Deal Value RISK

The value of the deal is an important consideration of how to manage the deal. The likely cadence, days to close, and how you might build trust and manage risk with the client will vary from deal size to deal size.

If your normal deal value is very small (for example a few hundred dollars) the deal is likely to move fast. If it’s hundreds of thousands of dollars millions of dollars is likely it’ll take months. The deal value has a bearing in that respect. 

The diligence the client will run over the deal,  the number of people likely to be involved, the scrutiny of your terms and conditions, after-sales service, etc. etc. will also frequently relate to the value of the deal. 

Outlier deals i.e. deals that are either bigger than normal or smaller than normal can also often present challenges. Measured with other parameters, such as how far away the client is, if they are in an industry you have done business in before, if they are a  brand-new logo etc. etc. all have a compounding effect on the risk associated with deals that are outside normal value for you and your prospect. Small deals that are up-sells or cross-sells should close quickly and efficiently. 

 

Be aware of the comfort of the large deal. It’s only human to be happy to talk about the big deals – “The  Brag accounts” as we call them –  that can be comforting to the business but present a danger in the eye of your investors. They will be concerned that you may be over-reliant on a small number of large deals. 

Let’s say you have three large deals that would 3X your company revenue and you are investing a lot of time and energy in those big deals.  This gives immediate alarm bells and concern to be careful having too many large deals in your pipeline. Large meaning beyond what you would normally win the potential danger of dragging these around, presenting them meeting after meeting with your investors or board and if they don’t close, that destroys a lot of confidence.





Amplifying Factors Company Size Geographical Distance Deal Age

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