Sales Cycle: All Stages Step-by-Step and How to Use It to Close Deals Faster
For businesses working in B2B sales, understanding and optimizing the sales cycle is key to success. Generally speaking, a B2B sales cycle is much longer than a B2C sales cycle. Understanding it and optimizing it can unlock increased performance–research indicates as much as 18% more. That's because having a selling cycle formalizes best practices and clearly defines objectives for salespeople, whether they are dealing with a new lead or .
What is a sales cycle?
A sales cycle is the formal process salespeople follow to convert prospects into customers. Also known as a selling cycle, a sales cycle defines the steps salespeople follow, especially what should be accomplished at each stage. Only when all tasks associated with a particular step of a sales cycle are finished, or a certain trigger has occurred, can the salesperson advance in the selling cycle. The sales cycle is common across all salespeople in a company, though there may be certain specificities for certain sectors or buyer personas. If you have well-defined stages, it will be easy to identify what works and what doesn't, when a salesperson deviates from the sales cycle, and what the effects are.
Why are sales cycles important?
Organizing the selling cycle brings key insights to how the sales team is functioning. The business will separate the prospect journey into different steps to understand how well the sales team is functioning at each stage and pinpoint what should be improved.
- Understand where the prospect is within the sales cycle, better understand what they need or want at that point, and better serve them.
- Make processes more efficient and easily spot obstacles/blockages
- Easily onboard and train new sales team members
- Identify the extremes of performance among sales representatives, whether they are doing well or badly
- Put your buyer at the center of the selling cycle and gain a more profound understanding of your target audience
- Define the sales cycle length and better forecast your sales and determine whether it can be changed to benefit your business
Sales cycle stages
We've already made mention of the different stages of a sales cycle and how important they are. The selling cycle stages structure the overall process and make it possible to attach tasks or criteria to each part of the sales cycle. That's why having a thorough understanding of each step is key to implementing an optimized sales cycle that will realize the full potential of all its benefits.
- Sales prospecting. The first step of the sales cycle is prospecting. During prospecting, you'll find the companies or people who seem like they could potentially convert to a customer. This is the very beginning of the , and oftentimes the prospects you find may not even be aware of your company and its product and service. In this step, the most important tasks to accomplish revolve around pre-qualifying leads. Salespeople will need to gather information to determine if the leads seem like a possible prospect, based on factors like industry and job position. Those possible prospects can be classified as sales-qualified leads ‘SQLs) if they meet the established criteria.
- Making contact. Once the sales team has identified the SQLs, the time has come to make a first contact. Choose a preferred communication channel and reach out to present your company. This first contact should consist of a brief summary of how your company can help the lead, including what problems your product/service solves. There are many ways to make a first contact, but common methods include a discovery call, email, or a free demo or trial period. Above all, remember to keep it simple and short.
- Qualifying the lead. This phase of the selling cycle is also known as research, and it's key to eventually converting the prospect. During this stage, you'll need to discover as much as possible about the SQL, particularly their challenges, current needs, and goals. Ideally, you'd be able to speak to the prospect on the phone. If you're leads, you can open the call with a to help you orient the conversation.Of particular interest is the lead's budget, challenges, and whether or not there is a timeframe to take into account. The point of this phase is to determine whether the prospect would be a good fit for your business as a client. If you choose the best prospects that are likely to convert based on established guidelines, your salespeople will be able to minimize time lost chasing people unlikely to ever convert.
- Nurturing the lead. This stage is energy-intensive, as you'll need to establish trust with the prospect and convince them that your product or service would make a significantly positive difference in their daily life. You'll need to use the information gathered in the previous step to inform how you contact the prospect, and what you say. When you do reach out to the prospect, make sure that you're not simply introducing yourself and soliciting a sale.To really establish trust, you'll need to deliver value at each interaction. Answer any concerns straightforwardly to ensure the prospect feels heard and reassured. Once the prospect sees you as a helpful source of expertise, you can try moving to the next step, making an offer. And if the timing isn't right, for whatever reason, don't lose contact. If you keep the relationship going through regular contact, you'll be top of mind once they are ready to convert.
- Making an offer. This is an exciting moment and one that shouldn't be rushed through. Though it may appear simple, especially if your company has set prices and services, the offer should still reflect the work you've put in during the rest of the sales cycle. At this point, you should leverage the information you've previously gathered and personalize their offer. Your reasoning for presenting that specific package should be explained clearly and succinctly, and should reflect the prospect's budget, problems to solve, and objectives.
- Handling objections. These are the final hurdles before closing a sale, but don't see this as a bad thing. Having questions or concerns before making a purchase is normal, so objections are a sign of the prospect's genuine interest. You could even receive pushback from a prospect over price, timeline, resources for onboarding, or post-purchase support. The best way to handle objections is to acknowledge them and confront them head on. If you don't address the concerns adequately, you'll risk the trust you worked so hard to establish earlier in the selling cycle. So answer all the questions to the best of your ability, and remind the prospect of the upsides of your product/service.
- Closing the sale. Closing the sale is tricky, and can sometimes overlap with handling objections if the prospect has concerns that must be addressed before they'll sign. But if you work with the prospect to refine the offer, you'll be more likely to get that signature on the dotted line. If the prospect can't close the sale, revert them back to step four, and continue to nurture them in case their situation changes.
Best practices for creating a sales cycle
There are significant benefits to optimizing your selling cycle, which is usually referred to as sales cycle management. Managing a selling cycle ensures that it remains updated to customer's needs and realistic for the sales team to follow. If you manage your sales cycle well, you'll be able to continually improve it to shorten it and make a greater quantity of sales. Here are several best practices to help you manage your sales cycle.
