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CEO @ Revenue Funnel | GTM Strategy Consultant | LinkedIn Top Voice in Sales
Increasing Average Contract Value (ACV) can help your business grow faster while staying efficient.
Think of it this way: all deals take time, but a $10K deal doesn’t take ten times more work than a $1K deal.
Growing your revenue without adding more people or technology is possible when you increase average contract value.
As such, ACV is a key metric in the health of a business – particularly in a recurring revenue SaaS business.
In this episode of Closing Time, Insightly CMO Chip House is joined by Revenue Funnel CEO Hannah Ajikawo to discuss four ways to increase ACV in your business: increasing the price, selling the solution, extending contract length, and enhancing the value.
So you want to grow your business but don’t have the budget to hire more salespeople or increase your marketing spend. What if there was a way to become more profitable without additional resources? It sounds too good to be true, but that’s the power of increasing average contract value (ACV).
When businesses successfully negotiate larger contracts, they can generate more income from each customer, maximizing the return on investment in acquiring and retaining clients. This increase in revenue can lead to improved cash flow, allowing companies to invest in innovation, expand their operations, or allocate resources more efficiently.
For salespeople, a higher average contract value means greater commissions and incentives, providing a strong motivational factor. It often implies that the sales team is effectively identifying and targeting high-value clients, showcasing their ability to navigate complex sales processes and build valuable relationships.
Hannah maps out four ways sellers and their leaders can boost deal size, with the first being the obvious, price. Sure, higher prices equal more revenue, but in a world where costs are rising, and businesses are cutting budgets, Hannah cautions against hastily blindsiding customers with a higher ticket price.
Price hikes should be made strategically, backed by data, and carefully considered by leadership before being polished by marketing and fine-tuned by sales. It should also be communicated appropriately and thoughtfully to buyers—they shouldn’t see a different price on your website or in a marketing email. There needs to be a narrative because you want your customers to see the added value, not just feel like they’re forking out more cash. Craft a story that aligns with market changes, ensuring your team can discuss price adjustments seamlessly.
Take Netflix, for example. They raise prices by just $1 for their 240 million customers and see almost a quarter of a million dollars added to their bottom line. But after the 2nd, 3rd, and 4th price hikes, they’ll start to lose customers who no longer see the value in what the platform is offering. Pricing changes should always be transparent and customer-focused.
Hannah’s second lever to pull for increasing ACV requires sellers to view their product not just as a standalone offering but as part of a broader solution. Recognize that you’re addressing only a fraction of a customer’s bigger challenge at any given time. So, it’s the seller’s responsibility to understand the larger company initiative your solution aligns with and identify what other components are needed to solve more of that problem.
For instance, many of today’s organizations are trying to consolidate their tech stack. They’re moving from, let’s say, 100 platforms to 90 this year, then 80 next year. Be the rep who says, “I get the bigger problem at hand. While you’re consolidating your tools, consider this feature or product that we also provide.” Become a trusted advisor, retaining relationships and adding value, even in areas the prospect hadn’t initially considered.
Don’t just stay in your lane; discuss the entire challenge. This positions you as more than a one-trick pony. Offer insights, even if it’s not your primary forte. Research on behalf of the prospect, make recommendations, and show willingness to collaborate beyond your core competency.
Chip shares how Insightly started as a CRM company, and over time, expanded into marketing and service, adopting all-in-one pricing for a comprehensive customer view. This approach compounds value, accelerating the roadmap and increasing the willingness to pay, subsequently boosting ACV.
If increasing the price or selling the solution are not applicable to your deal, consider extending the contract length to 2, 3, or even 4+ years. Multi-year deals can significantly increase deal size and overall ARR for the business. To pull this off, Hannah encourages sellers to focus on understanding the bigger problem at play. It’s a similar mindset to solution selling in that you need to connect your solution to the longer-term goals of the customer. Make it clear that committing for more than one year makes strategic sense.
In some cases, especially with Enterprise deals, Hannah has seen contracts stretch beyond ten years. This longer commitment is justified by the substantial time, effort, and resources required to realize the full value of the solution. Organizations need to equip their reps with the understanding of why a longer-term approach benefits both parties.
