How Product Managers and Sales Teams Tackle Risky Deals

Turning big and complex deals into product wins

You've cleared your calendar to work on the business case for your next product release when a new instant message pops up.  "Good afternoon! Can you help with a product question?"  The question is coming from a sales engineer that you haven't met before.  Since your product is behind on new orders for the quarter, you need to respond to the instant message.

When you speak to the sales engineer, you learn the opportunity is big, complex, and risky.  Your initial reaction is to say the deal is too risky to pursue.  But you pause and decide to evaluate further.  While you have many looming deadlines, you know that you can learn a lot from each deal.

Handling a Big and Risky Deal

The key to handling risky deals is collaboration across your organization.  The benefits of working together in evaluating risky deals are:

• Sales teams gain knowledge in developing deals to avoid the risk

• Operational teams can help shape deals to lower their effort

• Competitive and market insight from customer conversations

However, can these benefits outweigh the risks of going ahead with the deal?  How do you get collaboration on the risk assessment of a big and complex deal?

The ways to get help in evaluating the risk of a deal are:

1. Document the deal parameters in a shared location

2. Estimate and rate the deal against your product goals

3. Review with stakeholders

Before trying to handle a big deal, be sure you have an agreement with your stakeholders on your product goals and resource usage on big, complex deals.

The next sections cover how a busy product manager gets help in evaluating a big and complex deal.

Step 1: Write the Deal Parameters

Document your crucial deal and product parameters in a shared space.  This allows sales to communicate about the benefits of winning the deal.  The usual deal parameters to collect are:

• Deal overview: why your product? Customer's goals

• Estimated total revenue over the term of the deal

• Calculation of the revenue per unit ←- this is your product's standard

• Customization and other special needs

• Level of non-standard discounting

• Decision timeframe and any deadlines

Your sales team gathers this and documents this for you.  Putting this in a shared space allows easy updates as the deal evolves.  Large complex deals can take months to close if your product is in the B2B space.

Here is an example deal overview:

If you get this information in an email without speaking to the customer or the account team, then you need to schedule a time to talk to the account team.  If the deal is just about getting an extra discount, then you still need to talk to the account team to understand what is so special about this deal.

Step 2: Rate the Deal Against Product Goals

Carefully review the write-up from sales about the deal and write notes on your questions.  If the write-up is unclear to you, then don't doubt yourself and get your questions answered.  Once your questions are answered and you have decided the deal is worth pursuing for your product, then you go forward with getting others involved.  Don't waste the time of your product team unless this deal matches your product goals.

For example, if your product is a Software-as-a-Service product that runs in the Cloud and you get a huge deal opportunity that wants your product to run in virtualized servers on customer premises then you would not take the deal forward.  You would let the sales team know that running outside of Cloud is not on the near-term roadmap and that it can't be resourced at this time. 

If the deal does make sense for your product, then the next step is to calculate the impact of the deal with help from the product team:

• Engineering and Operations: request estimates of any customization or special requests

• Finance: lay out the likely revenue, costs, and margins over the term of the deal

• You, Finance and Engineering: determine the resource and margin impacts you expect if the deal is won

With this information, you summarize the deal and the risks.  You also recommend the way forward.  Below is an example deal evaluation.

Step 3: Update Stakeholders

From your collaboration with Sales, Engineering / Operations, and Finance, you have developed a good package to update your stakeholders.  The purpose of the package to stakeholders is:

• To gather their insights about potential risks

• Validate that the opportunity is a good fit

• Confirm resources can be prioritized if the deal is won

Since you have a strong relationship with your stakeholders, your stakeholders are likely to accept your recommendations about the large deal handling.  However, occasionally they may ask you to change direction due to their inside information.

It is important that you have a record of reviewing the non-standard deals with your stakeholders in case there is a disconnect on one of your large deals.  Many organizations are fast-paced and need documentation about in-flight deals.

Conclusion

Product managers leading large and complex deals think creatively and solve problems with cross-functional teams.  Product knowledge and judgment are key to deriving deal parameters in a way that the product team and stakeholders can use.  Collaboration is essential in mitigating risks on large and complex deals.

The steps for product managers to lead the large deal collaboration are:

1. Put the deal details down in a common place where everyone can access and refer to them.

2. Evaluate how well the deal aligns with your product objectives.

3. Go over the deal with your stakeholders to gather their input and perspectives.

The ability to drive large, complex deals is a key skill for product managers to develop throughout their careers.

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