What is a Sales Cycle?

How long is your sales cycle? How do we shorten our sales cycle? Interesting questions but how do you answer these if you don’t know what your sales cycle is?

I’d like to be a bit odd as usual and define a sales cycle my own way. My definition is a little different to the one I have heard in many companies throughout the last decade or so I have been selling and helping to improve people’s sales processes.

Many people seem to think of a “sales cycle” as the time it takes you from “starting from nowhere” to getting a contract. But how do you define this (I am having trouble defining “starting from nowhere” myself)?

The reality of prospecting is that it’s a statistical process of looking for someone with a need. You have a list of usually hundreds of names and you “inquire” to see if they have a need that your product or service might solve.

The time it takes to find a prospect in this process is quite difficult to define as it is based on probability. You could find your first prospect in a day or in a month or in 3 months. For example, if your ideal prospect – unbeknownst to you – works for “Zeta Corporation” and you started calling companies in alphabetical order with “A” it might take you 3 months to find your prospect at “Zeta” but if you had been lucky and started calling your list in reverse alphabetical order this time would have been 1 day. So this time varies widely. The average for this time might be knowable for any given product is any given market but I don’t know anyone who has really figured it out! Maybe we can call this time the “marketing cycle”.

So what is the “sales cycle”? I like to define the “sales cycle” as something much more tangible. I define it as the time it takes to take a qualified prospect to close. This means you have already found someone who has a genuine need. Now it’s the time it takes to “progress the deal” with all the relevant decision-makers in that company.

This time is much more predictable and trackable. It’s also a very useful tool for managing sales pipelines. Over the years I have almost never seen a deal close that has taken much more than 50% more time than this definition of “sales cycle” (except for exceptional circumstances on the buyer’s end that a sales person should be aware of, such as the buyer is away from work for a couple of weeks etc.). Therefore if you do an analysis of all the opportunities in your sales pipeline using this definition you can see which deals are too old and are NOT real deals.

One thing that has become quite clear to me over the years is that deals have momentum. Once a deal “slows down” in your sales pipeline (i.e. it’s in your “sales cycle” as defined by me). It will NOT close. “Slowing down” means that the communication between you and the prospect becomes less frequent and the execution of agreed-upon actions becomes slower. When these things happen your deal has real problems.

Using the definition of a sales cycle I present above can help you clearly identify which deals in your pipeline will close and which won’t. If you are a sales manager or business owner, you can speak to your sales person and try to understand if there are special circumstances for why this could be happening that may mean the deal is one of the rare ones that will close. Now you have a tool that you can use to put meaningful probabilities on your sales pipeline opportunities.

Knowing your sales cycle (as defined above) can help you focus your energies on real deals and hence boost your sales results. Cycle on!

No comments yet.

Leave a Reply