What is the sales cycle?
If you work in sales but you've never heard of the term “sales cycle,” don't worry. You may not know the definition, but you probably know how it works.
The sales cycle is simply the entire path the customer takes, from their first contact with you to the completion of the deal. The stages include getting to know each other, selecting the product, and even supporting them after the sale; it’s all a part of the sales cycle. And today we will talk about it in more detail.
How to build a sales process
First, let’s take a look at a list of questions designed to help shape the sales process:
- What product do we sell? What problem does it solve?
- What are the target client groups?
- How is the sales department structured? Is there a breakdown of who attracts leads and who closes? Is the department divided according to markets? Who controls the sales process and how?
- What advertising tools and platforms does the company use when looking for customers?
- What sources drive traffic to the website and social media pages? What sources generate incoming calls to the company? What product information do customers get from these sources?
- What are the stages of the sales funnel for new and regular customers?
- What happens to the client after the deal is closed? What kind of post-sales communication takes place?
- How does the sales team intersect and interact with other teams?
- How are the actions of sales managers recorded, and how is the customer database updated (manually or with CRM)?
It is important for sales department employees to know and remember the answers to these questions, how the processes works, and who is responsible for what. Then the processes will work without interruptions and efficiency will increase.
The seven stages of the sales cycle
1. Finding clients
it’s important not only to find a lot of leads for your sales funnel—you also want to try to find solutions that help qualify these leads. You need to determine the chances a the customer will actually buy the product.
So what is the right way to do that? What criteria can be used to determine whether a customer is ready to buy?
Here are some tips:
Create the “perfect customer” profile
The ideal customer profile (ICP) is a set of criteria that defines your potential customer. It includes factors like gender, monthly earnings, profession, and industry size.
The best way to create an ICP is to talk with people who have already bought your product. Invite them to chat and answer a few questions. You can motivate them with a discount on the product if it's a subscription, or anything else.
First, ask questions that will help you determine their:
- income range
- pain points
- business goals
Analyze the results: is there a pattern? For example, do most respondents have about the same income range or business goals? This means that this is the most promising target audience in terms of sales. With this knowledge, you can optimize your marketing spend, shift your managers' focus, or take steps to increase conversions in other segments.
2. Establishing contact
After understanding who your client is and getting an application/contact on your part, you need to make contact with the client. Introduce yourself, tell them about your company and your product, and discuss the client's expectations.
Try to establish an emotional connection by asking questions about the company and the client—subjects like what stage they are at, or if there are any problems slowing the company down that your product could solve.
3. Determining the need
The best way to learn about a client's problems and needs is through sincere conversation and open-ended questions (i.e., questions that can’t be answered with a "yes" or a "no").
Your focus as a manager should be listening to the customer’s needs and requirements rather than rushing to tell them how good your product is.
Once the client feels you really want to choose the most appropriate product for their needs, rather than pushing them to buy the most expensive option, communication will go much easier.
Tip: Summarize the client's answers and conclusions to a) establish a closer rapport (people like to hear their own thoughts and phrases repeated back to them), and b) make sure you get it right.
4. Making the presentation
Now that you've identified the customer's main problems, you can tailor your product presentation to address them. It should demonstrate not just the product, but how your products or services can solve their problems specifically.
This can take place in person or by email, phone, or video chat, depending on the client's preferences.
During the presentation:
- Articulate the client's main goals. This is necessary because the customer decides whether your offer is really worth listening to in the first few minutes. To get their attention from the beginning, it's important to emphasize the client's goals.
- Describe the main features of the product/service as ways to achieve the customer's goals. The purpose of this presentation is to show that you understand the customer's needs and that you have a ready solution for them.
- Explain how your product will help the customer solve their problems. Use more verbs: It helps to get a sense of the specific actions that will help the customer.
5. Working out objections
If all went well in the previous stages, there should be no problems at the objection stage. The main thing here is to listen to the client carefully, so that when a dispute arises, you can bring arguments directly related to the client's concerns.
Tips for dealing with objections
- Use accurate numbers: Paint a picture for your customer—for example, project their company’s revenue figures with and without your product (of course, be realistic!).
- Do your research beforehand: You need to know what objections are common so you can prepare a planned response for each one.
