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Understanding the Sales Cycle: 7 Key Steps (2023) | Online Money Moves

Winning new customers isn’t easy. It requires research skills, perseverance, and the ability to quickly build relationships. Sales leaders excel in these areas. 

Instead of reinventing the wheel with each sale, successful sales teams follow a defined series of steps to find potential clients and convert them into customers. Here’s a guide to each stage in the sales cycle and a few best practices for effective sales cycle management. 

What is a sales cycle?

A sales cycle, sales life cycle, or sales pipeline refers to the steps a business takes to attract a potential client, educate them about its products or services, and convert them into a paying customer. Sales cycles have several stages that correspond with the steps in the buyer’s journey through the sales funnel. 

7 stages of the sales cycle

  1. Prospecting
  2. Contacting
  3. Qualifying completion
  4. Presenting
  5. Making an offer
  6. Closing the sale
  7. Following-up

Businesses frequently divide the sales cycle process into seven stages. Each sales cycle stage corresponds with a specific sales rep activity. Here’s an overview of each stage:

1. Prospecting

The first sales cycle step is prospecting. It involves finding the right potential customers and has three essential parts: identifying your ideal customer, finding leads, and qualifying leads. Here’s a breakdown of each: 

Identifying your ideal customer

Use your target market information to build customer profiles, which are fictional representations of your ideal prospects. For example, if you sell custom packaging products to ecommerce business owners, one of your personas might be Sally, a 43-year-old crochet business owner who sells knit beach cover-ups and is looking for cost-effective branded packaging for her products. 

Finding leads

Next, you’ll research individuals who fit one of your ideal customer profiles. Depending on the types of leads you are looking for, you might use LinkedIn, search engines, or other social media platforms to locate potential leads.

Classifying or qualifying leads

Next, you’ll conduct additional research on your prospects to determine the likelihood of converting them into customers. This classification process is known as lead qualification. You’ll assess if the prospect needs your product or service, is a decision-maker with the authority to approve or make purchases, and has the necessary budget. If the answers are “yes,” you can qualify the lead to advance to the next stage. 

2. Contacting

Next, you’ll contact potential leads. Popular cold call methods include reaching out via email, phone, and social media. Many sales teams use all these methods and make multiple attempts to reach prospects. The objective of this stage is to make contact with a potential customer in an effort to set up a face-to-face or virtual meeting. 

3. Qualifying completion

Once you make contact with a customer, you can finish the lead qualification process. This often requires you to solicit additional information about a potential customer’s budget, needs, and decision-making authority. In some cases, you may need to schedule a discovery call to fully qualify a prospect. If so, keep detailed information about pain points, decision drivers, and needs. You’ll use this information later to craft your sales pitch. 

4. Presenting

Next, you’ll invite qualified leads to attend a sales presentation or demonstration. This might only involve a phone call, or it might require a detailed, visual sales deck. Tailor your sales script based on the information you learned during the qualification process. For example, if a potential customer has expressed concerns about their budget, you might emphasize your product or service’s strong return on investment (ROI). If your research suggests that your client is struggling to keep up with customer demand, you might devote additional time to cover your efficiency-related value propositions.

5. Making an offer 

After your presentation, you’ll make an offer. Depending on your business model and deal type, you may plan to make an offer at the conclusion of your sales presentation or send one shortly thereafter. 

As part of this process, your sales team will prepare to handle potential objections, such as customer concerns about cost, schedule, or process. Anticipating potential customer objections and preparing your responses can help you use the negotiation process to build trust and increase the likelihood of closing a deal.

6. Closing the sale

Once you’ve arrived at mutually agreeable terms, you can complete your contract and close the deal. Sales representatives use different tactics to encourage customers to commit, such as offering free trials or providing discounts or incentives with expiration dates. 

If a customer seems reluctant to sign, an experienced sales leader can also use a one-on-one call to learn more about the prospective client’s reservations, provide the customer with additional information, and compile feedback that the sales team can use to adjust future sales presentations. 

7. Following-up

After signing, your sales team will hand the new customer over to your customer service team to oversee the implementation process and offer customer support. Sales reps can also follow up with the customer to ask for referrals, both immediately after closing a deal and once your customer has experience with your company. Satisfied customers can point you to peers who may have similar needs. 

What is the typical length of a sales cycle?

Typical sales cycle length varies by industry, deal type, and specific client. Regardless of industry, some deals will close faster than others, so businesses typically compare their average sale cycle length to industry averages. For example, the average sales cycle length for SaaS (software as a service) companies is 84 days, and the average length for all B2B companies is 102 days. Generally speaking, B2B companies and companies targeting enterprise sales tend to have long sales cycles, and B2C companies tend to have comparatively short sales cycles. 

Here’s how to calculate your average sales cycle length: 

1. Record the number of days from first contact with a customer to closing the deal. This represents the length of one sales cycle. 

2. Next, calculate the length of every additional sales cycle during the past year, add the total number of days, and divide this total by your total number of sales in that time period.

3. The result is the average length of your sales cycle in the last calendar year. 

Here’s the formula:

Total number of days for all sales cycles / Total number of successful conversions = Average sales cycle length

How to manage your sales cycle

Using defined sales cycle stages to support the perfect sales process for your business is integral to many different kinds of businesses—and you’ll continue refining your process with every sale. These sales cycle management best practices can help you do the following:

Align your sales and marketing teams

Make sure that your marketing efforts support your sales strategy. When marketing cycles support sales cycles, the result is a cohesive customer journey in which the marketing department’s lead-generation messages match the language that sales managers use to convert prospects to customers. When these teams aren’t aligned, it can be difficult for sales reps to meet the expectations of customers who enter the sales funnel through marketing channels. 

Track sales process KPIs

Tracking sales process key performance indicators (KPIs) can help you evaluate the effectiveness of your sales cycle and monitor team performance. Here are three key KPIs to track:

  • Monthly sales: The number of sales closed each month. 
  • New monthly leads: The number of new leads acquired during the previous month.
  • Average sales cycle length: The average length of the sales cycle for sales closed during the previous month 

Once you’ve established a baseline, you can use this information to identify and remedy problems. For example, if you are generating a high number of leads every month but closing relatively few sales, you might reexamine your lead qualification criteria to determine if you are accurately identifying prospects with a likelihood of becoming customers. If so, you might choose to focus on refining your sales presentations. If not, you might revamp your qualification criteria. 

You can also use your baseline numbers to set targets for improvement, such as increasing your average monthly sales by 10% between Q1 and Q2.

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Use a sales CRM

A sales-focused customer relationship management (CRM) platform can help you organize your selling process and streamline communication between the members of your sales team. Some CRMs can also automate elements of the sales process like researching prospects, putting together initial prospect lists, updating contact records, and generating sales reports.

Sales cycle FAQ

Is the sales cycle a KPI?

The sales cycle is a series of sales rep actions—not a KPI—but businesses can use sales process KPIs to measure the effectiveness of their sales cycles.

What is the difference between a sales process and sales cycle?

A “sales cycle” refers to the repeated series of steps a company takes to convert a prospect to a customer. A “sales process” generally refers to the act of attempting to convert a prospect.

How can I measure the effectiveness of my sales cycle?

Businesses use sales process KPIs like monthly sales, new monthly leads, and average sales cycle length to measure the effectiveness of their sales cycles.



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