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What is a Sales Cycle?
When businesses refer to a sales cycle, they’re referring to a strategic and repeatable process or series of steps that their salesforce follows in order to convert an inbound lead into a customer. To better understand where prospective client is on their journey to conversion, many teams use a sales pipeline to visually showcase these prospects and where they are in the purchase process.
In essence, the sales cycle is a guide to the process or steps a lead might take in order to inform their purchase decision with a business. For example, marketing collateral could pique interest in a certain product which would in turn result in the lead reaching out via the business’s website for more information. From there, it’s the role of the marketing and sales team to qualify the lead and decide whether the business prospect is worth pursuing with the end goal of conversion in mind.
The sales cycle can be used as a forecast to help sales representatives have a view of their account, where each of their potential clients is sitting, and understand how close – or far – they are from meeting their quota.
- sales life cycle
- stages of the sales process
B2B vs. B2C Sales Cycles
Businesses either sell to other companies – B2B – or directly to consumers – B2C. While sales teams working in the B2C and B2B space may both use a sales cycle to map out where each of their leads is in the purchase process, these two sales cycles differ in a few key ways. Zendesk’s Director of Marketing Josh Bean outlines 3 key areas of difference when comparing B2B and B2B sales cycles:
- Time to Purchase
Most of the time, a consumer makes the decision to buy a service or a product relatively quickly. This is due to the fact that there’s normally only one person who needs to make the decision to purchase on a consumer level.
When it comes to selling to a business, the sales cycle needs to take into account things like budget, decision-makers, product demonstrations, and pitching; all of which can take time and effort.
- Individuals Involved in Decision
The number of stakeholders involved in the decision-making of a purchase is one of the biggest differences when looking at B2B vs B2C. When selling to a consumer directly, you normally only need to convince one person that your product or service is worthwhile, whereas if you enter into the B2B space, you might have a hierarchy of decision-makers you need to negotiate with and impress.
- Total Leads
This point might seem obvious, but when it comes to B2B you have fewer potential clients than if you are selling directly to a customer. This is because there are more people in the world than businesses, so your opportunity to convert in the B2C space is higher.
Sales Cycle Stages
In order to run a salesforce who are able to plan, implement, track and optimize, it’s crucial to develop and follow a sales cycle that works for your business. According to Hubspot, sales cycle management is the process in which managers, sales reps and business leaders monitor and track each stage of the sales process, in order to meet quotas and grow the business. They identify trends and determine which steps of the process are doing well or need to be improved.
In this stage of the sales cycle, you and your team will need to hunt for potential customers; this can be done through LinkedIn searches, contacting referrals from other contacts, and getting in touch with those who have taken action on your website.
Your sales team will work hand-in-hand with the marketing department to identify and qualify SQLs (sales-qualified leads) to push into your sales funnel. It’s pivotal to the success of your sales team to ensure that these individuals are a good fit and match the buyer persona you have developed together.
This is the point of the buyer journey where you make contact with your prospects and get to know them and their needs a little better. This is the perfect point to introduce yourself, where you work and what you have to offer, so when they think of a solution, you’re top of mind.
At the point where your lead or prospect has shown express interest in what the business has to offer, this is when you’ll need to work to qualify them i.e., identify them as an SQL. This can be done in the form of a discovery call or even a session to unpack their needs, their budget, their timelines, and their wish list. From there, you can decide whether or not the lead is a good fit and if they’re worth pursuing further.
If your lead has stuck out through discovery and you’ve made the call that this contact is worth nurturing, you’re in a good space to grow the relationship further. This process can involve one-on-one sessions where you can chat through their frustrations and any concerns they currently have in their business in order to better understand how it is you can solve this for them.
Product Offering – Demo
You now know their issue; you have an idea of what they need to solve and you know that they’re interested in one of your products or solutions. This is the point of the sales cycle where you educate – and in some cases delight – them with your product offering through a demo session. Education is key and showcasing how your product can bridge a gap is a fundamental step in this journey.
Before entering into negotiation with a prospective customer, make sure you and your team are in agreement about where there is wiggle room and where there isn’t. While it’s beneficial to be able to come to the party to make the deal sweeter, you also need to ensure you don’t make a loss.
If you’re unable to negotiate on cost due to suppliers, you can look to cross-sell, offer a trial period or enhance the deal with a value-added service.
After all your hard work and nurturing, there comes a time when you need to ask your potential client if they’re ready to buy what you’ve put on the table. If the answer is yes, you’ll need to work with them to draft a contract and payment terms for signing. If the answer is no, you might need to make the decision to walk away from the relationship and focus your efforts elsewhere.
Sales Cycle Management
Managing your sales cycle is the process of keeping track of what happens at each and every stage of the mapped-out sales cycle with the aim of being able to adjust to the buyer based on their behavior when moving through the funnel.
The most important reason for having a strategic sales cycle mapped out is so that the sales team and reps are able to look back on the process and identify where certain aspects can be improved to make the process work better for the business and its customers.
By making use of key sales data the sales team will be able to conduct an educated analysis of the cycle and pinpoint areas of weakness – and strength – and make adjustments to operations, processes, and technology.
Optimizing your Sales Cycle
Optimization is key to growth. BDC Business Insider has identified five key steps that sales teams can implement in order to better understand their sales cycle and work out key changes to make in order to improve it as they work.
- Analyze Current Process
What is working and what isn’t? The only way a sales team is able to answer this question is if they have a solid structure in place that determines what success is for the business. Having the sales cycle mapped out properly so that each and every sales rep can measure success at each point is crucial.
- Develop Key Performance Indicators
What does success look like to your business? If your overall business goal is to sell as many products to as many people as possible then your KPIs will differ from those of a business whose goal is to sell very specific products to high-net-worth customers. Once you’ve determined what success is to you, you’ll be able to track your prospects as they move through the stages of your sales cycle. Common KPIs for sales teams include sales to date, overall time in the sales cycle, average sales value, and closing rate.
- Measurement at Every Opportunity
Communication is key and hosting regular catch-ups where the entire salesforce can come together to review sales data, unpack concerns and workshop improvements are fundamental for sales cycle management.
- Invest in Tech to Monitor
Automation will alleviate unnecessary pressure and free up time to focus on chasing leads and big-picture thinking. Investing in a CRM system that will centralize all your client data and store all sales information in one place will ensure you are able to analyze and report when needed.
- Forecasting is Fundamental
BDC states that “by measuring your conversion rate at every step, you’ll be able to determine the inputs you need to achieve your sales goals.” If you have a massive drop-off in your conversion rate at a certain stage of your sales funnel, you’ll know to focus your efforts there.
People Also Ask
Why is understanding the sales cycle important?
Having a good understanding of the sales cycle is crucial as it will allow you to keep track of your salesforce’s efforts and where they need to place additional focus. If they have sight of the next step in the buyer’s journey, they’re better able to preempt their next move and work harder to drive conversions.
What is the difference between the sales process and the sales cycle?
A sales process is a series of steps a sales team will take in order to move leads through the sales funnel, whereas a sales cycle is a repeatable set of actions a prospective client will pass through when dealing with a business.