Understanding the Length of Your Sales Cycle

The sales cycle is undoubtedly one of the most critical metrics a company can measure. Without a clear picture of your sales cycle, accurately forecasting sales and growth becomes near impossible. 

Many factors can impact the length of your sales cycle. Some impacts may be seen right away, such as those created by the current economy or new and competing technologies and products, while others occur over time, such as changes in the way people buy. It goes without saying that the length of the sales cycle can be fluid, and monitoring and measuring your sales cycle must be an active and ongoing process.

Process is Imperative

Even beyond the fluidity of it, the sales cycle is a complex creature. The first step to understanding your sales cycle is to have a clear process that your organization follows consistently. What are the steps in your sales cycle? How do you define the beginning of the sales cycle? Is it when you first enter it into your CRM, first touch, or something else? Consider how your company treats potential leads. If you are dumping tradeshow leads or purchased lists into your CRM, but you’re not doing anything with them, using ‘entry into CRM’ as a starting point will skew your data. 

A side note on using a CRM, you will find tracking your sales cycle becomes effortless when used consistently by the entire sales staff. Implementing a process that dictates that leads are entered into the CRM and followed through the sales pipeline will make tracking your sales cycle much more manageable. It will provide transparency, efficiency, and allow salespeople to prioritize opportunities, potentially shortening the sales cycle. 

Accurate Data and Expectations

Many companies have an inaccurate perception of their sales cycles because they are not analyzing the data in a way that creates appropriate expectations. If your sales goals include closing large sales, make sure you’re looking at data from large sales. 

Orders from current customers are typically the fastest to close. You’ve built relationships, they are familiar with you,  and they are in your systems already. If included, these can make your new business sales cycle appear artificially compressed. 

Smaller and one-off sales will typically close faster than larger sales. However, if you are looking for six- or seven-figure repetitive deals, you will need to have patience and understand the process can be lengthy. Make sure you are comparing apples to apples. 

If you are trying to understand how long your sale cycle is for new business that fits your target market profile, look at those types of deals independently of others to get a true sense. Sometimes a huge deal will come out of nowhere and close quickly because the company had an immediate critical need. Those don’t happen regularly and should be considered anomalies. 

Closing the Whales Take Time

Most companies are fishing for whales—those big six- or seven-figure accounts that repeat annually. Not only do these types of deals take time, but they also take work.

If you are new to an industry or territory, it will take time to educate the market. You will need to have a plan for doing this, which may include creating content, social media, inbound marketing, SEO efforts, outbound marketing, etc. If you have been tracking data, you should have a good idea of how many touches it will take to convert a lead.

If you are trying to wedge out an existing vendor, you will have to do some digging to find cracks in the relationship. What issues are they having with the current vendor? Is there an opportunity for you to relieve this pain? Even if you lose the first quote, keep trying. Sometimes, you may get a small job as a test, and you will have to prove yourself before you get the full opportunity.

From our experience, it takes, on average, 6 to 12+ months to convert new prospects for large brown box orders and 6 to 18+ for POP display orders.  

One key point to make is that there is a need for constant communication and scheduling of the next steps before ending a meeting with a prospect. For our packaging clients, it takes 15-20 touches (calls, emails, voicemails, direct mail)  to get the first appointment, and it can easily take that long to get to the next step of the sales cycle if the next steps are not identified and scheduled before ending the initial meeting.

The key to accurately forecasting your sales and achieving the growth your company desires lies in understanding your sales cycle by having a process in place for it, ensuring your organization is consistent with using it, measuring key metrics, and, most of all, having patience.

Lisa Benson

Senior Marketing Content Consultant

O: 716.270.8118

M: 716.989.1400

E: lbenson@athenaswc.com