Smaller deal or larger pilot?

Today one of my clients asked me a great question: ‘When we’re in an enterprise deal, and they like our technology but are undecided and hesitant to move forward, is it better for me to try for a pilot or for a smaller initial deal?” (I love this question not only because it’s an important issue to decide in advance, but also because simply asking it tells me that my client is growing in the creativity and optionality which is crucial for sales!) There is never one, universal answer to this kind of question, because every business is different and every customer is different. Nuances like the effort involved in implementation and training, the health of the customer relationship, and how quickly ROI on your product can be measured all come into play. But all things being equal, you are better served by closing a smaller initial deal than by committing to a pilot at full scope, for at least four reasons.

First, there is the issue of commitment - and this means not only legal/contractual commitment, but psychological commitment on the part of your prospective customer. Even though they may invest time and effort in a pilot, the mental commitment to an ongoing business relationship is not there. In a pilot, even though you may be very excited about the work you’re doing on the customer’s behalf and very confident the pilot will be successful, the reality is that your prospect said ‘yes’ to a date, not to getting married. The psychological power of signing a contract and paying an invoice must never be underestimated.

Second, because of that psychological commitment which is inherent in a signed contract, you are going to have much more of an opportunity to continue building and deepening the relationship. Ongoing touch points like monthly progress meetings or quarterly business reviews provide a context for an ever-growing business engagement that is never going to happen with a pilot, no matter how successful.

Third - and this point grows out of that frequency and depth of communication just mentioned - expansion deals become not merely possible, but something between ‘likely’ and ‘certain.’ If you already have a company as a customer, you’re communicating with them well, and they are enjoying demonstrable ROI from your product, you absolutely will be able to grow that initial smaller deal into the larger scope that you originally discussed. As a mentor of mine used to say: ‘I don’t know who they’re going to buy that first license from, but once they’ve bought it, I know for sure who they’re going to buy the next license from.’

And finally, even with products that deliver almost immediate ROI, the hard reality is that more time means a much greater chance of proving your product’s worth. Even a 90-day pilot that blows your customer’s socks off is not going to have the impact of demonstrable ROI over a year or two. Current vendors with an established track record of delivering ROI are in a completely different position when the customer’s budget and planning cycle comes around than vendors who had successful pilots. Success OVER TIME matters in a way that nothing else can, so you need all the time you can get.