A large deal in the pipeline can swing the monthly financials for a company, and more often than not, they come as a surprise. It’s difficult for companies to get a good handle on whether a specific deal might hit this month, next month, or even next quarter. Simply asking your sales leader for their impression won’t give you sufficient confidence to make a call.
Onsite's Sales Center of Excellence receives many questions from our portfolio companies on how to build a process to review these large deals and gain better visibility into their likelihood and timing of closing. We have consulted with a sales consulting firm and several of our portfolio companies to understand how they approach this situation. What we have learned is that while there is no single process for big deal reviews, there is a consistent theme – Executive Engagement. Each of the companies that we spoke to had established a cadence for deal reviews with the executive team and had standard documents that were required for review and approval. These review sessions gave the executives a much more comprehensive view of the current deal status and allowed them to engage in the deal discussions.
Here is one particularly detailed approach to deal review:
An ARR threshold is set to capture the top 20% of deals. There is also a threshold for small deals that would result in low/negative margin. In addition, any deal with significant T&C issues are required to be reviewed. There are no exceptions.
The Deal Review Board is made up of the top executives in the company (direct reports to the CEO). These executives meet weekly on Fridays to review any deals that need decisions that week. They review that deal’s account plan, opportunity worksheet and review the steps for the client to make the decision. During the call they make recommendations on the engagements and the solution being offered and make the final decision on whether to move forward.
In situations where there are significant resources required to respond to an RFP or to engage with a prospect, the business leader and sales leader reviews the opportunity and determines if they will invest the resources. This process occurs before any significant engagement and is intended to avoid wasting resources where it appears that there is limited chance of winning based on competitive positioning or lack of prospect budget.
Deal Structuring/Solution Design
Discussions with the prospect have progressed to the point of offering a solution with preliminary pricing. The sales team presents the various documents and the strategy to win the specific deal. The Deal Review team provides insights and potentially offers up suggestions for networking or references that might help drive the deal forward. On average they spend 15-20 minutes reviewing a deal at this stage and encourage the sales team to bring the deals back regularly for updates.
The deal is beginning negotiation and there are now only 2 competitors being considered. The sales team returns to the Deal Review and presents updates on the negotiation and a request for final pricing. The Deal Review team provides final pricing approval and reviews any final customizations to the offering or changes to T&Cs. This is a more detailed review and takes 30-45 minutes depending on the size and scope of deal.
The largest variations come from the types of material required. Most require an account plan and a prospect decision process guide. Some companies also require business cases, formal call plans, and documented approvals from product teams (where product changes are needed). We have also seen some companies require the use of this process for large renewals and expansions. Consider your specific company’s needs and adjust the requirements accordingly. You don’t want to make the process too onerous, nor do you want it to become so loose that you miss the key information.
We recommend the creation of a deal review process for deals that are materially more than your average deal. Best practice would be to set a threshold where the top 15-20% of all deals would be reviewed at the Deal Review call. These calls should be held regularly and everyone should be accountable for bringing deals to them; there should be no exceptions made as that will eventually undermine the process. The actual process itself can be modified to fit the needs and the workflows of your specific company, but having a standard review process is key to reducing surprises in the forecasting process.
In each company that we spoke with, the impact of installing a deal review process was significant. Win rates increased as sales people had more support and direct engagement from the senior leadership team. Discounting became more consistent and controlled. Visibility into timing improved significantly. And in some cases, size and scope of deals increased as the team expanded the client relationship. But most importantly, those companies that implemented the process had a much higher degree of confidence in their forecasting capabilities.