Consider the buyer’s perspective—multi-year deals are appealing because once a software decision is made, buyers prefer not to rethink it in a short timeframe. It aligns with the organizational process of realizing value, showing ROI, and avoiding unnecessary disruptions.
Keep in mind: As a seller, your goal is to facilitate and help buyers make informed decisions. With multi-year deals, you’re not just renewing a contract; you’re renewing a relationship, a business case, and the perceived value. Don’t overlook the strategic importance of these renewals; instead, see them as logical steps in a mutually beneficial partnership.
Have you ever dined at a Michelin-starred restaurant? You walk in and are happily greeted by staff; you don’t have to wait; they know your food allergies and preferences, the service is fast, and the food is even better. Customers are willing to pay top dollar not just for the food, but for the entire experience—from booking to personalized service. A similar concept can be applied to the B2B sales process and overall customer experience with a brand.
Sellers who offer a seamless, frictionless experience throughout the buyer’s journey will inevitably be worth more in the eyes of buyers. It’s not just about price; buyers value the overall engagement.
Hannah explains that to increase deal size, sellers should establish themselves as a trusted advisor, not just a rep chasing commissions. Reduce friction in your process, create clarity, and build relationships. People are willing to pay more for certainty and a hassle-free experience.
Understand the buyer’s needs and deliver on promises throughout the sales process. Instead of asking, “How do I get a discovery call?” ask, “What does the prospect need to spend time with me?” Shift your perspective and deliver on the buyer’s expectations at every step.
Think beyond discounts. Add value that costs little but means a lot to the customer. For example, streamline onboarding by providing answers to common questions ahead of time. Show the customer that your company makes their life easier, and provide a service that the competition won’t be able to match.
When customers see the value in your execution—from onboarding to ongoing support—they’ll be less inclined to negotiate on price. It’s about driving value through impeccable execution, making your solution not just a purchase but an investment worth every penny.
For any business, especially those that are SaaS businesses, increasing what you sell your product for is often a good thing because it will help you grow your business. Specifically in SaaS, there’s an acronym we love ACV, which is annual or average contract value. And in this episode of Closing Time, we’re going to talk about ways to increase it. Thanks for tuning into Closing Time, the show for Go to Market Leaders. I’m Chip House CMO at Insightly CRM, and I’m joined by Hannah Ajikawo, a go to market strategy consultant and CEO of Revenue Funnel. Thank you for joining us, Hannah. I’m always happy to be here. Yeah, it’s phenomenal to have you. And I’m excited for this topic because I’ve been in SaaS for longer than I care to admit frankly, and I know how important increasing your deal size is, how important it is to increase your ACV. And you’ve got some great ideas on how to do that. So when I think about from a marketing standpoint, from the chair that I sit in, obviously it comes down to a little bit, you know, who’s your ideal customer profile and who are you actually targeting with your messaging, with your with your ads, things like that. That’s often like kind of a first step. But once it gets into the sales funnel, right? And so you’re a salesperson talking to a potential customer. There’s a lot of things to talk about that can help you increase your average deal size. So that’s what I’m going to talk to you about today. So the first thing is obviously price, right? And so talk to me about increasing your price. If you’re a SaaS company and if you’re a salesperson, how you go about managing that? Yeah, no thank, Chip, and this is, I love talking about this. I’m going to take it a tiny step back, back to that step you were talking about, about the target addressable market, because I think it’s just it’s so important to double down on that quickly. So all of these things around ACV become easier when you are in the right place, when you are trying to get your products and solutions to market in a place where you are uniquely positioned to sell for a very specific thing, it’s just inherently going to be more valuable. So it’s not just, you know, we are a CRM and anybody that has data for customers can plug it in. But it’s like, what specific scenario does that type of market need to be in for them to only choose us because of the mechanics of how their business works, the way they capture data, the way in which they interact to their potential buyers and customers. So I just think that part is just really important. Now moving into price. And I think right now we’re in a place where everybody has become accustomed to the fact that things cost a little bit more and some things we’ve automatically been told, hey, the price is going up, the world is changing, you’ve got to pay more and and some things where and we’re like, okay, fair enough. But there’s some other things where we’re like, I don’t really want to pay more for that because I didn’t feel like I’m actually getting