Did you know that the average B2B sales cycle has recently lengthened by 24%, clocking in at just over 8 months? While time for evaluation, trial and decision making is certainly justified, especially when it comes to high dollar deals, most reps have experienced at least one sales cycle that simply felt never-ending.
While much of this elongation can be attributed to market changes, the economy or organizational shifts, there are many things that sales teams can do to take charge of sales cycle length and cut it down to size – and it’s certainly worth the effort. Companies that are able to reduce the sales cycle by just one month can generate over $4M in incremental sales revenue for every $50M in sales territory/quota.
So how is it done? While the temptation may be to spur reps to move faster and push harder, these techniques don’t do much when it comes to today’s highly competitive market and educated buyers. Not to mention, you must beware of sacrifice value for speed. Instead, it’s time to help your team stop spinning its wheels and start closing deals faster by utilizing these three key strategies.
1. Smart Lead Scoring
To help prioritize prospects based on their stages in the buying cycle, companies score leads based on a number of criteria, including content downloads, website visits and much more. This is one way to qualify leads, but lead scoring can also help businesses actively seek out prospects that are likely to bring the most value based on their similarities with previously won deals.
As such, lead scoring should not be thought of as a straight shot from lead capture to revenue; rather, it should be treated as a matrix where a lead is carefully plotted on a plain of desired outcomes and ranked accordingly. To do this, companies can use a series of simple yet powerful formulas to better qualify leads. And the more qualified the lead, the faster it will close!
For example, take lead yield, the formula for which is as follows:
Sales Revenue / # of Leads Generated
Looking at the image above, you can see that leads from Source B close at a higher ratio and dollar amount than those from Source A. Digging deeper into leads from Source B then, you can isolate the common qualities found within these prospects – i.e. contact title, company size, industry, other technologies in use, etc. Cross referencing these qualities with those found in leads with the shortest sales cycles will help your team effectively prioritize and look for leads that will bring the most value to your business in the shortest amount of time.
To learn about this strategy in more detail, check out this blog post.
2. Measure Success One Stage at a Time
Think about your sales funnel, which is essentially a visual representation of your sales cycle. Now imagine a handful of leads being dropped into the top or wide end of the funnel, and wins falling out the narrow end or bottom of the funnel at varying speeds. If someone were to ask you why some wins were moving faster than others, how would you explain it?
The answer is, you’d have to guess, because you have no idea what’s actually going on inside the funnel. This is essentially what happens when businesses try to shorten their sales cycles just by looking at the velocity of lead to win. Instead, companies must measure the speed at which deals progress through each stage of the sales funnel, from accepted, to qualified, to evaluation, to whatever other stage your business may have in its pipeline.
One of the best and easiest ways to do this is with a Stage Duration Analysis report.
This report allows you to track how long deals are spending in each stage of your sales pipeline. It also pinpoints which stages are causing bottlenecks so that you can optimize the activities and communications that are taking place within these specific stages. Which brings us to our final tip: refine your sales process.
3. Refine Your Sales Process
A sales pipeline is merely a representation of a much more complex underpinning sales process that outlines the exact steps reps must take to move a deal from one stage of the pipeline to the next. For example, a structured sales process might require reps to have an on-site meeting, provide a customer reference and receive verbal confirmation that they’ve made the short list of competitors before moving a deal from the Qualified to the Quote stage.
Don’t have a formalized sales process in place? Don’t panic – you can learn all about how to create a measurable sales process that drives predictable sales growth in this eBook. Once you have this process in place and capture the information necessary to glean statistically relevant insights, you can begin to measure and understand many of the customer qualities, rep activities and other dimensions that impact your sales cycle.
For example, there is probably a step in your sales process to identify a decision maker. As your reps follow this process and enter information around the decision makers in their deals, you will soon be able to identify the profiles of the decision makers in deals that moved through the sales cycle the fastest. Similarly, if there is a step in your process where reps are required to secure a customer referral to prove the value of your solution, you may soon discover that prospects who are connected with a particular customer progress to the next stage of the pipeline 2X faster than those who are connected with another.
A shorter sales cycle is a common sales KPI, but is difficult to achieve without the right metrics, tools and processes in place. With these three tips, your reps can stop spinning their wheels and start taking more strategic, data-driven steps toward increasing deal velocity. To get more formulas and insights like these delivered straight to your inbox, subscribe to our Science of Sales 101 eCourse.