Sales
Average Deal Size
Average Deal Size is a metric that quantifies the average revenue generated per sale or contract, providing insights into the value of transactions a business typically secures. It's a critical indicator for evaluating sales performance and business growth strategies.
HOW TO MEASURE
Calculate the Average Deal Size by dividing the total revenue earned from sales in a specific period by the number of deals closed during that period.
HOW TO IMPROVE
Upsell and Cross-sell: Implement strategies to offer additional services or products that complement the main purchase.
Focus on High-value Leads: Prioritize efforts on leads more likely to close larger deals based on historical data and customer profiling.
Improve Sales Training: Equip sales teams with skills to negotiate better terms and recognize opportunities for larger sales.
Refine Pricing Strategy: Adjust pricing structures to reflect the value delivered and encourage larger purchase commitments.
FORMULA
Average Deal Size = Total Revenue / Number of Deals Closed
EXAMPLE
A B2B software company earns $500,000 in revenue from 100 closed deals in a quarter. The Average Deal Size would be: Average Deal Size=500,000/100=$5,000. This indicates the average revenue per deal is $5,000.
DEPARTMENT USAGE
Sales: To assess performance and set targets based on revenue per deal.
Finance: For revenue forecasting and financial planning.
Marketing: To align marketing efforts with the types of deals that bring in the most revenue.
Leadership: For strategic decision-making based on the value of customer engagements.
View the collection of Metrics Workshops.