You’re closing deals at a great rate — you should hit your monthly target. The issue is, you’re not sure why. This means you don’t know how to repeat your success next month. Is it the amount of cold calls you’re making? Or is it your fantastic sales presentations that win over clients?
On the other hand, maybe you’re struggling to close deals. Again, the reason is a mystery. You have a general idea of which sales activities are effective, but not exactly which ones need adjusting.
For either scenario, you can’t repeat your success or determine how to improve, because you’re not thinking in terms of the sales cycle.
That’s why we created this guide to help you understand the sales cycle and why it’s important. We walk through each stage of the sales cycle and offer tips so you can close deals faster.
What is a sales cycle?
A sales cycle contains the seven steps you take to close a sale with new customers — from initial contact to signing the contract:
- Find leads.
- Connect with leads.
- Qualify leads.
- Present to prospects.
- Overcome objections.
- Close the deal.
- Nurture new customers.
How long it takes you to complete the cycle depends on a number of factors, including your company, your product or service, and even your industry: A B2B sales cycle is much longer than a B2C sales cycle.
But why is it useful? Well, you can use your understanding of the cycle — and which stages you move through most quickly, which stages trip you up, etc. — to close deals faster. Looking at the process of closing deals at a granular level, step by step, makes it easier to identify the individual actions that lead to problems or successes.
For example, maybe you discover that your sales cycle is twice as long as your peers’ (that is, it’s taking you twice as long to make a sale). To find out why, you look at each sales cycle step or stage you take to close a deal — from finding leads to overcoming objections.
You then review stage-by-stage conversion rates to see at which stages leads are dropping off. According to your stage-by-stage conversion rates, it looks like leads are dropping off after you give a sales presentation. Time to polish your presentation skills or revise your message!
Let’s now dig into the sales cycle stages and what each one should look like.
What are the sales cycle stages?
The execution of the following sales cycle stages will depend on your product, service, company, or even industry. However, the order of the stages is typically the same, no matter the situation.
Below, we look at how to successfully move from one stage to the next with best practices and helpful resources.
1. Find leads.
In this stage, you’re searching for people who may be interested in your product or service and adding them to your sales pipeline. Start by making sure that you understand your company’s buyer persona, aka the ideal customer for your product/service.
Why? You’ll improve your chances of finding quality leads if you know exactly the type of buyer you’re looking for.
Find ideal customers via phone, or use these cold email templates to gauge interest. You can also use the lead-generation methods below:
- Solve potential customers’ problems on Quora.
- Create videos with a built-in lead generation form.
- Generate leads from support-ticket conversations.
- Interact with potential customers on LinkedIn Groups.
Especially if you’re in B2B sales, don’t try to make a sale yet. At this stage, you’re just gathering leads and trying to determine whether these people match your buyer personas. Once you have leads, put their contact info into your CRM. You’ll qualify them later on.
2. Connect with leads.
Now that you have your potential clients lined up, it’s research time! Find out what their problems are and how you can help. But even as you’re armed with info about your leads, this isn’t the time to hit them with a hard sales pitch. Instead, earn your lead’s trust by sending resources that help them or their business succeed.
You can educate your target customer by sending relevant, valuable information via your prospecting emails. For example, maybe you find out on LinkedIn that your target lead is hiring a sales team. Send helpful resources on the topic:
| Hi [Contact First Name],
Here are four blog posts that would be really helpful for [insert prospect pain point, such as hiring a sales team]. Resource 1 Best, |
By providing material that addresses a challenge the lead is facing, you show that you care about the lead’s success. You stand out from sales reps who ask for leads’ business right out of the gate. You’re giving the lead a reason to trust you and opening the door for future communication.
3. Qualify leads.
Not every lead that you contact is going to be right for your product. Turn your leads into prospects through qualification steps.
Leads are people who might be a good fit for your product or service but don’t have the resources or interest. Prospects are people who have both the interest and the resources to purchase your product or service.
Below is a lead-qualification checklist to help you determine whether or not a lead should be moved to the next stage in your sales cycle. Based on your interactions with leads, answer yes or no to each of the following questions:
- Can the lead afford your product or service?
- Is the lead the key decision-maker?
- Does the lead recognize their need for your product or service?
- Is the lead interested in your product or service?
If you can’t answer “yes” to all of the questions above, the lead isn’t a qualified candidate and shouldn’t be considered a prospect. But don’t delete the lead’s contact info. Just because they’re not a good fit for your product or service now doesn’t mean that they won’t be in six months.
Instead, send their information to marketing so the department can enroll them in email marketing campaigns with updates about your product or service.
4. Present to prospects.
Your lead is now a prospect. It’s time to share with them how your product or service can help them!
Your sales presentation could be a demo, an in-person meeting, or a 1:1 conversation. Whatever the case, the basic formula of a sales presentation remains the same:
- Introduce yourself.