the value and I don’t feel like. I received this message properly. And I feel like you might be using excuses for why you’re just charging me more. So I think there’s a bit of an art to the way in which companies can go about increasing prices, but it can be so significant in impacting the average, you know, initial contract value or the average contract value your having with a particular company. And I’ll use the example,. Chip, of Netflix. Right. Netflix increased their prices. Netflix have approximately 240 million users. It takes a $1 increase to create, you know, a quarter of a billion in new revenue which times by, you know, 4x look how much that adds to that to the stock price. Right. So it’s when done correctly, it can be so significant for your business. But I really do say do it with caution because it shouldn’t be the job of the salesperson to be like,. Hey, yeah, we have to put our prices up because people like,. I didn’t prepare for that. It’s like just at the renewal time or I saw on your website, you know, last week you had pricing on your website. Now you don’t have pricing your website, what’s going on here? So I feel like there needs to be some kind of narrative and you understand how you do that storytelling right as a marketer to say, okay, what foundation do we need to lay and what materials can we provide our reps to allow them to have that conversation with ease? Yeah, that’s perfect and good to be Netflix, right? But I think the rest of us, you know, feels like we’re fighting for peanuts compared to that. I think, you know, relative to price, I think a lot of companies maybe overindex on the competitor that’s priced below them, you know, and you know, they’re concerned about it. But, you know, I think we’re going to talk about kind of value based pricing and value enhancement and things that you can do as a salesperson there. But the other thing that I’ve heard you talk about, Hannah, is solutions selling. Right. And, you know, if you are an AE and you are selling a product to a customer, you’re ultimately selling a solution to them. But how do you think about it? Yeah, so I think about this in a slightly different way. So I, I always encourage companies and reps to look at the biggest picture that their solution fits inside of. So you always think about when you are solving for some kind of desired outcome, that desired outcome for that decision making unit or person, group of individuals, is usually tied to a bigger company initiative. The good reps work out what that is. The ones who are not so great may not understand that, but the formal way of doing it is, is the way that allows you to create a solution sale. Because what you do from there is you recognize that you are solving at any given time, maybe just 15% of that bigger problem or that bigger challenge or opportunity. And now what you’re trying to identify. Okay, so what are the other little pieces that need to be added to that to actually make sure that we’re solving more and more of that problem. So right now, a lot of organizations are thinking about tech consolidation. They’re trying to go from that 100 plus platforms to let’s get to 90. The next objective is 80. So they’re thinking, okay, so who do you,. I’m just going to switch all off and it’s our job as reps to be like, well,. I kind of have a good understanding of the bigger problem. You know we can’t be doing this, but we do actually also provide this. So in that situation, you’re retaining relationships you have. You’re actually adding more value, even though the prospect may not have been considering you for this particular part of the problem or challenge. So now you’re having this dialog where you are this trusted advisor and you’re saying,. Hey, this is how you’re currently thinking about it, here’s some alternative ways of doing that and solving for that problem. And it can be done here, even if it’s not perfect. Just that whole, we have this initiative around reducing platforms and we don’t want to have multiple vendors and 100 customer success managers. We’re happy to get this far ahead with you as someone that we already trust. Yeah. So if you’re in marketing or in sales or even in CS and you’re supporting your customer over time, you’re trying to optimize the value and you have to introduce the idea to the customer for them to even understand what that solution could look like, correct? Absolutely. And I think that’s the whole point of getting creating a relationship with a prospect that allows them to kind of step outside of that one thing that they think you do. And having those broader discussions,. I always say like don’t selfishly just stay in your lane, talk about the entire problem and very easy to say, hey, now I have a clear understanding. I just want to create alignment here. We do this really well, we do that kind of well, and that part is not us at all. So but I can. I’ll do some research on your behalf and maybe put out some recommendations for you on that piece. But that’s what we should be doing anyway. And then guess what happens? You get to that part of that thing that you do kind of well and now you’re brilliant because the roadmap’s accelerated and people are willing to pay you and alternatives and subsequently, sorry, you increase the average contract value. Yeah, it makes good sense. I mean, just for Insightly. We were a CRM company for nine years before we introduced Insightly