- Be proactive: Raise common objections at the beginning of the presentation and answer them so customers don't raise them later.
Objections are part of the sales process in any industry, so write down all these reactions, thoughts, and objections, and start collecting a knowledge base of sorts. Share objections and responses with colleagues and work through them together so everyone knows how to respond to objections in future deals.
6. Closing the deal
At this stage, the buyer weighs the pros and cons, and you try to gently persuade them to decide "for" your product or service.
This differs from the other stages of the sales cycle in that you are no longer trying to convince the customer of the usefulness of your product, but rather you’re leading them to action.
This is also the stage where you learn how you handled the client’s objections. If you did an excellent job and spoke to all their doubts, the client is more likely to buy your product. If something went wrong and doubts (even unspoken ones) remain, the client will tactfully say they need time to think and take their leave. In this case, the chance of a purchase is probably 50/50.
If that happens, prepare to close the deal, put away the documents that need to be signed, and tell them you will send them over right away if you are selling over the phone. The client should know that all that separates them from the deal is a signature in the right place.
7. Providing after-sales support
If you think the most important thing in sales is to close the deal, and that everything after that is not your concern, then you're wrong. The manager's job is to leave the client with the feeling after the deal that you didn't extort money from them, but rather that you helped them at a fair price.
After the customer pays, send them an email or call them on the phone. Ask if they are satisfied with the product, and if there are any problems, help, fix them, offer a replacement product or a discount depending on the type of product. This will increase the client’s loyalty, and in the future the reputation of your company in the market.
During the conversation, show genuine interest. Listen to every comment—even the negative ones—and take everything into consideration. Criticism is the greatest gift a client can give you.
Remember, after-sales support is critical: it costs six-to-seven times less to retain current customers than to attract new ones.
The length of the sales cycle and its importance
The sales cycle can take varying amounts of time, depending on:
- Cost of the product
- Supply constraints
- Number of competitors
- Sales-team skills
The cycle in B2C sales can take anywhere from just a few hours to several weeks. It all depends on the product, its cost, etc.
In B2B sales, a cycle of a few months is often considered the norm, and some clients can take longer than six months to complete the cycle.
How to improve the sales process and shorten the deal cycle
1. Calculate the deal cycle, if you haven't already done so.
As a manager, it is critical to understand the average length of the transaction cycle—what is normal and has a chance of conversion, and when it becomes a virtually guaranteed failed sale.
Calculate the average length of a transaction using the formula:
Average deal cycle = Duration of all deals / Number of deals.
If you notice one of your managers or a new product has an atypically long deal cycle that's not within the average, it’s a reason to take a closer look at your lead history and find the problem. Otherwise, the metrics could go bad before you can prevent it.
2. Determine the length of the transaction cycle by sales-funnel stage.
Look at the sales cycle not only as a whole, from first contact to sale, but also separately for each stage. Maybe managers are delaying sending materials to the client, and that's why the sale is taking longer than it could have. Or perhaps there are other issues that need to be addressed.
Unfortunately, most CRM systems don’t have the functionality to automatically analyze the duration of each step. So you'll have to upload the data via API. But you can get a lot of valuable information about your sales structure in this way.
3. Calculate the length of the first —and all subsequent—transactions.
The first transaction in most cases takes longer than the subsequent ones. After all, for later transactions, contacts are already established, there is trust (if all went well the first time), and the client is more loyal. Once you know how quickly deals are closed for regular clients, you can better plan the work of your managers and pay more attention to retaining current clients instead of attracting new ones. This step is relevant for companies that work with LTV and repeat sales.
Plus, such a step is important for tracking managers' progress. You can tell if your sales rep is growing or stagnating by how consistently the length of deals is shrinking (if at all).
4. Calculate the length of unclosed transactions.
Find out how long, on average, the deals that are not closed last. If they are longer than others, it means your managers are "pushing" clients to the end, which is great. But if unclosed deals are shorter than average, it's worth looking into. Maybe managers are giving up too quickly.
5. Find out the sources of customer traffic.
Customers obtained through social media and customers attracted through affiliate programs can be very different in their trust in you, their willingness to buy, and, as a result, in the transaction cycle. Companies use different amounts of information about your product in different engagement channels. The customer who follows your posts on social media likely knows a lot about you, while someone who saw a banner ad once and left an application will need to warm up and fully immerse themselves in the product.
