Deal types RISK

Not all deals are created equally.

 

The type of deal is a profound effect on what it takes to close the deal. As a rule of thumb, if you’re looking at a win rate for new business of 20 to 30 percent, you’re looking at a close rate of upsell and cross sell, usually around 70 or 80%. So when you’re looking at opportunities it’s important to know if its a new sale to a new company (new logo) or to existing business (Cross Sell or Upsell).

A healthy balance between upsell and cross sell is important to maintain. If your business allows for upsell and cross sell and bear in mind that “this year’s new logo sale is next years add-on sale”. You need to work out what is an appropriate blend between the two – 50/50 or 70/30 in favor of new logo is a common ratio to maintain a healthy pipeline of business.

Amplifying Factors Industry Location

 

Further reading :

Landing New Logos: Small Improvements to Make a Big Difference

Why sales people MUST stop focusing on ‘net new’

The 4 “New Logo Sales” KPIs to Focus On

RED – New Logo.

Net new logo to a company you’ve never done business with before. This is the hardest of the three types because you have no track record of understanding the dynamics of the prospect company or dealing with their culture, what’s important to them when selecting a vendor etc. Proceed with caution.

AMBER – Cross Sell

Cross sell. This is selling to the same company, but to a different group of users. You have a high amount of familiarity with the company culture, corporate fit, purchasing processes, overarching needs etc. but pay particular attention to the people working with you and look out for any overlaps with people you’ve already succeeded with.

GREEN –   Upsell

This is where your existing customer is adding additional capability – more users, et cetera. In theory, this is the most likely and easiest of the three types but don’t underestimate the importance of still delivering value and reminding them of capabilities and benefits. Frequently there is an internal dependency driving this need – for example, hiring new staff and requiring more users for them. You need to be aware of this and work around it to create a compelling event.

Mitigation – what to do?

Follow your process. Whichever of the three types of business, always make sure you follow your process. With upsell and cross-sell, you will probably move faster through certain stages. You can often be less cautious when it comes to positioning the pricing as they already know it. Make sure you build on the experience you have of dealing with the customer previously.

For net new logo business, the full sales cycle begins with decisions around qualification. This is the one that has the most dangers in terms of likely to be one to qualify out either at the start of the sales cycle. With upsell and cross sell you are less likely to focus on “qualify out” but speed is important so be attentive and responsive. 

Upsell and cross sell tend to begin with “Can I have a price for…?” They already know the product and the value and frequently are looking to see what would be the cost to add more. Make sure you engage face-to-face or by phone rather than simply reply by email with a price as you need to make sure that your matching the investment to their need to expand.

Cross sells can often involve other players. For example from a different department or different division. Sometimes your champion can actually get in the way and create a false sense of security with you, so make sure you do engage not just with your champion but also directly with the new players to ensure success. Many situations arise where your competitors are only dealing with the new players and you can lose out because your champion didn’t have the influence you hoped he or she would have or they told you they had.

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