B2B Marketing: Combating a shrinking deal size
Every time I look through the new 2012 B2B Marketing Benchmark Report, I find something interesting or useful from this research based on 1,745 surveyed marketers.
A B2B marketing challenge
Yesterday, I actually came across a chart I find disturbing:
Click to enlarge
Hopefully your deals aren’t moving to the left side of this chart. As you can see, compared to last year, the average B2B deal is declining. Deals under $10,000 have increased (with deals under $1,000 up 100%), and all deals over $10,001 are down.
Similar to the data point that the smallest deals are increasing the most, the largest deals – over $250,000 – are down by the largest percentage.
Yikes.
Part of this is likely attributed to the ongoing economic difficulties. Some larger B2B purchases are perhaps being put off until the financial outlook is better. Although, our research found one reason for this decline: the economy is causing B2B companies to feel pressure to accelerate their current pipeline and get deals closed.
The problem with this strategic response is that now B2B companies are competing on price instead of value and are offering promotions that result in overall smaller deal sizes as well as including fewer products and services in the deal so it’s a simpler sale.
Another data point from the report also supports this research – compared to 2010, the average length of sales cycles in 2011 was much shorter.
Comparing 2011 to 2010, cycles of:
- Less than one month, up 15%
- One to three months, up 4%
- Four to six months, down 2%
- Seven to 12 months, down 7%
- Over one year, even
One common reason for a shortened sales cycle is the deal becomes less complex. For example, Sales might work harder to close multiple one-year licenses to meet their quota instead of taking the time to nail down the all-you-can-eat enterprise license agreement. Read more…