Be sure to record the source of attraction in the CRM system. The differences in the duration of transactions between advertising channels should also be taken into account when planning marketing activities.
It’s also useful to compare transaction cycles on...
6. ...products and services.
If you sell different products or services, compare which ones sells quickly and which ones sells more slowly. If a certain product does not have the most attractive margins, and its sale requires more time, human resources, and money than others, you should consider putting it aside or revamping it.
On the other hand, you may find a product that has a shorter selling time and good margins. In that case, it is worth investing more effort and money in promoting it.
7. ...types of customers.
Explore the sales process for different types of clients. These can be different positions in the company (CEO, service stations, etc.), different sizes of companies that come to you, etc.
Each type of customer should be handled differently, with special sales scripts, conditions, and nuances of negotiation.
If you find out during research that a certain type of customer has an excessively long deal cycle, try to test new approaches to shorten it. For example, when selling a product to a corporation, most of your time may be spent presenting your product to your client's boss.
Suggest to the employee you are communicating with that you hold a meeting with all stakeholders and explain everything in person, or send more explanatory materials and presentations via email so that the decision is easier to make.
8. ...customer industries.
If you work with clients from different industries, you should consider industry specifics: current market conditions, technological advances and growth in general, specifics of decision making, the amount of bureaucracy and conservatism, or conversely, mobility and flexibility. Separate your customers by industry and track which criteria correlate to companies who are better at converting to payment. It may be worth it to spend time qualifying leads better and highlighting the most promising ones among them in order to improve metrics.
9. ...by different managers.
Not all managers are equally successful. Even if you have a well-thought-out system for recruiting and training employees, the human factor will still come into play. Analyze which managers close deals faster than others, and who, on the contrary, suddenly begin to "slow down" the overall process. Maybe they are good at closing deals in other industries or better at selling specific products and services than others—this too should be taken into account when analyzing sales figures.
Take a more in-depth look and you'll be able to properly assign employees to the right positions or remove ineffective people.
Common mistakes in the sales process
Mistake 1. The manager is talking at, not talking with, the customer.
Imagine a customer leaves an application. They are already interested in a product and are waiting for a call from a representative of the company. The manager calls, but instead of engaging the customer in a dialogue, he simply follows a pre-constructed plan for himself.
The mistake is that the manager is not taking into account the client’s needs and preferences. The most important criterion for a successful sale is dialogue—when the client shares a request and the problem they want to solve, and the manager builds the conversation with all of this in mind.
Mistake 2. The manager believes once a customer has left a request, they are ready to buy the product.
An important part of any sale is customer consultation and product discussion. If you think the faster you get to the point of payment and get people to buy, the higher the chance of conversion, you're wrong. All you will get with this approach is a sale the person will regret in an hour. Are you sure this is what your company should be associated with?
When selling, it's worth building communication so that when the deal is made, the person understands the product will solve their problem, how it will do it, and whether the product is worth the client's money.
Mistake 3. The client already has the money in hand, but the manager is still presenting the product.
The reverse situation can also happen: the client wants to buy the product. Imagine that—they want to buy it themselves! It would seem that the sale is one step away, and the money is already in your company's account. Some managers, however, start to present the benefits of the product at this point for some reason, even when the client has asked for a link to pay.
This is a mistake, and it can easily derail the deal. Remember: everything needs a measure. If you feel the client is not completely confident in the purchase, ask about doubts and reinforce confidence with your USP. Is the customer ready to pay? Don't waste their time; instead, focus on providing a better buying experience.
Mistake 4. The manager is afraid to hear "no," so they hesitate to close the deal.
We all hate rejection. But there are managers who, in order to avoid the dreaded "no," put off the deal for months, procrastinating on closing. This greatly affects your overall numbers, prevents you from understanding the real length of the cycle, and creates the illusion of having relevant clients.
Talk this point through with the team. An effective sales manager is ready to hear the rejection and do everything possible to turn it into a purchase, but if the customer flat-out rejects the product, the manager is not afraid and calmly closes the deal as a failure.
The sales cycle is a very important concept in sales if you know how to work with it. The bottom line is you need to constantly improve your skills—and don't forget to watch your metrics. When you do these things, success won't be long in coming.