Definition Of Sales Cycle:
A sales cycle is the steps a salesperson takes to sell a product or to take a prospective buyer from a prospective stage to the stage where he/she makes a purchase.
It is simply the steps a potential buyer goes through before making a purchase.
It is a journey for a prospect and a roadmap for a salesperson.
A sales cycle encompasses all the activities involved in closed a sales deal.
A sales cycle may take days, weeks, months or even years depending on the industry, the product you are selling, market condition, the efficiency of the process, numbers of people involved and so on.
The goal of every company is to shorten the sales cycle so as to increase sales.
The efficiency of a sales cycle is measured by the number of sales made within a given time frame.
Importance of a Sales Cycle
To keep track of the time it takes to close a Sales Deal
As a salesperson or a company owner, you need to track and know the time it takes for you or your sales team to close a sales deal.
This will help you track the time you use in converting a prospect to customer.
It will also help you to compare the standard length across your industry and for you to know how well your sales team is doing.
When you take more time in closing a sales deal, you will only succeed in making a few sales.
Is the time taken for you or your sales team to close a sales deal longer or shorter than the average of the industry?
Are you making more sales than your competitors?
Are you acquiring more customers than your competitors?
With sales cycle, you will know all these and know how effective your sales team are.
It reduces Time Wastage
A sales cycle helps to reduce time wastage by helping you to identify the right thing to do.
You will be able to understand the things that are working and what are not working.
It will help you to focus on the right things to do and get rid of activities that do not yield any good results.
It helps you to Understand your Customers better
A sales cycle will help you to understand your customers better by making you feel like a customer instead of a seller.
You will be able to know your customer’s needs, know their different behaviors, know their expectations.
When you are able to understand your customers totally by stepping in their shoes, you will be able to know exactly what they want and thus making more sales.
It helps you to Know More about Sales and How to Utilize your Sales Skills
A sales cycle breaks down all the steps that are involved in sales.
This helps you as a salesperson to know all that is involved in sales process.
It will help you know how you can convert prospects into customers within the shortest possible time.
It will also help you to know what to do at every stage.
Helps to Identify Qualified Leads
A sales cycle will help you to prioritize your focus by identifying qualified leads that are sure to make purchases.
You will be able to identify the leads that are going to convert to customers so you can focus on them.
Focusing on all leads will not yield much revenue because not all the leads will make purchases at the end.
You need to analyze your leads and identify the qualified leads from the non-qualified leads.
This is very important, as this is what will determine your return on investment.
Identify the Causes of Stalled Sales
There are times whereby sales maybe stalled and time will be wasted.
A sales cycle will help you to identify the causes of stalled sales and what can be done to prevent such situations from happening.
You will be able to analyze each step of the sales process and predict what to expect next.
Never Miss a Follow-Up
With sales cycle, you will never miss any step of a sales process.
This means all activities involved in a sales process will be carried out, most especially follow-ups.
You will always be reminded when you need to follow up on a lead and keep an up-to-date sales pipeline.
7 Stages of a Sales Cycle
Typically, a sales cycle consists of 7 stages. We are going to take a look at the stages involved in a sales cycle.
#1 Prospecting Stage
This is the first stage of the sales cycle.
This is the stage where you find potential customers which are also referred to as prospects and then determine whether or not they have a need for your product or service.
Your prospects also need to be aware of the product or services you are offering and determine if they have a need for it.
Your product or service should be of value to prospects so that they will have a need for it.
What are the benefits or values of your product?
What problem can your product solve?
In this stage, you need to explain the benefits and values of your product to your prospects so that they will see the need for buying your product.
When your prospects are aware of your product and they see the need of your product, they will be willing to move further in the sales cycle by either filling forms, signing up, or providing their contacts through other means.
At this point, your prospects have been converted to leads.
Examples of prospecting activities are advertising, website, cold marketing campaign.
#2 Preparation Stage
The preparation stage is known as the stage where you contact potential customers.
At this stage, you collect relevant and useful information about your product and send them to your prospects.
The information should be useful to your prospects and they should meet your prospects needs.
