In the eye of an inexperienced person, sales might look a little bit different every day. Odds are, however, that there are patterns that repeat themselves through the lifetime of the sales cycle.
Although each situation might look different on the outside, there are steps and activities through which each prospect needs to go to become a loyal customer.
By defining these steps, organizations can create a winning process for their sales teams. Ignoring the fact that sales activities are not a combination of casual coincidences can lead organizations, of any size, to inevitable failure.
- What Is A Sales Cycle?
- Why Understanding Sales Cycles Is Important?
- What Are The Sales Cycle Stages?
- Steps To Shorten Your Sales Cycle Management
- Key takeaways
What Is A Sales Cycle?
A sales cycle is the process that your company takes to sell your services and products. In simple words, it’s a series of steps that your sales reps need to go through with prospects that lead up to a closed sale.
A common misconception is to think that sales cycles are different depending on the industry. The reality is that the steps are the same.
The length of the cycle and the key metrics that each company tracks, however, are the factors that sales managers should keep in mind.
For example, there are industries where a prospect can turn into a customer within 30 days and others where it takes at least one year.
Why Understanding Sales Cycles Is Important?
When managers understand how the sales cycle of the company in which they operate works, they can start setting up a series of activities that simplify tracking and optimization.
Then, having a full understanding of the customer journey from the first touchpoint to contract signed can improve dramatically how the company deals with objections and internal bottlenecks.
What Are The Sales Cycle Stages?
Generally speaking, there are six stages that everyone should be aware of when thinking sales cycles. Sometimes, you can add an extra one at the end, depending on whether referral is part of your daily routine.
The critical stages of a sales cycle
1. Research & Prospecting
Finding new prospects to fill in your sales team pipeline is going to be the lifeblood of your business. No prospects, no business. It’s as easy as that. Before identifying potential buyers, however, it is essential to have done good research on the type of buyer your organization wants to target, the so-called “buyer persona”.
In this step, you are not only generating leads, i.e., collecting contact information, but your sales reps also need to think at the best way to reach out to them as well as actually making the first contact.
2. Prospect Fit
Once your team starts to have conversations with potential buyers, there’s a need to understand whether or not this will be an ideal customer or not. Unfortunately, not all prospects are created equally. Each organization should develop a set of key metrics by which the ideal customer is defined.
After doing so, all new prospect your sales reps start to talk with will need to be evaluated against those metrics. The importance of this step is often undervalued and as result companies start closing customers which bring little or no value.
3. Offer or Demo Presentation
Depending on the type of product/service your business offers, you might jump straight into the offer phase or go through a product demo first. Regardless of which comes first for you, this is a critical step for success. Most businesses often fail here by not customizing their proposal according to prospects’ needs.
If you present a generic offer and don’t respond to your prospect needs, you are wasting time. Even if your company can’t customize the solution selling, your reps should still tailor the offer to what the potential buyer is looking for. Understand what your prospect needs and then highlight your product or service advantages accordingly.
4. Objection Handling
There’s no sale without objections. It has been shown that actually there’s a 2% chance that someone will buy at the first attempt. On top of that, if a prospect jumps on buying a solution or product with no question, you might want to revisit the “Prospect Fit” step.
Objections are a natural part of the sales process; for this reason, your team should be well-prepared for them. There are common questions, such as price, timing, competition, and then there are others that might be specific to your industry or even company. The best approach to this is to be structured (like everything else in sales).
Create a document and let your sales team fill in all the objections that they face during the sales cycle. Review these regularly and group them into categories.
Then, every week or so, get the whole sales team together and let them work on a standard answer that satisfies both you and the reps.
In this way, you will let your team feel empowered in deciding how to respond to these, while at the same time overviewing how they position your company.
Lastly, working on objections can also help the tech team (if you have a product) developing features accordingly, so it might actually be a good idea to have now and then someone from the product team sitting in those meetings.
A natural evolution of the previous stage is to start negotiating with the prospect about contracts terms. This step can vary in time-length depending on the complexity of the solution you are selling.
