while to see.

So net net, maybe if the buyer is the same buyer for the second product, you can put off having a dedicated salesteam until a few million in ARR.

But much longer, and you just don’t sell as much.