Every organization, regardless of the industry they operate in, follows the same sales cycle to close deals. Having a sales process gives you a clear and consistent way to nurture your leads into paying customers. But, what is a sales cycle and what are the stages of a sales cycle?
A sales cycle refers to a series of phases that occur during the selling process of a product or service. You can think of it as all the steps involved that lead to a successful sale.
Sales Cycle: Why Is It Important?
Having a defined sales cycle in your company is important because:
It Can Help Identify Areas Of Improvement
Breaking down your sales process into smaller, measurable steps help you gather data and metrics. For example, you will be able to identify the points where sales fall through in the process. You will also be able to highlight steps that lead to a sale and which don’t. It will help you finetune methods and efficiently allocate team members and resources to improve conversions and increase sales.
You can automate the collection of data and metrics by using the right CRM tool.
It Helps Make Training Easy
Training new sales reps become a lot easier when you have a well-crafted sales cycle. Your sales reps will get used to your process faster because you will be able to give them a structured roadmap to follow. Following a sales cycle helps new reps understand the selling process and identify areas where they need additional help or training.
It Helps You Forecast Future Sales
By collecting detailed data from your sales process, you can forecast future sales. For instance, you would be able to predict the number of sales each rep makes in a month based on the length of the sales cycle. You will also be able to identify the sales most likely to succeed after they reach a specific point in the customer’s journey.
It Helps You Create The Right Team Structure
When you understand your sales cycle, it empowers you to structure your team more effectively. For example, you have identified that your team is lacking in following up with leads. You could re-assign roles to your team members to address this problem.
It Helps You Monitor Team Performance
When you track your sales cycle, it also helps you monitor your team’s performance. If your sales cycle is getting shorter, it shows that your team is closing their leads in a shorter timeframe. It is good for increasing both productivity and sales. You could also compare the length of your sales cycle with that of your competitors. It will help you figure out how you are performing in comparison to them.
What Are The Stages Of Sales Cycle?
Depending on the industry, the type of clients, and other factors, every organization may have a unique sales cycle. However, all organizations follow a few similar steps.
In general, there are seven stages of the sales cycle.
In the first stage, you may be identifying potential customers to contact and your target customer profiles. You may also figure out the best ways to contact your prospects.
Take your time to research your prospects during the prospecting stage. The better you understand your prospects, the easier it will be for you to close sales.
If you want to research a sales opportunity, start by creating your Ideal Customer Profile. It is never a good idea to take for granted who your ideal customers are. In the process of creating your Ideal Customer Profile, you will uncover some deep insights about your sales campaign.
After you have created your Ideal Customer Profile, you can match it with prospective leads that match that profile. Using online databases, social media, and other avenues, you will be able to generate a database of similar profiles on your own.
2. Make Contact
Now that you have a database of prospects, it is time to make contact. Reaching out to your prospects and building a connection is necessary if you want to convert them into buyers.
What is the best way to contact your prospects? Are your prospects only reachable by phone, or are they active on a certain social network? If you are unsure of the right way to make contact, try email. According to research, 8 out of 10 prospects prefer to be contacted over email. Also, emails are an excellent way to make direct, personalized contact.
Depending on the audience that you are targeting, social media can also be a good place to make contact. Consider using social media with email marketing for better results. In fact, you will eventually end up using several methods to contact your prospects. For instance, you will engage with them on social media, send a follow-up email, and then continue further follow-ups through phone calls.
The main thing to focus on here is contacting your leads timely. Did you know 30% to 50% of all sales go to vendors who contact a prospect first? In the current market scenario, when competition is fierce, you cannot afford to contact leads at your convenience. You must call your leads as soon as possible if you want to have the best chances of converting them into paying customers.
3. Qualifying Your Leads
The lead qualification process is your chance to learn more about your target prospects. This is the time to understand more about their goals, budgets, challenges, and other factors that could influence their decision-making. You may also want to use this stage to understand if you are speaking with the right decision-maker and look for ways to offer high value.
You should also take the chance to qualify them as prospects based on four important factors- need, budget, authority, and timing of need. 67% of sales are lost because sales reps do not qualify their leads properly before taking them through the sales process. Not all of your prospects are ready to buy, which makes lead qualification all the more important. Did you know that only 3% of your prospects are ready to buy? So, what do you do with the rest of the prospects? You need to nurture them, which is the next step in the seven stages of sales cycle.