On average, in a company with 100 – 500 employees, seven people are involved in a buying decision.
For this reason, it is essential for your sales team to have a good understanding, at this stage, of who are the decision makers and ensure that they have all the information needed to make the right choice.
6. Closing A Sale
Most companies often mistake this part of the sales process with a formality and therefore underestimate its value. It’s vital for your sales reps to have a full understanding of your prospect’s mood now and to adapt the closing styles accordingly.
All the work your reps have done up until this point is what will determine the final note of this song. Often time, just by making sure all the paperwork is handled correctly and promptly can smooth this last stage.
7. Referral Generation
Asking for a referral is not necessarily part of the sales cycle. However, as a growing company most likely you are strengthening your brand every day by establishing yourself as a trustworthy partner with good products and services.
There’s no specific moment to ask for a referral. However, it is usually good practice after the sale is closed and the customer is happy with what you are providing. Remember to hold on asking for referrals if the client doesn’t seem fully on board with your solution.
Steps To Shorten Your Sales Cycle Management
Regardless of how well your organization is doing, there’s always room for improvement. Your sales team should continuously optimize their activities to shorten the time from one stage to the other.
1. Automate Repetitive Tasks
InsideSales showed that sales reps spend only a third of their time (35.2%) actually selling. That’s an average of 14 hours out of a 40-hour week. Improving sales cycle is also about letting your sales team do what they are supposed to.
Automating repetitive and “low-value” tasks will allow reps to focus on selling and serving your prospect better, shortening the time between each cycle.
Implementing and configuring a CRM in the right way will help gather all the information in one place and make analysis and data processing simple.
2. Follow Up Consistently
Sales professionals know very well that establishing the first contact is just a small victory in the whole process. Following up, on the other hand, is what makes the difference. Prospects sometimes disappear and stop returning calls or even emails.
On average, five email follow-ups is the best number to move the prospect down the funnel, as a matter of fact, 50% of sales happen after the 5th touch point.
However, surprisingly enough, the average rep makes two attempts to follow-up with a prospect, and 44% give up after the first one.
3. Stay On Top Of The Cycle
One of the critical mistakes many sales reps do is to keep a deal “alive” for too long, but how long is too long? This changes from company to company and also from the industry. However, your sales managers should be aware of the average sales cycle length and the touchpoints cadence each lead needs.
Be aware though that sales reps don’t give up so easily on their leads, for this reason, evaluate follow-ups quality and strategy, and check effective interactions. Make sure no lead gets ignored but that there is a good lead recycling process to add fresh air in the pipeline.
4. Work On Incremental Wins
If you focus exclusively on the final sale, i.e., the contract signature, you might be putting too much pressure on your lead from the very beginning. Asking for small commitments to your prospects will make the whole process look less complicated.
Incremental wins should also be used to encourage sales reps to take small steps towards the bigger goal. Focusing on these reduce the pressure also internally and make the sales process more effective.
5. Focus On The Team
It is most likely that in your team, some of your sales reps are performing better than others. Take a look at what they are doing and create successful processes out of their daily routines that can be applicable to everyone else. Creating repeatable process is key to success. You don’t always need to reinvent the wheel, improving it is sometimes enough.
To shorten the sales cycle is fundamental first to get a good understanding of it and align your whole team on what’s needed to be done. Having clear what are the steps in your company (and industry) sales cycle will allow you to work on continuous improvements to shorten your way to repeated and scalable success.
Sales activities should be process-oriented and planned very well. Implementing and repeatedly testing processes will help your sales reps improving their daily contribution and conversation rate. Creating sustainable growth is the key to long-term success for your company.
Other business resources:
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- The Complete Guide To Business Development
- Business Strategy: Definition, Examples, And Case Studies
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- What Is Market Segmentation? the Ultimate Guide to Market Segmentation
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- Marketing vs. Sales: How to Use Sales Processes to Grow Your Business