Marketing, right? And then we introduced Insightly Service. And so now we have a platform and last year we added all-in-one pricing, which is sort of a solution based pricing that gives people kind of one view of the customer across all those different departments and so hopefully, you know, we’re seeing some of that solution selling in our price modeling as well. And I think that you can help the sales reps when you do that right. Yeah, it’s about compounding value, right? That’s what you trying to do when you’re adding more, adding more products, you’re compounding the value. And alternatively, there’s a bigger opportunity in front that’s up for grabs. Yeah, I think a piece of that right, is when you’re negotiating with a customer, there’s often, you know, there’s price, there’s the length of time of the contract. So I’ve heard you talk about a way to increase deal size is to do a multi-year deal. And how do you go about that? What are your strategies for that Hannah? Again, let’s go back to just the idea of understanding the bigger problem. The bigger problem is always going to override the little piece that you might be contributing to unless you are providing some kind of big ERP like, you know, multi-platform, multi-division, multi-geography type thing. But typically we need to understand what the longer term goal is and just help people see that. It just makes sense in depending on the solution to make sure that we can bring this in for two, three, four, five years. Now I’ve sat in organizations where for Enterprise as an example, the contract values go over ten years, there’s a ten year contract because of just as they like the time, effort, resources and money that it takes to make this thing realize any value is so significant. And so there’s this acceptance that when’s the first time when it gets a value. Okay, that’s going to take about six months. Okay. So when are we going to start seeing consistent value? Probably at eight months.. Contract is over. We have to go for two years. So again, I think it’s on the job of the organization to equip reps with understanding why that this longer term approach to securing a vendor is going to be in their best interest. And sometimes it’s because, hey, the change management, like what’s the narrative around that? And helping that prospect to understand that it just makes sense, like does your team want to reintroduce something again after a year? Probably not. Does you know, how many things do you currently have in your business that you’ve only had for a year? Not that much. It’s actually quite logical to have something for a longer time. I think we just can’t leave that to the discretion of the rep to try and figure out the best way to position that. If it’s a company initiative,. I’ve seen it work so well when it’s a company initiative to do it and all of the different parts come together to make sure that that makes sense. Yeah. And so when I think about multi-year deals as a buyer, there’s a certain appeal to that to. Right. You know, just because if I’ve made a decision to buy a piece of software, I don’t want to rethink that necessarily in nine months, maybe when I have to give notice or something, if I’m going to get out of it and it’s going to take me some time organizationally to realize that value, show the ROI, potentially, etc.. And so you’re actually if you do it well, you’re helping out the buyer as well, which is the point of solution selling also. Absolutely. And that’s the thing our intention should always be to facilitate and help buyers make decisions about things. And one of those decisions is should I continue to work with you? And I always say like the over the multiyear, we have to understand that we’re not just renewing a contract, we’re renewing a relationship, we’re renewing the business case, we’re renewing the value, and oftentimes we overlook that. So we’re just thinking, oh it’s just you know, just a quick renewal, let’s just do it automatically and I don’t have to get involved. But we have a multiyear agreement and we’ve laid out the steps and the milestones that we’re trying to meet. It’s like, well, this is just logical. Yeah. Two years is fine. Three years is fine. Yeah. So you’re just really focused on establishing, understanding and value as you discuss that. So that that’s a great actually transition to circling back to value enhancement. And you know, I’ve heard you talk about that, but I would love it if you could define that and how you go about that for all of our guests. I really think you can drive up the dollars, the cents, the pounds, whatever currency you’re working in, inside a deal simply through the way in which you’re executing. And so let me give you an example. Have you Chip in the last year, have you been to a Michelin star restaurant? Oh, yes. Uh huh. We will go into a Michelin star restaurant and pay 40, 50, $60 for spaghetti simply because of the experience. And they may put some parmesan on top and we’re like even better add more 5 more dollars. All right. But that’s simply because there is this finesse. There is this this frictionless experience that we go through when we walk into those environments from our booking through to, you know, welcome, Chip, This is your third visit. How’s your family? How’s this? You said, do you still want that bottle of wine and all. It’s the entire experience. Yeah, it’s the entire experience. And you, you