What is a sales cycle?
The sales cycle is the average length of time between your first contact with a prospect and them turning into a customer, and ultimately you getting paid for the work. This “sales cycle” time varies between industries, and between businesses. For example, some businesses have a very quick sales cycle – you go to the supermarket, select your goods, and pay immediately. Other sales transactions are longer. For example working with the government, local councils, or large businesses. With this type of engagement the time between first contact and payment can be much longer. When items are put out to bid or tender, it can slow the process down too.
It’s useful to first understand your sales cycle, and then explore ways in which to get paid sooner. For example, can you take a deposit up front?
A generic sales cycle
So first take a look at a generic sales cycle, listing typical steps in a sales process. However, you will find it useful to understand the steps in your business’ sales cycle.
Reviewing your sales cycle
First create your sales cycle (which could be an easy process – or it might be a bit more involved). Then you can see how long each step typically takes. You may also be able to reduce the time between some of the steps. Another reason to review and document your sales cycle is to ensure that you provide a consistent and repeatable service. I recommend documenting it so that the process can be followed whether it’s you or someone else (handy if you want to grow your business).
Often these steps or “touches” with your prospects are instinctive, and are not typically explicit. It can be really useful for you to understand and write them down. For you to really understand the value of each touch. You’ll then be able to train your employees to handle some (or all) of the steps, and be assured that prospects are getting a very similar (high) level of service.
Over time you can develop a benchmark of how many people fill the top of your SALES FUNNEL and the typical ratios of how many prospects move through each step of your sales cycle. I.e. How many prospects do you need at the top, to pop out the bottom with a client. These ratios will become increasingly important as you begin to take a hands off approach and are less involved in the day to day running of your business.
With your Key Performance Indicators you can create a BUSINESS DASHBOARD. A business dashboard shows you at a glance the sales pipeline for your business. Where figures deviate from the expected norm or benchmark you can take notice. Yes – even if things are going well, you’ll want to understand what’s happening – and if it’s been an inadvertent change to the process, to understand and perhaps even modify the sales process to reflect the improvement.
If you would like to speak to Angus about mapping out the sales process, please call us and make an appointment for a free, no obligation chat.