Keep the prospect in mind
A customer-centric selling strategy keeps the current and future customers' needs, problems, and objectives top-of-mind for the sales team. A strong connection to the customer and prospects, which is helped in large part by step four of the sales cycle outlined above, will allow you to create and communicate a strong value proposition.
Sync the prospect's journey with your actions
The sales cycle steps outlined above give a useful but general framework for a selling cycle. When it comes to the details of when, how, and what to communicate, there are many options–enough that it can be difficult to make decisions. To create a highly effective sales cycle, the best place to start is with any existing customer journey. Once you have an idea of the status quo, you can then create a sales cycle that is complementary–adding, removing, or refining outreach actions as necessary. Just be wary of creating unnecessary complexity for the sales team or the customer, and keep in mind the resources available to the sales team. After all, the demands of the sales cycle must remain realistic.
Align sales and marketing
One of the strongest turn-offs for a prospect is discovering the claims made in a marketing campaign are not true, and the product or service is not as indicated. That's just one of the reasons to keep a close connection between sales and marketing. If you need another reason, don't forget that both sales and marketing have important data on customers and prospects. When shared, this information can give both departments an edge.
Leverage social proof
There's not much that's more compelling than a positive review from a current customer. Salespeople can put prospects in touch with customers willing to speak about their experience, or provide a more in-depth look with other content, like use cases. Just be mindful about how people are talking about your company online. Online review sites are more popular than ever, and can have a real impact on whether a prospect converts or not. Therefore, it's good to coordinate with the marketing team to ensure the company's online reputation is favorable.
Use the right tools
There are many business software or tools to support sales teams. One of the most common is Customer relationship Management (CRM) software, but other types of software have been specifically developed to facilitate the sales prospecting process. For instance, like allow salespeople to automate outreach across multiple communication channels, provide daily to-do lists thanks to preset , and with other business software like CRM.
Measure and improve
Just like with any process aided by digital technologies, you'll have access to data which allows you to understand the sales cycle performance. The best way to understand how well the selling cycle is working is to track relevant metrics before making any changes. That way, you can understand how any changes affect the sales output. A few good metrics to check are lead response time, sales cycle length, and conversion rate. We'll go more in depth about the right metrics to evaluate your sales cycle in the next section.
Sales cycle management
Sales cycle management refers to tracking the selling cycle by stakeholders like the sales team, managers, and company management. To successfully manage the sales cycle, you should keep an eye on KPIs to recognize trends and pinpoint any steps where the performance could be improved. Let's take a look at which ones are most relevant.
Sales process KPIs
Lead response time
The lead response time refers to how long it takes for a sales representative to respond to a lead. You can apply this metric at any stage of the sales cycle to understand why prospects aren't advancing more quickly. Ideally, you'll want to respond to a lead quickly (within an hour) to begin the conversation while they are fresh. That's when you'll have the highest chance to capture their attention. So if you find that the lead response times are significantly long, you can train your salespeople in how to handle inquiries more rapidly or use a sales prospecting tool that has templates to increase efficiency.
Lead to prospect ratio
This ratio is the percentage of prospects that result from the total number of leads. In this context, we define leads as a contact who is in stages one to three of the sales cycle, and a prospect is a contact who is in stages four through seven. This metric is important to track because the more prospects generated, the more opportunities you have to convert them into full customers. If this ratio is not exactly where you would like it to be, you will be able to identify where the issue lies. For example, if you're transforming a good ratio of the leads to prospects but you have fewer leads than you would like, you know you have a lead generation problem. But if the ratio itself is low, better to take a look at stages one through three of the sales cycle.
Sales cycle length
The sales cycle length is the amount of time from when a lead enters the sales cycle until the deal is closed, whether a sale took place or not. The shorter this amount of time is, the better. Once you start tracking this, you can determine the average sales cycle. This information is extremely helpful as a baseline. You'll be able to spot prospects who are moving through the sales cycle more slowly than normal, or sales representatives whose prospects frequently stall out. The same goes for any prospects or salespeople who move through the cycle quickly–you'll want to understand what went so well!
Loss rate at each sales cycle step
This metric is the ratio of deals lost during each stage of the selling cycle. If you want to optimize the sales cycle, this metric is key. It will allow you to understand the performance at each stage and then pinpoint what actions should be taken to improve the performance at each stage.
This is one of the most important metrics to track because it's a direct indicator of the health of your sales department. This is a higher-level KPI than the others mentioned in this article and can deliver insight into the effectiveness of your sales cycle and your sales team. When you see changes to this KPI, you can then refer to the other KPIs mentioned for more specific information about why performance is not where you'd like it to be.
Sales Cycle FAQ
What is the sales cycle?
A sales cycle is the formal, repeatable process sales teams follow to convert prospects into customers. Also called a selling cycle, this process lays out what steps the salespeople should follow. There are significant benefits to putting a sales cycle or selling cycle in place, notably that it allows you to track leads closely and pinpoint moments of success or failure in the process.
What are the 7 stages of sales cycle?
The 7 stages of sales cycle are:
- Sales prospecting
- Making contact
- Qualifying the lead
- Nurturing the lead
- Making an offer
- Handling objections
- Sales closing
What are the 4 phases of the sales cycle?
The 4 phases of the sales cycle are:
- Discover client needs
- Sales closing
What are the sales cycle with 5 stages?
The 5 stages of the sales cycle are:
- Make contact
- Research client needs
- Present the solution
- Close the sale
- Follow up for referrals