4. Nurture Your Prospects
A very large portion of your prospect database would not be ready to buy immediately. For such prospects, you need to nurture them to slowly move them down the sales funnel. Nurturing your prospects would mean addressing their doubts and educating them on the unique benefits of your products. You should also be able to answer what problems can your product or service solve for them.
Even if your prospects do not have objections, they will need some nurturing before you can convert them into buyers. It is important to earn their trust, and you can do so by offering consistent value. When you are nurturing your leads, you must also work to establish yourself as an expert in your field, as well as being helpful and responsive.
You will also come across prospects that are qualified but are somehow not ready to buy at that time. In such cases, you must maintain regular contact with such prospects through personalized newsletters, emails, and content to stay on top of their mind.
5. Present Your Offer
In all the prior stages, your focus is solely on the prospect. You contact them, understand what they need, and address their concerns. At this stage, you need to take all the information you have gathered to make them the best offer. Your offer should be personalized and relevant to the needs of your prospects. If you connect your offer to the budget, challenges, and long-term goals of your prospects, you will improve your chances of turning your prospects into customers.
6. Overcome Objections
After you have made your offer, it is up to your prospect to decide whether to take the offer or not. In most cases, they will come back with objections, such as price, contract terms, the content of the offer, or more. You should ideally use the nurturing phase to address these objections, but it is not always possible to address them ahead of time.
When you are address objections, always be patient. It is never a good idea to rush or pressure your prospects. Also, try and address related objections as well. For example, your prospect may have objections about the price of your offer. While addressing that concern, you should also ensure that the prospects understand the contents of the offer.
However, you will also come across prospects who will not explicitly state their objections. In such cases, you would need to read between the lines. You may need to ask probing questions to get to the root of the problem.
When you have handled all their objections, you can move on to the final stage of the sales cycle.
7. Close The Sale
The last stage of the sales cycle is closing the deal. However, it is a lot easier said than done. You can use various approaches to close the sale, depending on how the preceding stages played out. It is important to read your prospect’s attitude and tailor your closing style to match.
Has your prospect listened to you intently? Do you feel you have established a good relationship with them? If you have, you can use a more direct approach to close the sale. If your prospect does not sound as enthusiastic, you may need to use a more nuanced approach.
You may not be able to close the sale in the first meeting. However, that does not mean that the sale is over. Sometimes, it may take several days or even a few months to close a sale. The sales cycle continues till you have closed the deal or the prospect declines the offer.
How Do You Improve The Sales Cycle Process?
Regardless of whether you are hitting your targets or underperforming, finetuning your sales technique can vastly improve your sales cycle.
Tips to Improve your Sales Cycle:
- Implement measures that allow your sales reps to spend more time selling
- Align your sales and marketing teams
- Regularly following up with your Leads
Here are some tips to improve your sales cycle:
– Implement measures that allow your sales reps to spend more time selling. According to research, sales reps spend only 37% of their time selling. For instance, you could invest in a CRM system. The CRM tool can automatically capture leads from many sources, eliminating the need for sales reps to hunt for leads. It can also prioritize their tasks and optimize their schedules to ensure that they contact all leads in a timely manner.
– You should also align your sales and marketing teams. 61% of marketers send all the leads directly to the sales team. However, only 27% of those leads are qualified. According to MarketingProfs, you can increase your sales by 38% and your customer retention by 36% by aligning your sales and marketing teams. It can also help shorten your sales cycle and increase your revenue and ROI.
– Regular follow-ups are an important part of lead nurturing, and your sales reps must be diligent with their follow-ups. In a report from the Bridge Group, it has been shown that sales reps who make 12 or more contact attempts do 20% better than their colleagues who stop at 8 attempts. Here also, you can use CRM software to automate follow-up emails so that the sales reps can use that time to focus on other leads.
– Leverage social media to improve your sales cycle. If you have case studies, you can use them to build social proof. When your sales reps share the case studies with your prospects, it will help them nudge the prospects in the right direction. It can also be a great way to handle objections. For example, if a prospect feels that your software is difficult to implement or learn, show them case studies where your clients have had it up and running in a few hours or days.
Every sales process is different, and that is true for the sales cycle too. The stages of sales cycle can be as short as a few minutes to as long as several months. In general, all sales cycles will consist of the seven stages mentioned above. Refining the stages of sales cycle can help you shorten your sales cycle and improve both sales and revenue.
Stop spending time managing your sales process and learn how you can improve your revenue today.