don’t have to think. You’re already a busy person. You don’t have to think. And I think when we bring that style of delivery and experience and the data continuously shows it, you know, people we thought it was just price. But it’s experience that really matters during the sales engagement, you know buyers are willing to actually speak to us today even though they say they don’t if we can add value, if we know more, if we can actually help them advance their own understanding of issues and problems. So it’s really in how are we helping to create an experience that’s frictionless. There’s no overlap, there’s no repetition going from each person like SDR does the discovery, the AE does 80% of what the SDR did, and then it goes to the CS team that’s like, What the hell have you sold? And then, now we’re firefighting and they’ve already put in their non renew at four months. If we start to really create inherent value in our process, which is around reducing the friction, creating this trusted advisor relationship rather than just a sales rep trying to get commission, people will just attach more value to you. They won’t be surprised when you’re like 10% more, 20% more. And I’ve been in situations where someone has said this is way more than the other companies. Like absolutely. And they’re like, But I get it. I get it because I can see the difference. I can see that you were clearer, your breakdown and your process was very clear. I know exactly what’s going to happen once we sign on the dotted line. You’ve told me where it goes wrong. You’ve highlighted other customers and you’ve let me speak to them. There’s all of these things that happen that make that so easy for them. And people are willing to pay for certainty and they will pay a lot for certainty. Yeah. So if I’m spending $100,000 on software and I’ve talked only to the sales rep, I know that something is wrong. Yeah. So I would expect to, you know, see an integration consultant, meet my account manager, get a chance to talk to some former customers and they’re talking to multiple people in my company, not just me. Right. Yeah. And we do that by, you know, as reps and organizations trying to understand what are the things that this buyer is really going to need in this moment. And I always say, I think I said recently, hey, like rather than saying what more do I do for someone to book a meeting with me to say,. What is it that I think this prospect is going to need for them to spend time with me? Because if otherwise, what else matters? Like, I don’t want to say how someone said, How do I get a discovery call? I was like, Oh, I don’t know. What do you think your prospect needs? Why would they want to meet with you? Maybe it’s not a discovery call, maybe it’s a brochure they need. So we just have to shift how we think about those things and deliver on the deliver on the many promises we’re making throughout the sales engagement. And then we’ll see how that starts to change the pricing that we can put out and the way in which we’re actually, the deal values that we’re seeing as well. Yeah, it’s interesting. I actually. I love the restaurant metaphor for that experience because it’s almost difficult to put into words because a certain amount of is just the overall experience. Right. It tastes better not because, well, it probably is you know, because it’s got a Michelin star. Yeah. But it’s the service, it’s the environment and, you know, sort of similarly, it’s how prepared the SaaS company is that you’re doing business with. Yeah. Have they done this before? Is it obvious? Are you working with a set of intelligent people who give you a roadmap. Right. And, can help you establish and understand ROI and value that you’re going to get by purchasing their software? So I mean, that kind of value is truly value added to whatever price you’re paying. Yeah. And let me give you an example. You know, I was working with a team for a couple of years and I said to the CS team, you know, as the people’s purses are getting a little bit tighter, a lot of people are going to ask for discounts, right? So what do you do? Not even to add more value, but just to retain the value that they think they’re getting? What can you do that cost you no money and I set them all that challenge. Go out and figure out what you can do that cost you no money, but seems very valuable to the prospect, to your customer and everyone was getting creative. Well, actually, Hannah, people always ask me these 25 questions during onboarding, I’m like, well, give them something so that they have the answers to that. And I said, Do you think that the person that’s going to come in and resell to them after they’ve not renewed with you is going to do all of that? Absolutely not. And even in their sales pitch, they’re not. So you’re going to show them that to be fair, this company just makes it so much easier for me. It’s not worth me asking for a 10% discount. I’m just going to leave it as it is and keep it going. So we got to think about those low cost, big value initiatives we can drive to help with that execution, value through execution. Yeah, it makes a ton of sense. Well, really appreciated having you on, Hannah, it was really great. Thank you so much.. Chip. Can’t wait to come back. Yeah, would love to have you back. And thanks to everybody out there for joining us on this episode of Closing Time. And we’re excited to see you next time.
