Your Average Sales Price (ASP) is climbing steadily, and you’re thrilled. You’ve been working hard to increase your company’s (ASP) and move upmarket — changing sales and marketing tactics to earn more money with every deal.
But has your team really started closing larger deals, or are you being misled by the data?
Unfortunately, ASP can be an inaccurate measure of what’s really happening on your sales team. If just one sales rep on your team closes a huge deal, your ASP could jump up substantially and trick you into thinking you’re making progress team-wide. While closing a few large deals is great, it’s not indicative of the value of deals all your reps are closing.
If you’re trying to move upmarket, how can you track whether your mix of deal values is really increasing over time? You need to start tracking the metrics that really matter — you need to understand Deal Value Over Time.
The Weakness of ASP
Though Average Sales Price is a basic metric you still need to understand, in some cases, it doesn’t tell you the whole story. Although ASP gives you a good pulse of trends across the sales team, an average isn’t an exact measurement. Outliers in the data can skew your results in ways that you don’t fully understand, or your data could be changing in ways you didn’t expect.
If, for example, you’re closing fewer and fewer small deals, your overall ASP could increase and you might assume it’s because you’re closing larger deals. However, you’re not actually closing larger deals at all — you’re just closing fewer small deals which shifts the metric.
Unfortunately, this is a risk many businesses take when moving upmarket. As your company grows, you often add processes, change pricing and can sometimes lose the ability to close small deals. That opens you up to disruption from below — a startup can come in with a simpler product, a lower price point, and steal your smaller customers away before you know it — if you’re not tracking the right metrics.
What is a Deal Mix Report?
Instead of being in the dark about the deal values your sales team is closing, you can truly understand what’s happening on your sales team. Look at Deal Value Over Time, also known as the Deal Mix Report, to help you unpack the story of what’s going on behind your ASP.
Here you can see that last May, 60% of your deals were $5K or less and only about 11% were more than $15K. This May, your deal mix has moved slightly upmarket — about 50% are $5K or less and 15% are more than $15K. You can clearly see these numbers have been up and down in the past year, and take action based on the patterns you see. You may decide, for example, that you haven’t made enough progress in moving upmarket, and need to double down on your efforts to change sales and marketing tactics.
The Benefits of Tracking the Deal Mix
Understanding deal mix changes over time is vital to making changes on your sales team. You can also get more granular by filtering the deal mix by geography — comparing the US and European markets — or by teams. You can learn that the management of one team is implementing your plan to drive up the sales price effectively, while another is not.
With this data, you can offer effective coaching to your team and affect real change. It’s easy to find out what one team is doing successfully, and replicate it across all of the teams. You can also understand what works in one market, but doesn’t quite work in another. The data help guide your sales decision-making from start to finish.
Too often, ASP can be just a vanity metric that doesn’t tell you everything about the deals your sales team is closing. Take another look at the numbers and start tracking Deal Value Over Time to learn what’s really happening behind the scenes on your sales team.
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