Deal Size RISK
Deal Size is a major factor that influences the likelihood of a deal closing.
Its nice when you have big deals in your pipeline – we all feel good dealing with big names and big deals. It can help to hone our skills and bring us forward in our careers.
However deal size is a key determinant of whether a deal will close or not. Simply put if you normally close deals of a given size and then you work a deal much bigger, there are factors involved that you may not have encountered before and hence it carries a higher risk.
Amplifying Factors Company Size Geographical Distance
RED – Deal Size much bigger than average If you have a deal that is much bigger than normal you need to be wary. The dynamics ( cadence and time) of the deal will be very much different that normal. You may encounter new steps and involvement from other people that will add to the risk. |
AMBER – Deal much smaller than normal Small deals can also be problematic. The dynamics can be very different to normal- often a small deal will move fast , lots of questions etc focus on price rather than value and then go slow as they client looks to make sure the deal is what they want. |
GREEN – Normal deal A normal deal for you will have a familiar cadence and activity. |
Mitigation – what to do ?
Be prepared for questions that you don’t normally get – for instance you may be asked for more details about your company (Size etc) as the investment is larger and hence a larger risk. Ideally build the trust piece around this.
Consider if “seed and grow” might be a good tactic to employ. Rather than having a large deal in your pipeline for a long period, consider if taking down a smaller deal ( eg a distinct part of the business that you can service well) and this puts you in a good position to expand the deal later. Better to have the logo on your book as a customer than a prospect !
Expect different players to be involved. The client may involve other people so neutralise this by involving the relevant people from your side as well.
Remember that the justification (Cost benefit analysis ) may be higher so you might need to allow for supporting the bigger business case with proof points
Finally don’t over rely on a large deal. There is comfort in having big deals in the pipeline but they can over inflate your pipeline value and put you in trouble if they don’t close.
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