Each prospect has different needs and so you should send information that are useful to each prospects depending on their individual needs.
You can contact a prospect through a phone call, email, or text messages, depending on the one that is more appropriate.
At this stage, you are contacting your prospect for the first time, the prospect doesn’t know details about your product or service yet.
You will need to set up a meeting or create an avenue where you and your prospect can discuss more in details.
Example is sending a cold email to a prospect and asking to schedule a meeting with the prospect.
#3 The Approach Stage
The approach stage is the stage where you determine if a lead is a qualified lead or not.
This is the stage where you make the first contact with the lead.
It can be a face-to-face meeting, a conference call or maybe a more detailed phone call.
In this stage, you will have a detailed discussion with the lead to be able to analyze the lead and know if the lead is qualified or not.
To get your lead to be more interested in what you are saying and catch his/her attention, you can present a gift to him/her, ask questions or provide a free sample of your product for trial.
Here is where you will know if the lead fits into the criteria of a qualified lead.
Examples of the approach stage are face-to-face formal meetings, conference calls, a phone call to talk at length.
#4 The Presentation Stage
The presentation stage is the stage where you present your product or service in details to your lead.
This is where you demonstrate in details how your product will benefit your lead.
This stage is very crucial because it is the stage that will determine if your lead will be interested in your product or not.
You need to be able to impress your lead and show him/her the benefits of your products.
You should be very ready and prepared so you can present your product very well to your lead and be able to convince your lead to make a purchase.
You need to show how your product meets the needs of your lead.
If you are presenting to a company owner, be able to demonstrate how your product will help the company.
What problems and issues can your product solve?
All these should be clearly outlined and explained during the presentation.
Presentation can be done by showing your lead all the features and functions of the product you are selling.
You can make use of powerpoint slides if you are presenting to a group of people.
As a salesperson, you should always look professional when presenting to your leads, most especially if you are presenting to other professionals and people in the cooperate world.
Examples of presentation activities are power point presentation, sales pitch, product demo.
#5 Handling Objections
After the presentation, you don’t expect everybody to agree with everything you said, there must be some objections.
Objections might come in the form of questions, concerns or fault-finding.
As a professional salesperson, you should listen to all concerns and questions.
After you have listened to the concerns and questions of your leads, you should be able to provide adequate answers.
You should know that not all leads will be converted to customers so do not feel bad and rejected when a lead refuse to make a purchase but you should be very ready to provide adequate answers to questions and concerns that may be raised.
You should be able to manage and overcome objections by critically analyzing the questions and concerned raised.
After you have analyzed the questions and concerns, provide suitable answers and be able to convince your leads to make a purchase.
The ability to change the mind of a lead who has said “No” before to say “Yes” is what makes a good salesperson.
The closing stage is the stage where the lead has made a decision to move forward.
The lead has not made a purchase yet but has agreed to purchase.
You still need to lure the lead into making a purchase by providing some form of incentives or mouth-watering offers that can’t be resisted.
You might offer a discount, free month of service usage, coupon on next purchases, etc.
You can also further prompt the lead to make a purchase by creating a sense of urgency and limited offers.
You can also lure the lead to make a purchase by providing installment payment method.
All these methods are strategies to get the lead to make a purchase.
As a salesperson, you should be able to study the attitude and body language of your lead to know the right approach to use so he/she does not change his/her mind and declines to proceed further.
After your lead has made a purchase, you are happy as you have made a sales and have succeeded in converting a prospect to a customer.
But that is not the end, you need to follow-up on your customers so that they can come back again to make more purchases.
If you do not follow up, your customer may never come back to make any more purchase from you.
You need to follow up on customers not only because to have them come back again to make more purchases but to also ask them for referrals.
A happy customer has a higher tendency to refer a friend or a family member to you, hence getting more customers through your customer.
It is much easier to retain a customer than getting a new customer, hence you need to follow-up and create a lasting relationship between you and your customers.
After a customer has made a purchase, always thank the customer and ask for feedback.
With the feedback, you can further ask for referrals.
To lure a customer into referring more people to you, you can provide some form of incentives such as discounts on their next purchases, coupons, etc.