You might think there’s not much that can be done to increase average deal size.
Other than apply good old fashioned sales skills.
But you’d be wrong.
In fact there are 5 things that can be done in salesforce to help increase average deal size and drive revenue.
- Compare average deal size across sales people.
- Measure the number of optional products on opportunities.
- Make it easier to find and add optional products to opportunities.
- Get a grip of discounts.
- Create product bundles.
Let’s explain how each one works in salesforce and look at the relevant dashboard charts.
1. Compare average deal size across sales people.
As the saying goes, what gets measured gets managed.
The mere presence of a dashboard chart indicates that average deal size is important.
This is the most basic way to measure average deal size but it adds major value. By comparing the average deal size by sales person, the chart:
- Tells sales people this is a metric that is important.
- Helps identify training needs.
- Highlights successful people from whom we can learn.
- Provides factual information that can be used in 1.1s and reviews.
It’s a simple and easy dashboard chart to create. Simply create a standard opportunities report and summarize the Amount by Average rather than Sum.
Start comparing average deal size across sales people today.
2. Measure the number of optional products per opportunity
On most opportunities there are one or more core products.
It’s these products that comprise the bulk of the opportunity sales value.
But there are often a number of optional products that can be added. Optional products might include additional enhancements, complimentary product features and service and support contracts.
And guess what? There are often two characteristics of optional products.
First, they tend to come under less price challenge than core products. And second, the margin on optional products is often higher than on core products.
Adding more optional products to opportunities is a critical way to increase the average deal size. That’s why you want to measure it.
The chart compares the performance of sales people in adding optional products. Here is the impact of adding optional products on average deal size and revenue.
That’s important information when it comes to training, coaching and managing sales people.
The same information can be created at team and company level.
Let’s look now at how to make it easier for sales people to add optional products to opportunities.
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3. Use a product selection wizard
We agree that adding optional products is an essential way to increase average deal size.
But here’s the rub.
Using the standard page layout, it’s not particularly easy to find and add products to opportunities in salesforce. Especially if there are a lot of products.
And that’s an important reason why optional products get missed off opportunities.
Here’s how many of our customers deal with that challenge. They use a product selection wizard.
The wizard gives an easy-on-the-eye way to view all products. Sales people can expand each section of the tree and select products from various categories. The pane on the right lists all the opportunity products by the various categories.
The wizard makes it easy to add products to opportunities. And because it’s easier, more optional products get added to opportunities. And that increases the average deal size.
For more information on using a product selection wizard visit our dedicated blog page.
4. Create product bundles
Very often groups of products can be bundled together.
Bundling products has several advantages.
- Essential but relatively minor products don’t get accidentally missed off the opportunity.
- Complimentary optional products can be automatically added to the opportunity.
- An improved price can be offered to the customer compared to purchasing the products individually.
All of these benefits help to increase the average deal size.
The combination of products that can be bundled together is created by an experienced product manager.
Sales people select the bundle using a similar interface to the product selection wizard.
When sales people associate a bundle with an opportunity, all of the products in the bundle are added to the opportunity.
The customer benefits from a reduced price or increased discount for buying as a bundle. And the effect from a sales perspective is to increase the average deal size.
5. Get a grip of discounts
It stands to reason. The bigger the discount the lower the average deal size.
Discounts are a fact of commercial life. But in many businesses there is loose control over discounts.
Discount approvals are often handled in an unstructured way. Requests and approvals are often communicated by ad hoc emails and phone conversations.
The result of this is often that a higher level of discount is approved than is needed to secure the deal. And this impacts the average deal size.
The solution is to use the salesforce approvals functionality.
Using Approvals means that pre-defined rules can be created based on the size of the discount. There is a full audit trail of the discount request and approval on the opportunity. And discount requests can be approved by email or Chatter and automatically updated on the opportunity.
In my experience this controls discounts in two ways.
- Discount requests become more formal. This encourages sales people to think more deeply about whether a discount is really necessary to win the deal.
- Management control is increased. This can mean that overall, lower level of discounts are offered to customers.
- A quid-pro-quo is more often obtained from the customer in return for a discount. An increased product quantity or longer contract term for example.
The outcome is an overall lower level of discounting and higher average deal size.
The average deal size is not a sales metric that should be left to look after itself. There are things that can be done to proactively increase it.
If you would like a customised demo of how to increase the average deal size in your business then simply fill in the form below. We’ll get in touch to arrange a time for a web meeting.