What Is a Sales Cycle?
No matter what your business offers, every sale follows a similar pattern. First, there’s awareness and education to qualify the lead, then there’s the traditional sales pitch that (hopefully) results in a purchase. And, the work continues even after the sale.
This pattern, known as a sales cycle, acts as a playbook to help you guide prospects toward a purchase. A sales cycle includes all of the necessary actions that it takes to convert a sale. From research to lead nurturing to transactions, each step in the sales cycle works toward retaining a loyal customer base while meeting profit goals.
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What Are the Steps in a Sales Cycle?
Build it and they will come_ doesn’t always apply to sales. In order for customers to learn about your product, build a relationship with your brand, and make a purchase, several steps need to happen in a certain order.
While the process for every company can vary, most businesses follow these seven steps:
- Prospecting: The first step of any sales cycle is to conduct research to determine who would benefit most from your product or service and figure out how to get in contact with them. Are your target customers college students on social media or digital startups downtown? Understanding your target demographics will help set you up for better results at the end of the cycle.
- Make contact: Next, reach out to the prospects you identified. Depending on your company, this can take the form of cold calls, in-person visits, or email. Give your potential customer a brief overview of your product’s benefits during this step so that they are interested in learning more.
- Qualify the lead: During your initial contact or your first full meeting, get to know your customers and determine whether they are right for your business. If not, save time and resources going after leads that are qualified.
- Present your offer: Your product presentation is the most important part of the sales cycle. In this step, it is your job to showcase your product or service in an informed, professional way that establishes you as the expert in the market.
- Overcome obstacles: Almost everyone will have reservations when buying a new product. Ease customers’ mind by answering all questions and pointing them to educational resources, like product demos, competitive analyses, or your support team.
- Close the sale: This is the step you’ve been waiting for — closing the sale. Some prospects may arrive at this stage quickly, while others may require months of nurturing. It’s important to remember that even when a sales doesn’t happen in the first meeting, the sales cycle isn’t over.
- Gain referrals: 88 percent of consumers place their highest trust in recommendations and word-of-mouth referrals. Make sure you have a referral program in place so your new customers can spread the word to their friends and family. This final step is often what leads to the entire sales cycle starting again with a new prospect (who has already been qualified with a referral!).
How to Speed Up a Sales Cycle
From conducting research to setting up meetings, the sales cycle is a major time investment. While you should never rush or pressure a prospect’s decision, there are certain things you can control that can make the process faster.
Here are three ways to speed up your sales cycle:
- Prioritize leads: Not all leads are created equal. As you gather information and get to know your leads, prioritize and focus on the ones that are already seriously interested in buying. For example, perhaps you know that leads who come from a certain marketing channel are more likely to convert.
- Use CRM software: With customer relationship management (CRM) software, all your customer information is stored in one place, synced with all your apps. You can also clearly see what to do next and stay on track.
- Be transparent: When customers ask a direct question, like pricing, answer immediately and honestly. There’s no use in waiting to share important information, like cost, until they reach a certain stage in the sales cycle.
How to Improve a Sales Cycle
Improving your sales cycle doesn’t just mean closing more deals. You can also measure the success of your sales cycle by things like overall customer satisfaction, churn, retention, and the efficiency of your sales team.
Here are three ways to improve your sales cycle:
- Define your current process: You can’t improve what you don’t understand. As you cycle through your current process, keep track of steps that take extra time, like following up with repeat leads or taking weeks to close a sale. Once you see where your time is being spent, you can prioritize your efforts and use automation when needed.
- Identify better leads: Some leads will never respond to your sales efforts. Instead of trying to pitch every new lead, focus your efforts on the most qualified. For example, if you know your best leads come from webinars, invest in that area and reduce your efforts in other channels.
- Automate your work: Automate follow-up reminders, create reports, and forecast creation based on prospect needs and trends. Then, when you’re ready to close the deal, you can create, manage, and share custom quotes directly from your tool.
A sales cycle offers a standardized, repeatable process that anyone can follow. And, just like any process, having this kind of structure helps ensure everyone is on the same page and that leads can move through the funnel in the smoothest way possible. Defining this process also provides clarity and visibility into the sales process, identifying gaps and letting you better plan for the long term success of your business.