Someone once told me their average deal was between $30,000 and $3,000,000.
Sorry, that’s not an average; it’s a range.
And here’s the thing about value: it’s definitely NOT a spectrum.
Value is what a customer is willing to pay you. Period.
Value means revenue and understanding what your ICP is going to bring in. It comes from the sales and marketing teams coming together to determine the strategy for choosing customers and your product/market fit. This will help you determine the value of each deal, which will be different for an SMB versus an Enterprise.
This value number is finite and must be chosen, and your leadership team should know what this number is. If you don’t know this number, I guarantee you’re not in the room where it happens. You should always have a point of view on what it should be, how it relates to ARR, and the lifetime value of your customer.
And one more thing: you must get leadership to agree on a value number. There’s a big difference when the ARR of a deal is $30,000 versus $3,000,000.
The funny thing about ARR is that every person I’ve known and client I’ve worked with exaggerates their size. But if you start with the wrong number, your marketing math is baloney. So, it’s essential to be honest with yourself and your team.
Still, I’ve seen plenty of people with a bad habit of making that value number a moving target.
Ideally, that number is static and does not change. You’ve got to use the same number every quarter or year to measure marketing math effectively.
Remember, there are three tenets you measure in your GTM motions:
- Volume, which is a change in amount. (How many?)
- Velocity, which is the change over time. (How fast?)
- Value, which is (or should be) static. (How much?)
The problem is that if you change the value number, all three Vs will change. And when that happens, you’ll be scrambling to try to find anything meaningful to help guide your GTM efforts.
There is value at every stage of your funnel, and your value number will give your pipeline life.
A sophisticated sales leader knows this and keeps to no more than three products. When you start adding more products and pricing models, things get confusing.
And confusing = trouble measuring your marketing math.
My advice? Don’t overcomplicate it.
Keep your value number static.