Why should you increase your average deal size?
Increasing the number of transactions you close can be an inefficient way to achieve your B2B sales goal. This is more pronounced if you are in a high-trust business, such as managed services or professional services. We have a limited amount of time in which to build and maintain trusted relationships: creating profitable relationships in a trust-based sales environment starts by aiming for quality over quantity.
Increasing your average deal size should bring more value to your clients. As you increase your knowledge of a customer, you are able to find new and better ways to deliver value: this should translate to an increase in spend over time.
Increasing your average deal size should benefit your business, and your customer.
You can leverage the following techniques to help yourself or your sales team increase your average deal size:
1. Qualify-out poor targets
“Spray and pray” marketing campaigns target everyone and anyone. Getting maximum exposure can seem like a good idea, but the reality is that not every customer is a good fit. Not all business is good business: do not make the mistake of wasting your limited time and resources on clients too small for your goals. You are usually better off spending your resources targeting people who actively need your services. Using this strategy helps you create win-win relationships instead of trying to get as much money as possible out of the wrong end of the market. Being specific with your marketing helps attract more repeat customers and referrals from their positive experiences. Targeting a specific profile also keeps your sales and marketing staff focused.
2. Pursue larger clients even if they are ice-cold
Winning larger clients usually mean larger average deal size. But winning over a larger business is a slower and more difficult process than winning a small client. The higher up you go, the tougher client acquisition gets. Many established companies have business relationships they value and are unlike to break in a hurry. For these reasons, it can be easy to talk ourselves out of cold outreach. However, it’s important to remember the prospecting process is gradual. What starts as a simple email leads to a handshake at an event, a friendly phone call and eventually a sale. During the prospecting period, you need to find ways to create value. Even if reaching out doesn’t result in business immediately, it helps you become known in your industry. Being recognised is helpful years down the road when someone is ready to make a change, and they remember the efforts put in by you or your sales team.
3. Increase effort, not activity
By increasing your average deal size, you reduce the number of sales it takes to reach your target. Executing a higher volume of sales activity can lead to a lower average deal size, and even missed targets. Assuming more activity and more “knocking on doors” will lead to the right result is a common mistake businesses make. Instead, determine the right size of deal your organisation needs. and focus your sales efforts on the activities that are needed to get these. When we put ourselves under pressure to make quick sales, we will burn through the market looking for a “yes”. If you give them time to cultivate relationships and build value, you can increase revenue without increasing pressure on either your own business or the market. Taking this approach helps your salespeople learn more about your ideal clients. Instead of grasping at straws to create value, you can make educated guesses based on previous relationships.
4. Provide more services to existing customers
The first barrier here is fixed-price contracts: what if you have already set a monthly or annual contract value that the client has agreed to pay? In our experience, everything is negotiable provided you have a decision maker with a degree of discretion on one side, and additional value to deliver them on the other. Creating new services that complement your original offerings will help you find ways to deliver more value, and therefore increase your average deal size. Look for areas in your services where customers can customise their experience – you can offer these as added value. Exclusive content releases, paid coaching or training over and above normal service delivery, and results-driven bonuses or kickers are all possible ideas to incrementally increase deal size. Get your sales team to frame this value as customer-centric ideas to create improvement in your customer’s business. Looking at deal size from this perspective will help your clients see the value in additional services.
5. Steer clear of low-priced packages
Many companies actually have their prices too low. Low prices may attract people who want to trial your service but are unable to commit. Clients with this mindset usually don’t proceed to larger projects or managed service contracts, and end up occupying your resources without providing a long term return to either themselves or your own business. Setting your prices higher also helps you better serve your clients. Many products and services work better when executed by the entire company rather than just a handful of people. Clients who understand this are more likely to commit to long-term projects where there is an opportunity to benefit both sides. The right buyer is happy to pay more, for a service tailored to their needs.
6. Secure fixed prices for long-term contracts
As the market and your industry continue to evolve, your prices will also have to adapt to the times. It is important to include in your contracts that your prices are subject to change, unless your clients make long term commitments. Explaining the type of price increase customers can expect yearly can help them make a decision. Locking in fixed prices provides stability for both sides and prevents any surprises. It’s worth breaking down the work structure in your contracts so clients can see exactly how their funds are used. Securing the fixed price language in the contract needs to be a highlighted goal for your sales team.
7. Accentuate where you can add value
Instead of offering discounts to close sales, find alternate ways to create more value for your clients. Discounts and trial periods cheapen your service and make it harder for people to appreciate the value that they’re getting. Staying away from discounts as a closing strategy is a simple mindset shift that will help you increase your average deal size. Instead of a discount, reinforce the value that you deliver. Reporting is a great way to start: specifically, regular reporting that shows your clients improvement in measures or KPIs that demonstrate a return on their investment in you. Other clients might value you allowing an additional degree of flexibility to their contract in return for a price premium. Yet others will pay more for a faster service level, or more attentive relationship management. Adding value is different for every buyer and company. What your clients find valuable will depend on their priorities and other factors that you can learn by building relationships.
8. Sell directly to the C-suite
You make the best use of your sales time and energy when you engage directly with decision-makers. When you deal with managers who have to seek answers from higher-ups, the sales cycle takes longer, and you have less control. Building relationships with professionals in the C-suite takes longer, but it gives you and your salespeople a direct pipeline to all the facts. Selling someone in the C-suite on your service will also have a much bigger impact than convincing a mid-level manager that it’s a good idea. While building relationships with the C-suite takes longer, it’s an effective way to increase your average deal size. Once people in powerful positions understand your value, the extra time spent building relationships becomes exceptionally valuable.
Get our help to increase your average deal size
Resonate helps its clients improve their strategy, marketing, and sales. We measure average deal size for our clients and we have demonstrably helped many of our clients increase their average deal size. We give healthy, pragmatic advice on which prospects to strategically qualify-out and who to chase (and how). We also design go-to-markets with you, and execute them end to end from a Marketing perspective so all you and your team need to do is run the sales cycle, with our guidance. Get in touch with us today if you would like to learn more about our approach.