Sales velocity series: Part 4 of 4
Sales velocity is all about measuring how fast you’re making money. It looks at how quickly leads are moving through your pipeline and how much value new customers provide.
Sales velocity is calculated using the number of opportunities, conversion rate, average order value and time to sale. Each is a lever you can pull to drive business growth.
In this article, we’re taking a deep dive into the world of average order value and how to increase it. Visit the other articles in our sales velocity series here:
- How to improve your conversion rates
- Increasing the number of sales opportunities
- Speeding up the decision-making process
What is average order value?
Your order value (also known as deal size) is the average selling price for orders you close. Pushing the average order value up by even 2 or 3% can have a massive impact on annual revenues and targets. So where do you start?
At Flume, this is something we help sales teams with on a regular basis. Here’s what works.
Seven ways to increase average order value
1. Know what your brand stands for
Making buying decisions in B2B is risky, so you need to start by building trust in your brand.
People buy emotionally first and then rationally; this is where the gut instinct comes from. Make sure you’re pitching your company in the right way and aligning your brand with client needs.
Rather than getting straight to the solution, be clear about your company’s purpose. Create an emotional connection. Help clients to feel safe working with you.
Imagine you’re walking down the high street and ready to make a purchase. Chances are, you’ll seek out a brand you like and trust, rather than heading into the first place you see. Then, once you’re in the store, you’ll choose the product.
In B2B sales, we need to stop pitching to people walking down the street. Focus on convincing them of the value of your brand first, so you can get them into the store. Then, you can select the right solution for them.
2. Identify your Ideal Client Profile
If you want to land the biggest deals, create an Ideal Client Profile (ICP).
An ICP allows you to identify the customers most likely to turn into larger accounts. It means you can spend your time more efficiently, rather than approaching dozens of clients and simply hoping for the best.
Start by exploring your largest deals in the past year. Look at the characteristics they had in common, whether it’s sector, size, desired outcomes or something else. Group clients together based on the different characteristics and the size of the deal they might bring in.
The more you can narrow down this ICP, the more focused your qualification can be. You can spend time where it matters: focused on customers likely to spend the most.
3. Plan for account growth
A surefire way to increase average order value is to grow the accounts of existing customers. To do this, you need a strong focus on account planning.
Firstly, make sure you’re able to have the right conversations at the right time. Know when your customer reviews suppliers, sets goals and assigns budget every year.
Secondly, you need to know how the company works internally. What are the different divisions? Who are the stakeholders within each division? If there’s an incumbent provider, what do people think of them?
From there, you can work out the approach and messaging needed to displace that provider. You can also spot valuable white space: gaps within the business where there’s no current supplier or solution.
4. Look backwards and forwards
Another key step in increasing average order value is to get clients in the right frame of mind to buy more from you. To do that, it helps to look backwards and forwards.
Looking backwards highlights what you’ve already achieved. Remind clients of where they were before you and the challenges they had. Compare that to where they are now. Prove you’ve had an impact in terms of ROI.
Then, look forwards. Open up a conversation about the client’s future. Find out the strategic plan for both the individual and business over the next two or three years. Identify opportunities to fill gaps based on where your client wants to get to.
5. Uncover the root cause
As buying habits change, so should the sales experience.
Most sales reps diagnose a client’s needs by asking questions like “What do you need to achieve?”. But for clients, this isn’t a useful conversation – they already know the answer.
Instead, be brave and dig below the surface. What is the reason their need exists? What is the root cause of their challenge and need?
These deeper conversations help to shift perspective, and can often lead to new and bigger solutions with a greater level of investment.
6. Co-create the solution
A common way to boost revenue is to create a number of different products to sell. As a result, some sales reps might have 20 or 30 different products or solutions in their arsenal.
This makes it tempting to throw everything at a client and see if any of them stick. But the paradox of choice comes into play here. With so much choice, it’s even harder for the client to make a decision.
A better approach is to co-create a solution with your client. Think about what would and wouldn’t work to achieve the outcomes they need, both personally and for the business.
If your client feels like they own the idea, there’s a higher chance of them moving forward with it. It’s also more likely that they’ll be able to sell it on internally, because they genuinely believe in the solution.
7. Focusing the case on stakeholder needs
When a sales proposal goes through a business, it’s seen by an average of 11 stakeholders. Each of those stakeholders has their own motivations and reasons for buying. As a result, most proposals get pulled apart.
Avoid this by working with your champion on the proposal. Make sure you understand what lens to position your solution through. That way, the end product can meet the needs of all stakeholders.
Use this approach:
- Understand the individual motivations of the different stakeholders
- Identify the core challenge/need that they can all agree is the priority
- Focus the entirety of your recommendation around that
Want more expert tips on how to increase sales velocity and drive business growth? Download our ‘Sales Velocity: The crucial equation powering today’s best sales teams’ How to Guide. Follow us on LinkedIn for updates or sign up to our newsletter at the bottom of this page.