When it comes to B2B sales, closing bigger deals is always better, right? Think again! This might sound crazy to some of you, but often, it’s better to start small. This is especially true if you’re selling complex, expensive B2B tech. The reason is that large deals are riskier. Big deals can be difficult to support. And if something goes wrong, it can be disastrous for your company and your client’s.
We just hosted a webinar (now available on demand) on how to close BIGGER deals. One of our panelists was Andy Paul, seasoned B2B sales expert and the bestselling author of the fantastic sales books Zero-Time Selling and Amp Up Your Sales. Andy wisely cautioned that it’s important to look at a customer’s potential lifetime value instead of just trying to close as big a deal as possible up front.
Three Barriers to a Decision
The reason that a lot of deals fall through is due to fear on the customer’s part. Making a big deal is risky and risks lead to fear. The riskier a deal seems the harder it can be to close. But starting small enables you to mitigate as much risk as possible. To quote Andy, “Win bigger deals by starting small … Reduce their perceived risk in order to increase your win rate and compress your decision cycles.”
Andy revealed three prominent barriers to customers making a decision, all of which can be alleviated by starting small:
- Risk that you can’t perform– Your customers don’t know whether your product will work as advertised. This is a valid concern. I can’t count the number of times that a solution I’ve purchased hasn’t lived up to its promise. This especially comes into play if you are competing in deals with larger companies since there is a perception that larger companies can support big deals better than smaller ones.
- Risk that the customer can’t perform– Does the customer have the internal resources (personnel and infrastructure) to truly support the deal?
- Risk that the wrong decision could be career limiting– Big deals have consequences. Choosing the wrong solution can not only hurt the decision maker’s productivity, it could lose them a job. It’s therefore important to ensure that your clients are successful.
Land and Expand
The best way to avoid risk is to start with the least risky relationship possible. “Starting small” might mean something completely different depending on what you sell. Perhaps it means doing a trial before signing a deal. Maybe it means selling five seats instead of 50 to begin with. Either way, the less risky you can make a deal seem, the easier it will be to win deals (even from far more established competitors). Once you are in, you can radically expand the scope of deals.
Andy told a story of one of his clients who sold $100K software systems. One of his accounts wanted to start with six systems. But six systems would have been difficult to support, so he started with one system in order to reduce risk. Then he was able to “land and expand” (to use one of Andy’s terms). In the end, he sold all six systems, while ensuring that the deal was a success.
I know it’s tempting to close big deals as quickly as possible. But by starting small you can reduce risks, close more accounts and then transform those small deals into giant ones.
Watch our webinar How to Close Bigger Deals for free on demand for more awesome tips from Andy Paul and our other expert panelists.