- Present the problem.
- Present the solution.
- Back it up with data.
- Summarize the info.
- Answer questions.
Throughout the presentation, focus more on the benefits of your product or service, not the features. Your soon-to-be customer wants to know what’s in it for them, not how awesome your product or service is.
5. Overcome objections.
While some prospects might be totally on board after your presentation, most will likely be skeptical. Use their objections as an opportunity to convince them that your product or service is worth their money, the time it will take to implement, the conversations they’ll have to have with their boss, etc.
Be prepared to answer common sales objections:
- “Your product/service costs too much.”
- “I’m under contract with “[Competitor].”
- “Our company needs X, Y, and Z features.”
Just remember that objections don’t necessarily mean a sale isn’t possible; you just have to know how to handle them. For example, price is a common sales objection. When met with this objection, communicate your value proposition. Point out the benefits of your product/service and how they relate to the prospect’s needs. Be clear on what the prospect is getting for the price.
6. Close the deal.
You’re ready to present the paperwork with the dotted line, but the line is still blank. Here are three possible ways to effectively close the deal and guarantee a signature:
- Technique #1: The Assumptive Close — Behave as though the prospect has already agreed to buy what you’re selling.
- Technique #2: The Suggestion Close — Provide purchasing suggestions based on what you’ve learned about your buyer’s needs.
- Tactic #3: The Urgency Close — Pitch your product at a discounted, limited-time price.
If your potential customer signed a contract, congratulations! If you weren’t able to close the deal, don’t be discouraged. A lost deal might not be lost forever after all. Continue to nurture them with email campaigns and resources. They might be ready to purchase later on.
Also use lost deals as a learning opportunity. Ask the lost customer what their main reason was for not signing. Use their feedback to go back through your sales stages and sharpen certain sales skills.
7. Nurture new customers.
It’s important to invest time in your new customer even after the deal is closed.
Not only will you strengthen customer loyalty, but you’ll also increase the chances of an upsell or referral. Here are a few ways to nurture the new relationship:
- Make sure that you have a smooth onboarding process between account managers and new customers to ensure a smooth hand-off.
- Talk with marketing to determine the types of things that are going to be helpful to your targets, and send valuable resources, such as how-to guides and demos.
- Check-in with your customer every 1-3 months via call or email and ask how you can help.
If you’re continually investing in your customers and they’re happy, don’t be afraid to ask for a referral. Ninety-one percent of clients say they’d happily give a referral, but only 11% of salespeople actually ask for one.
3 best practices for sales cycle management
To improve the time it takes to close a deal, you need to manage your sales cycle. This means looking at each individual sales stage, finding ones that are taking longer to move leads or prospects through, and making adjustments.
If you manage your B2B sales cycle properly, you speed up the time it takes to complete each sales stage which shortens your sales cycle length.
Below are a few best practices for managing your sales cycle.
Track conversion rates between sales cycle stages
Each sales stage should take as little time as possible. To find out which stages are taking the longest, measure the “conversion rate” between stages by dividing the number of opportunities in one stage by the number in the next stage. The result is a percentage.
Let’s say that between the prospecting and qualifying stages, you’re achieving a 25% conversion rate. By itself, this means nothing. Compare it to your sales-team average. Compare it to the same rate last month, last year, last week. Notice trends up and down.
When you see a low conversion rate between stages, find out why, and then experiment with sales conversion rate solutions.
Manage your sales cycle with a CRM
Maybe you currently use a spreadsheet to insert and track deal information. But if you’re dealing with a lot of leads and prospects, this can quickly get messy and difficult to organize.
A CRM organizes all of your leads, deals, and tasks in one central location. Use it to store contact and deal information. In addition, look in your sales activity reports to see how you’re doing in each sales cycle stage.
The stage duration report breaks down the average time an individual team member has a deal in a particular stage.
Experiment with your CRM’s capabilities. You can use it to view every sales stage and find ways to improve each one (see our resource below).
Track your average sales cycle length
As we already mentioned, the average sales cycle length depends on many factors — company, industry, what you’re selling, and the size of the sale.
So how do you know whether your sales cycle length is good or bad? First of all, compare your sales cycle length with that of your teams. Determine whether your sales cycle is drastically longer than the team’s sales cycle, and make improvements. Also check the industry average:
To calculate your own “Average Sales Cycle Length,” use the following formula: Total # of Days to Close Deals / # of Closed Deals.
Close deals quickly with a strong sales cycle
When you look at your deal-closing process through the sales cycle framework, it’s easier to narrow down what you can improve. Maybe you’re good at finding people who match your ideal customer profile but have trouble making that first, important connection. Or maybe you can close most of your sales but don’t nurture your relationships with customers, so they eventually go elsewhere.
Use your understanding of the sales cycle to strengthen your sales game!
Read more: The Sales Execution Challenge – How Do You Measure Up?